Legislature(2007 - 2008)HOUSE FINANCE 519
04/25/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB228 | |
| HB184 | |
| SB103 | |
| HB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 184 | TELECONFERENCED | |
| + | HB 228 | TELECONFERENCED | |
| + | SB 103 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 88 | TELECONFERENCED | |
HOUSE BILL NO. 228
An Act relating to fees for certain medical treatment
and service under the Alaska Workers' Compensation Act;
and providing for an effective date.
DEREK MILLER, STAFF, REPRESENTATIVE MIKE KELLY, commented
that in 2005, the Alaska Legislature passed SB 130, a rework
of the Workers Compensation statutes. As part of the
rework, medical payments were frozen at the 2004 fee
schedule so that a review could be done of the underlying
reasons for premium increases. The review was to be jointly
done by a special Workers Compensation Legislative taskforce
in concert with the Department of Labor & Workforce
Development Medical Review Committee. The taskforce was to
develop recommendations to moderate program increases in the
future. As part of the conditions of the medical rate
freeze, the taskforce was to have completed their review by
February of 2006; the rate freeze would sunset in August of
2007 (to be replaced by a new fee schedule).
The taskforce did not complete the report by that time;
consequently, the State is faced with the sunset of the
medical rate freeze in August 2007. There is no plan for
the post rate freeze sunset period.
Mr. Miller pointed out that under HB 228, the medical rate
freeze would be extended two years to allow time for
recommendations to be developed. It implements an annual
rate increases based on the Consumer Price Index (CPI). He
added that the bill is not meant to be a long-term fix, but
rather a stop-gap measure, extending the medical fee
schedule, adjusting it for inflation. The bill is supported
statewide.
1:50:30 PM
Representative Crawford remembered when price controls were
put in place to lessen inflation during the Nixon
Administration, which did not accomplish the intent. He
voiced concern that the legislation does not allow the
market place precedence. He stressed the importance that
injured workers receive the care they need. He questioned
the time table.
Mr. Miller explained that the Division of Insurance has
indicated that if the measure is not adopted, medical care
costs will increase related to workers compensation
insurance. The March 1timeline places it in the middle of
the legislative session in order for long-term discussion.
Representative Gara acknowledged the need to raise medical
treatment compensation rates as costs keep increasing; he
asked if compensation rates for certain injuries had been
frozen.
1:55:25 PM
Vice Chair Stoltze asked about restrictions & need
constraints to important services. Representative Kelly
said it was not addressed; the bill only recognizes the
sunset and absent that, rates will be frozen. The bill does
not attempt to fix the system.
1:57:38 PM
LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, voiced support
for the bill and offered to answer questions regarding the
impact to insurance.
Representative Crawford questioned the timing of the rates.
Ms. Hall did not know why those dates had been chosen. The
Division makes their rates effective the beginning of each
calendar year with the process beginning in April or May,
2007. Any data received by them would be included in the
rate making process. She indicated concern with the mid-
term rates.
1:59:55 PM
ROD BETIT, PRESIDENT, ALASKA STATE HOSPITAL & NURSING HOME
ASSOCIATION (ASHNHA), ANCHORAGE, noted that ASHNHA,
requested the proposed legislation in an attempt to "fix"
this problem. The work of the task force has not been
complete and with a rate freeze sunset in August, hospital
and physicians would get paid on what they had billed, which
would result in insurers paying out more than intended. No
one wants to see that happen. HB 228 addresses these
concerns.
Representative Gara asked if the medical cost inflation
adjustment would be retroactive to the time it was frozen.
Mr. Betit replied it would be prospective for the next
eighteen months.
Representative Crawford inquired about the difference in
rate structure. Mr. Betit explained that hospital members
follow the Consumer Price Index (CPI) closely. At the time
the freeze was put in place, the hospital charges were being
discounted by workers' compensation; he anticipated it would
be in the 25% discount range.
Representative Crawford thought that the rate was higher; he
worried about the final disparity. Mr. Betit commented that
the bill only impacts the medical claims of an injured
worker, not all medical claims; no one is happy with it as a
permanent solution. Long-term reimbursement needs to be
made through negotiation.
2:04:33 PM
Representative Gara asked if the frozen rates would create
risk for those not receiving treatment with fees too low.
Mr. Betit said no; the providers will continue to give
treatment.
Representative Gara pointed out that they would be charging
less than the workers comp arena to private patients and
asked if costs would be passed to other consumers. Mr.
Betit explained that the same charge is made to all
patients. There are different reimbursement agreements
reached with different payers; each hospital offers charity
policies, some of which are passed to other payers.
Representative Gara reiterated his query regarding the
workers comp rate being lower than customarily charged and
causing a rate increase to others. Mr. Betit reiterated it
was not passed on.
2:07:32 PM
GEORGE RHYNEER, CARDIOLOGIST, ALASKA PHYSICIANS AND
SURGEONS, ANCHORAGE, testified in support of HB 228, as it
provides the Legislature time to more fully evaluate the
real cost of workers' compensation. He noted that the cost
of medical care continued to rise due to technological
advances. Physicians want to determine a solution for cost
effectiveness and that HB 228 allows that to happen.
2:10:19 PM
SALLY STUVEK, (TESTIFIED VIA TELECONFERENCE), HUMAN RESOURCE
DIRECTOR, FAIRBANKS NORTH STAR BOROUGH, FAIRBANKS, testified
that the Fairbanks North Star Borough supports the
legislation, which provides stability in establishing costs.
The adjustment appears reasonable as the rates have been
frozen since 2004. She requested that consideration be made
for March 2009, when the bill again sunsets, there then be a
process in place to address these concerns. A long-term
solution would be the best. It is also an important issue
for providers.
MICHAEL HINCHEN, (TESTIFIED VIA TELECONFERENCE), GENERAL
MANAGER, ALASKA TIMBER INSURANCE (ATI) EXCHANGE, PORTLAND &
KETCHIKAN, stated that he represents a small workers'
compensation insurance company, formed in 1980. The company
is owned by the policy holders, who are concerned about
rising medical costs. [remaining testimony inaudible].
2:16:28 PM
PAUL LISANKIE, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT, responded to a
query by Representative Gara, explaining that it would be
lump sum payments associated with permanent partial
impairments, not indexed. Representative Gara asked the
last time they were updated. Mr. Lisankie thought it was
2000 & offered to check the precise date. Representative
Gara said he was concerned that injured people are being
compensated.
2:18:16 PM
PUBLIC TESTIMONY CLOSED
Representative Gara asked if workers compensation rates were
updated, does that affect all rates. Ms. Hall emphasized
that benefits in any one time period are aggregated for the
amount that the system costs by a three year look-back,
trending for current and projected costs. There are no
single items, creating a huge cost. Alaska is already
number one in the country for premium costs for employers.
Representative Gara noted that he would speak to the sponsor
regarding his concerns.
Co-Chair Meyer referenced the two zero notes.
Representative Gara pointed out the two CPI rates for
medical services, the one used is the Medical Care CPI
index; the other is the Medical Care Services Component, a
percent higher. Representative Kelly agreed, noting that
the one chosen caused the "least consternation".
2:22:58 PM
Vice Chair Stoltze MOVED to REPORT CS HB 228 (L&C) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 228 (L&C) was reported out of Committee with a "do"
recommendation and with zero notes #1 & #2 by the Department
of Administration and Department of Labor & Workforce
Development.
2:24:20 PM
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