Legislature(1999 - 2000)
03/24/1999 03:30 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 121 - DENTAL CARE INSURANCE
Number 0671
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 121, "An Act relating to patients' rights under a health care
insurance plan or contract providing coverage for dental care, and
prohibiting certain practices by health care insurers relating to
dental care." He indicated the first witness, Ms. Kalamarides, had
wished to testify at the March 19, 1999, hearing but the
teleconference had been mistakenly disconnected through a
miscommunication.
Number 0718
ROSEMARIE KALAMARIDES, Administrator, Alaska Teamster Trust Fund,
testified via teleconference from Anchorage in opposition to HB
121. Ms. Kalamarides noted the trust fund opposes the legislation
but would not be impacted by it. She stated, "This fund represents
more than 100 employers and more than 8,000 covered lives, and we
understand that when ... small employers cannot afford to buy
insurance to cover dental expenses, then the unpaid costs often
shift to employers like those in our plan. I'm not aware of any
dental PPOs [preferred provider organizations] in Alaska. However,
they are negotiating such arrangements in the Lower 48 and it
creates a very strong competitive marketplace. Dentists who choose
to participate in these PPOs are selling their services at lower
prices in exchange for some assurance by employers that they will
get more patient traffic. Those who have not agreed to participate
are seeing their patients go to the preferred group of doctors.
Therefore, I understand why some Alaskan dentists are afraid of
PPOs. According to a Daily News [Anchorage Daily News] article
just last year, dentists in Alaska enjoy the distinction of being
the highest paid professionals in the state. If I were in their
shoes, I wouldn't want to lose that distinction either.
Number 0802
MS. KALAMARIDES continued, "We understand why they are seeking
protection from competition, why they are attempting to regulate
their industry here in Alaska. However, we must oppose it because
ultimately those who can least afford it will pay for the
protection. I heard testimony last week advocating that this
legislation would protect small businesses and I think it was
directed at dentists as being small business people, and that's
certainly true that this would protect them but it would be at the
expense of other small business people. Insurance companies are
not going to pay the extra costs. I think the sponsor bill made a
reference that the insurance companies would be paying this, but
the insurance companies are not going to pay the extra costs for
this. When a small business person goes to the market place to buy
insurance, the insurer for the insurance company sells them
insurance based on the cost experience in that market place. So,
if they were buying an insurance product with a PPO ... their
premium's gonna be less than it would be without a PPO. ... If
this proposed legislation is passed, then providers are not gonna
negotiate into PPOs because there's no assurance then that they
would get the volume. It's a real simple concept. Discounted
rates for volume referral.
Number 0884
MS. KALAMARIDES continued, "By creating regulations which do not
permit employers to negotiate lower health care costs then you
directly impact their ability to compete with other Alaskan
companies who do not provide insurance, or outside companies who
enjoy lower health care costs. What happens then is the Alaskan
company must shift the costs to their employees and in the end the
patient pays for this protection bestowed on them, or, when the
insured patient does not or cannot pay, the provider simply shifts
the costs to plans who are paying. If you pass this legislation,
then small employers who have no choice but to buy insured products
will not have the cost benefit of these preferred arrangements.
Our membership task force, by the way, and these are rank and file
members, looked at this legislation and they quickly recognized
that this was simply a cost shift from the patients' pocket to the
doctors' pocket. Please keep in mind that Alaskans pay more for
medical costs ... than in any other state and the only way we can
keep costs down is by negotiating preferred arrangements. Please
do not regulate this industry and preclude the opportunity for
competition among health care providers. I want to quote Henry
Aaron again, and I've done that in the past at similar hearings,
because Henry Aaron of the Brookings Institute [Henry J. Aaron,
Senior Fellow, Brookings Institution] put it best when he said,
'This legislation is not about consumer choice or consumer
protection. It is, quote, meant to prevent the impairment of
doctor's income.' And in closing, please remember that the support
for this bill has come from doctors. The patients or consumers are
eerily absent and of course the employers oppose it, so thank you
very much for your time, and thanks for the extra time too."
CHAIRMAN ROKEBERG confirmed there were no questions for Ms.
Kalamarides. The chairman confirmed the next witness, Dr. Hipsher,
had not previously testified on HB 121, although Dr. Hipsher noted
he had testified on the previous session's HB 300. The chairman
indicated there are materials in bill packet from Dr. Hipsher.
Number 1020
THOMAS G. HIPSHER, DDS, testified next via teleconference from
Anchorage. He said he is a general dentist in Anchorage. Dr.
Hipsher stated that the Alaska Dental Society and most of the
dentists in Alaska are not anti-PPO or anti-HMO [health maintenance
organization], but rather are pro-patient which is what HB 121 is
about. Dr. Hipsher offered the following statements in response to
issues mentioned at the March 19, 1999, hearing on HB 121, using
his March 24 letter to the committee as the basis for his remarks:
"Dentistry versus medicine: Everyone in the insurance
industry categorizes dentistry the same as medicine when
in fact they are very different. Here are the
differences:
"Medicine is reactive whereas dentistry is preventive.
In medicine there are a high number of specialists, a low
number of generalists, whereas in dentistry just the
opposite. In medicine we see a high number of
catastrophic incidents whereas in dentistry we rarely
ever see catastrophic claims. Does medicine meet the
criteria for insured risk? Absolutely. Does dentistry
meet the criteria for an insured risk? Absolutely not.
The average claim amount for medicine is usually high
whereas ... with dentistry it is usually low, whereas
with medicine [it] is usually quite high. Dentistry has
done an excellent job with prevention and education to
minimize oral disease. Cavity rates in children have
been reduced significantly over the years and more older
people than ever still have their teeth.
