An Anchorage Superior Court judge last week upheld the State of Alaska’s decision to repeal the long-standing “80th percentile rule,” a regulation that for nearly two decades had governed how health insurers reimbursed out-of-network medical providers.
The ruling from Judge Yvonne Lamoureux came after a four-day bench trial in February, in which a coalition of Alaska medical associations, including the Alaska State Medical Association, the Alaska Podiatric Medical Association, the Alaska Physical Therapy Association, and the Alaska Chiropractic Society, challenged the Division of Insurance’s repeal of the rule. The groups argued the repeal was arbitrary, lacked transparency, and would harm patient access to care by driving down reimbursements for independent providers.
The judge disagreed, siding with the Division of Insurance, which has long argued that the 80th percentile rule drove up health care costs in Alaska by incentivizing providers to raise their charges in order to capture higher reimbursements.
The 80th percentile rule was adopted in 2004 and required insurance companies to reimburse out-of-network providers at or above the 80th percentile of charges billed in a given geographic area. Supporters said the rule protected patients from being underpaid by insurers and ensured that providers could continue offering care in a state with some of the nation’s highest medical costs.
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The Division of Insurance and some large insurers, argued the regulation created a feedback loop of escalating charges, since providers knew insurers were bound by the percentile benchmark. After years of debate, the Division formally repealed the rule effective Jan. 1, 2024.
The coalition of doctors and medical associations has not ruled out an appeal to the Alaska Supreme Court. If pursued, the high court would be asked to determine whether the Division’s repeal was legally sound and consistent with Alaska’s administrative law requirements.
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Until an appeal, the Superior Court decision is a victory for the Division of Insurance.
Read the court ruling here:
