Legislature(1995 - 1996)
03/16/1995 01:40 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 100 DISCRIMINATION UNDER GROUP HEALTH INS.
SENATOR KELLY announced SB 100 to be up for consideration and noted
there was a proposed committee substitute. He said there were
three sections to this bill and started with the physician's
assistants.
JACK HEESCH, Alaska Academy of Physician's Assistants, said he
thought this bill would prevent discrimination by group health
insurers among physician's assistants (PA). This means if a person
is licensed by the State of Alaska as a state licensed practitioner
and is covered under group policy, then all people with similar
licenses must be paid for services. He believed the bill did not
mandate or require coverage of physician's assistant services; it
merely says that if an insurer covers PA service, then they must
cover all PA's without discriminating among them.
MR. HEESCH said the fiscal affects of this bill are $0. He also
pointed out that this bill did not have adverse comment when it was
introduced last year, nor has it this year. This specific statute
was amended in 1992 to provide for psychologists and psychological
associates and again, in 1994, to include certified direct entry
midwifes - both without adverse comment.
NICK COTI, East Care Acupuncture Clinic, supported SB 100. He said
his wife is an acupuncturist and a medical doctor and received her
training in China. He said he has recently completed one and half
years of graduate study in China and he found that macro economic
information supports how effective acupuncture is, not only as a
mode of treatment, but as a means of containing costs. Life
expectancy, health care, and some other things are better in China
than in Washington, D.C., one study concluded.
The World Bank has conducted studies on the nature of the Chinese
currency and its value in the economy, in general. It was found
that there was a very reliable correlation between life expectancy
and per capita income. At that time, China had a per capita income
of $250 and a life expectancy of 70 years. One would predict, with
a per capita income of $250, a life expectancy of something like 50
years. A life expectancy of 70 years is more consistent with an
advanced industrialized economy. One of the reasons for this is
that they have a fully integrated western and Chinese medical
system. The use of both is encouraged interchangeably.
Current insurance laws make it difficult for people to get
acupuncture, because they have to pay fully out of their pocket to
do so.
TAPE 95-12, SIDE B
MR. COTI asked the committee to consider very seriously the
importance of taking discrimination against acupuncturists. He
also pointed out that many acupuncturists are receiving either
directly or indirectly support from insurance companies through
other people who bill for them which is not a very good practice.
SENATOR KELLY said they would go on to the third section of the
proposed committee substitute.
DON KOCH, Division of Insurance, commented that there has been a
litany of providers added to this section of law over the years.
He explained that his department's position on section 1 is that if
the provider is performing a service that is covered under a group
insurance health policy, and that service is within the scope of
his occupational license and practice, then the insurance company
should not be able to discriminate against that person. This does
not mandate to the insurer that they provide a specific kind of
coverage that is particular to one practitioner. It does say that
if whatever you do provide coverage for can be provided by multiple
kinds of practitioners, then you have to treat them equally.
MR. REINWAND, Blue Cross, asked if this means you can't have
preferred provider arrangement with different fee schedules within
a group like doctors and hospitals.
MR. KOCH replied that at this time, he believed there does not
exist authorization for preferred provider arrangements in statute
- with the exception that, in the case of hospital medical service
corporations (for example Blue Cross and Blue Shield), they are
directly the provider who through contracts with practitioners
provide a service. So you can have, in effect, a different level
of coverage for the entity with whom the Blue Cross, Blue Shield,
Hospital Service Corporation, is in contract with versus the piece
in their policy that provides for indemnification for other kinds
of services that they're not under contract with a provider for.
SENATOR SALO asked when he talked about "not discriminating" did he
mean between providers within the same category or between a
variety of providers like acupuncturist, medical doctors, etc. MR.
KOCH replied that it was between all the different providers. He
explained that typically a hospital medical service corporation
will enter into contracts with hospitals and, generally, with
medical doctors. They may have arrangements in some cases where
they go to other practices as well. In that case, you're going to
have a level of care that can be stated in the policy that may be
greater than the level of care you would provide on an
indemnification basis. He said they may limit coverage to the care
provider who was "first in line" to give treatment.
Number 501
SENATOR DUNCAN asked if Mr. Heesch agreed with Mr. Koch's
testimony. MR. HEESCH answered that he didn't. SENATOR DUNCAN
restated that Mr. Heesch's understanding of adding physician's
assistants meant you have to treat all physician's assistants the
same. What Mr. Koch's understanding of the unfair discrimination
is that if you have a headache, you should be able to go to anyone
who is licensed to practice in the state who could cure that
headache. MR. KOCH replied that was correct.
SENATOR DUNCAN asked if the list of providers is necessary to be
included in the bill. MR. KOCH replied that he would take out the
list of providers and put in some generic language that says, "if
the practitioner is operating within the scope of his license, and
the event that is triggering his care is within the scope of his
practice."
SENATOR DUNCAN asked if that had been suggested in the past,
because there is the problem of continuously adding to the list and
then there are providers who aren't being recognized by the
insurance industry, although they are certified and licensed. MR.
KOCH answered no, their deputy director, Thelma Walker, recently
asked the same thing.
SENATOR DUNCAN said just adding "physician assistant" wasn't
solving the problem the physician assistants were concerned with.
MR. KOCH agreed and said there was one more issue which is, in some
cases, some of the items have been added to the list, but the scope
of practice is not particularly clear.
SENATOR KELLY announced an at ease at 2:35 - 2:43.
RACHEL YATES, Alaska Association of Marriage and Family Therapists,
said they are licensed clinical professionals and provide a
comparable service to psychological associates and clinical social
workers. She asked to be added to the list in the bill.
CHARLIE MILLER, Alaska Regional Hospital, supported SB 100. Alaska
Regional Hospital has a very well defined scope of service. They
are well established, highly regulated, certified, and licensed
facilities. They are primary providers of health care in the state
and requested to be added to the list of providers.
MR. MILLER noted there was a question about them being an
institution rather than an individual, but he did not think this
was significant.
SENATOR SALO said it looked like listing hospitals would start a
whole other list, because there are nursing homes, clinics, etc.
MR. MILLER said that usually a clinic is included with a
physician's billing. SENATOR SALO said that wasn't necessarily the
case, because many clinics offer surgical services where they do
bill separately.
SENATOR SALO said some insurance companies prefer using Providence
in Anchorage and asked if that would be prohibited. MR. MILLER
said a lot of programs are regulated by federal law. There are no
provisions for preferred provider agreements in the indemnity
insurance, as Mr. Koch said, in AS 21.36.090. The ones that are
allowed are in AS 21.87.
MR. KOCH added that AS 21.36.090 does apply to both an insurance
company and a medical service corporation. The reason is because
there is a reference in 21.87 back to 21.36. saying it picks it up.
In addition, there is language that talks about "group disability
policy" and "group service for an indemnity type contract." "Group
service" is the language that should be used to pick up the
contract that a hospital medical service corporation uses; and the
term "policy" used for the contract and insurance companies issues.
Both are covered by the language in AS 21.36.090.
SENATOR DUNCAN asked if he was saying that nowhere in statute is
there a provision for preferred provider networks in this state for
insurers, for example, Aetna. MR. KOCH agreed, but said Blue Cross
and Blue Shield could, because they are a medical service
corporation. The way they could be viewed as a preferred provider
is that those that they enter into a contract with to provide
services may be recompensed under their contract at a different
level than those they don't have a contract with, but have the
ability to be picked up as an indemnifier.
SENATOR DUNCAN commented, then, that under the way our statutes are
presently written, and with the movement towards managed care
networks in the country, Alaska is really in a very weak position
to have managed care. MR. KOCH said that was absolutely correct
and if this is what they want, he has a copy of a model bill that
may address that issue.
SENATOR KELLY asked how this affects the arrangement that Aetna has
with Providence Hospital. MR. KOCH said he contends that Aetna
could enter into those kinds of arrangements with self insurers,
because the insurance code provides no impediment to a self
insurer.
SENATOR DUNCAN asked if they were sure there were no PPO's in this
state that are in violation of the law right now. MR. KOCH replied
that no, they are not. If there are PPO's written by insurers of
this state, they may well be in violation of the statutes.
REED STOOPS, Aetna, said that Aetna does have PPO agreements, and
have had them for years in Alaska. They believe the statute
permits those agreements. The Division of Insurance has approved
policies with those provisions and there has never been any attempt
to prohibit Aetna from doing it.
MR. STOOPS said there are other statutes in other states that have
litigated this question before and courts have determined that
unfair discrimination does not mean that one cannot have a PPO
agreement.
What he thought the issue really was, was an attempt by Alaska
Regional Hospital to clearly prohibit a PPO agreement. He thought
PPO agreements were in the public interest; they are common
practice in the rest of the country and provide lower cost
insurance for Aetna's clients.
Number 334
SENATOR DUNCAN asked if the Municipality of Anchorage is self-
insured. MR. STOOPS said they are not self insured.
SENATOR DUNCAN asked who their contracts are with. MR. STOOPS
replied that they have a PPO with Providence, although not for all
clients. They also have a PPO agreement with some doctors and
dentists in Anchorage.
SENATOR DUNCAN wanted to ask the Division of Insurance to respond
to the testimony that they have been approving contracts that they
think are in violation of the law.
Number 284
MR. KOCH responded that they have written to Aetna and told them
that these arrangements are not legal; some have been disapproved.
If any have been approved, it has happened inadvertently. He said
Mr. Stoops is correct that they presented some arguments that place
somethings into question. They haven't gone to court to contest
it, because there were discussions going on about it in the
legislature.
MR. STOOPS said there was no doubt that this particular amendment
will strengthen the case. He said he would like to have someone
from Aetna testify about which customers are included under PPO
arrangements now.
JERRY REINWAND, Blue Cross, said he thought there were a couple of
issues here: what the existing law says, what the legislature
thought it said, and what the division says it says.
He thought he heard the division say that the section in existing
law is really a mandate. If you are on the list, you're mandated
to cover that scope of practice. He suggested getting the
division's interpretation of what the existing law is. MR.
REINWAND said he would like to know what this amendment does to
Blue Cross and other providers and does it mean they have to void
their existing PPO arrangement with Providence's other providers.
Third, he wanted to know the public policy on this and if this is
the right direction to go. The whole trend is toward managed care
to try to bring costs down and this appears to be going in the
other direction.
SENATOR DUNCAN said the real question on managed care is are we
really reducing costs or increasing costs by adding layers of
bureaucracy.
MR. REINWAND said there is a question of discrimination within a
group and, then, whether it applies to Blue Cross or not is another
public policy question. If it's discrimination between groups,
does that apply to services. If a physician provides a service,
and an acupuncturist provides the same service and they get a bill
from both, do they say no to one and pay the other.
SENATOR SALO said she wanted to know what the affect would be of
going to the generic language rather than the specific list.
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