Legislature(2001 - 2002)
03/28/2001 06:06 PM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 37(L&C)
"An Act relating to collective negotiation by physicians with
health benefit plans, to health benefit plan contracts with
individual competing physicians, to the application of state
antitrust laws to agreements involving providers and groups of
providers affected by collective negotiations, and to the
effect of the collective negotiation provisions on health care
providers."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Kelly drew attention to the proposed committee substitute
Version "B", which was introduced, but not adopted during the
previous hearing. He pointed out that a provision regarding the
exemption of nurses was inadvertently omitted in this committee
substitute, which a proposed amendment would reinsert. He pointed
out that this amendment reflects an agreement with the nurses
association.
Senator Wilken moved for adoption of CS SB 37 22-LS0323\B, 3/27/01
as a working draft.
Without objection it was ADOPTED.
Amendment #1: This amendment adds a new subsection on page 7, lines
15-19 of the committee substitute to Section 1. Chapter 50.
Collective Negotiation by Physicians. Sec. 23.50.020 as follows.
(p) Nothing in this section shall be construed as
exempting from the application of the antitrust laws the
conduct of providers or negotiations or agreements between
providers and a health benefit plan if the purpose or effect
of the conduct, negotiations, or agreements would be, directly
or indirectly, to exclude, limit the participation or
reimbursement of, or otherwise limit the scope of services to
be provided by separate or competing classes of providers who
practice or seek to practice within the scope of the
occupational licenses held by the providers.
Senator Wilken moved for adoption.
There was no objection and the amendment was ADOPTED.
Amendment #2: This conceptual amendment deletes Section 3, the July
1, 2006 sunset date, from page 8, lines 30 and 31 of the committee
substitute.
Co-Chair Kelly moved for adoption. He explained this sunset date
was inserted in the bill as a result of concerns over increased
health care costs. He assured that most of the concerns have been
addressed, such as making the negotiations voluntary, establishing
veto provisions for both the carriers and providers, that "soften
the impact" of a worse case scenario. He surmised that the need for
the sunset is therefore no longer necessary and warned that the
insurance corporations would wait for the sunset date rather than
participate in negotiations.
The amendment was ADOPTED without objection.
Co-Chair Kelly addressed the Department of Administration fiscal
note that describes possible impacts to the state employees' self-
insurance plan. He noted that the committee substitute Version "B"
eliminates self-insured plans from the negotiation requirements and
therefore, there would be no fiscal impact to the state. He
recommended the Committee adopt a zero fiscal note for the
Department of Administration.
Senator Green asked the impact of the provision regarding self-
insured plans.
Co-Chair Kelly explained that the state, municipalities and most
labor organizations would not be required to abide by the
negotiation requirements established in this legislation. He
clarified that physicians would not have the protection of the
state action doctrine if they entered into negotiations with self-
insured organizations.
Senator Green wanted to know the segment of the population effected
by the removal of the self-insured from the legislation.
Co-Chair Kelly did not know.
Senator Wilken moved to adopt a zero fiscal note for the Department
of Administration.
Co-Chair Kelly clarified for Senator Austerman that the new fiscal
note would delete reference to a potential $3.5 million to $9.1
million increase to the state.
Senator Austerman assumed that health maintenance organizations
(HMO) and similar organizations are not self-insured.
Co-Chair Kelly pointed out that there are no HMOs operating in the
state, but there are preferred provider organizations.
Senator Austerman asked if any of the preferred provider
organizations are self-insured.
Co-Chair Kelly answered they are not.
Senator Hoffman asked about the second paragraph of the fiscal note
analysis regarding any increased costs that would be borne by the
employee, and asked if the removal of the self-insured portion of
the bill would eliminate this.
Co-Chair Kelly responded that the matter was irrelevant with the
proposed zero fiscal note.
Senator Austerman commented that the expenses shown on the current
fiscal note were estimates and that there is no way to know if
health care costs would increase or not.
Senator Green expressed that she did not understand the reasoning
behind the legislation. She judged the sponsor's legislative
findings to be questionable and she did not agree with them. She
asserted that there would be a fiscal impact as a result of the
bill. She cited from the findings, "There are however instances in
which a health benefit plan dominates the market to the degree that
fair negotiations…" She wondered how many people remained available
to participate in the negotiations when the self-insured are
removed from the process. She recalled discussions regarding the
impact on the Comprehensive Health Insurance Association (CHIA)
caused by changing health care coverage for state employees to a
self-insured system. She stressed that this action removed a large
segment of the population from private insurance plans. She was
concerned that this legislation targets the small group remaining.
Co-Chair Kelly directed the discussion to the motion on the table
to adopt a fiscal note.
There was no objection and a zero fiscal note for the Department of
Administration was adopted.
Senator Green stressed that if a fiscal note applies to the state
and its employees only, it could be claimed that the legislation
would have an indeterminate fiscal impact, but that it does not
give assurance to those with private insurance that there would be
no cost increase. He requested the Department of Community and
Economic Development address this concern.
Co-Chair Kelly did not agree that the consumer costs would increase
an estimated 15 to 20 percent as a result of this legislation. This
he explained is because the program is "completely voluntary". He
stressed that the insurance companies could decline to participate
in negotiations and the physicians would have no retaliation
options nor could they refuse patients covered by that insurance
company.
Senator Green expressed her concerns were based on the size of the
pool of participants that are not self-insured.
[Note: teleconference connection is very poor. Much of the
testimony is inaudible.]
BOB LOHR, Director, Division of Insurance, Department of Community
and Economic Development, testified via teleconference from
Anchorage that once the self-insured participants are excluded from
the bill, the number of people covered by this legislation would
decline.
Mr. Lohr noted that if physician fees were negotiated at a higher
rate, the increase could result in a rise in the cost of insurance.
Senator Green wanted a percentage figure.
Mr. Lohr estimated "ten-percent of the total published." [Continued
testimony inaudible.]
Senator Green asked if it is typical that the remaining privately
insured participates attempt to enter a self-insured pool.
Mr. Lohr replied there would be an economic incentive to increase
the volume of members in an insurance plan for the purposes of
negotiations. He indicated that plan administrators would look to
do this or possibly reduce benefits or eliminate coverage
completely.
Senator Green asked about the impact on CHIA.
Mr. Lohr explained that CHIA is based on the number of health
insurers participating in the market and that percentage of the
total market. He said the assessment to fund CHIA is determined by
the board of directors for CHIA. [Additional comments inaudible.]
Co-Chair Kelly reiterated earlier assumptions that health care
prices would increase because of negotiated prices. He countered
that this legislation provides either side with veto power and that
insurance companies could refuse to negotiate fees. He remarked,
"This constant talk about prices being raised, I think is uncalled
for. It doesn't follow what is in the bill." He admitted that
quality of care issues are a different matter, such as determining
what procedures constitute emergency services. He noted that there
could be price increases in this area.
AT EASE 6:28 PM / 6:29 PM
Senator Wilken offered a motion to report from Committee CS SB 37
22-LS0323\B as amended with forthcoming zero fiscal note from the
Department of Administration, Division of Retirement and Benefits.
Without objection, the bill MOVED from Committee.
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