"Insurers say they will lose ... patient control if HB
121 passes: Insurers will not lose patient control,
meaning patients will not leave PPOs and HMOs in droves
as a result of the passage of this bill. There is a
financial disincentive for patients to leave their PPOs
and HMOs because when they see a non-participating
provider, they will have to make up the difference
between what the insurance company pays and what the
provider charges. If many people elect to leave their
PPO and HMO, and are willing to pay the difference, then
there's something fundamentally wrong with the PPO or
the HMO. It should be the patients' choice as to whether
or not they want to spend their own money to see another
provider.
"Insurers also say they will not be able to guarantee
participating providers adequate numbers of patients if
this bill passes: The truth of the matter is, is that of
all of the contracts that I have seen inviting me to join
a PPO or HMO, not a single one has mentioned, let alone
guaranteed, any patients as a condition of my signing the
PPO or HMO contract. I'm sure that if you ask any
provider, you will find the same is true with them. The
insurance industry is simply not telling the truth about
this matter.
"Insurers say they will not be able to attract providers
to join their PPOs and HMOs: Dentistry is very
competitive business and many providers spend $2,000 to
$3,000 per month on advertising in an effort to attract
patients. There are those that will join a PPO (indisc.)
HMO for [the] free advertising it provides in exchange
for the reduced fees. In the case of United Concordia in
Alaska, not a single dentist joined their PPO because
their initial fee schedule was far too low for Alaska
standards. What they simply did was raise their fee
schedules and they had a drove of young dentists join.
... The cost of providing dental care in Alaska is
extremely high and, as businessmen, we must make a profit
in order to stay in business, the same as any other
business."
Number 1213
"A couple of other major points I'd like to say. The
insurance industry has convinced employers and
legislatures [legislators] that HB 121 and HB 300 is Any
Willing Provider legislation. I prepared a detailed
explanation comparing those two pieces of legislation.
The comparison is included in your packet of letters. I
ask that you carefully review this comparison to see that
HB 121 is not (indisc.) Any Willing Provider legislation.
"... Patient Testimony: It was alluded to that when HB
300 was introduced last year and a public hearing held,
patients did not show up to testify. It is likely they
won't show up to testify for HB 121 as well. Patients
are intimidated by the process and fear retaliation by
their insurance companies. Just as patients rely on
providers to sort out the mess that occurs with dental
claims, they rely on their providers to carry out
(indisc.) message to the legislature [3/24/99 letter:
"... carry their message to ..."]. Patients don't live
in a political (indisc.) [3/24/99 letter: "... political
world nor do they live in a dental world."]. As such,
they feel uncomfortable when asked to speak up about
problems they are faced with their insurance. Therefore,
who else will stand up for them if not their providers?
"And for Employers, if employers listen: Since dental
care does not meet the criteria as an insured risk, there
are several other alternatives that employers can pursue
that will allow employees complete freedom of choice,
freedom to have the dental care they need without
interference from a third party, and save money at the
same time. If employers will only take the time to
listen, there is a lot to be learned about this matter."
DR. HIPSHER noted that the Teamsters are a great situation for
this. The Teamsters can contact the American Dental Association
(ADA) to learn how to provide a dental benefit plan which provides
dental care at a lower cost than that which can be purchased from
insurance companies.
Number 1320
CHAIRMAN ROKEBERG pointed out that the committee packet includes
letters from Dr. Hipsher dated March 17 and March 24, 1999. The
chairman believes that is what Dr. Hipsher referred to as the
analysis regarding "any willing provider."
REPRESENTATIVE MURKOWSKI noted that she has had conversations with
both sides of this issue and has received conflicting information
regarding whether HB 121 is "any willing provider." Representative
Murkowski understood that if she choose to go to a dentist that is
not on a preferred provider list, she can do so and would pay the
difference. She asked how this would take her dentist out of the
"any willing provider" category.
Number 1409
DR. HIPSHER explained the main distinction between any willing
provider legislation and HB 121 is that any willing provider
legislation would allow any dentist to join a PPO. The dentist
would merely ask to join the PPO and the dentist would be a member.
Normally, providers are invited to join a PPO in order to limit the
number of providers allowed in the PPO. Therefore, those people in
the plan are directed to the PPO providers. Any willing provider
legislation dilutes the small number of doctors and in effect
destroys the PPO. On the other hand, HB 121 allows PPOs to exist.
Dr. Hipsher indicated dentists have no problems with the existence
of PPOs, as long as the patient obtains care matching his or her
needs and to the patient's satisfaction. If a patient seeing a PPO
doctor is dissatisfied with the care, then the patient should be
able to utilize his or her benefit, at least to the same level the
patient would have received under the PPO, to obtain the
appropriate care. Dr. Hipsher believed there is a financial
disincentive for patients to do that. He noted he has patients in
his practice who have left to join PPOs and subsequently returned
because the patients were not receiving the level of care he
provides. Dr. Hipsher further clarified for Representative
Murkowski that the main distinction is any willing provider
legislation allows any doctor to join the PPO which dilutes the
number of patients that the doctors can see. However, in a true
PPO there may be only a few doctors and a wealth of patients. In
that situation, the PPO doctors are seeing many patients in
exchange for reduced fees. Whereas in the other situation it is
the opposite.
MS. KALAMARIDES offered to add to that.
Number 1571
CHAIRMAN ROKEBERG noted Ms. Kalamarides could bring a statement to
his attention and he would provide her an opportunity shortly. The
chairman took exception to Dr. Hipsher's definition of any willing
provider. Commenting he had introduced a bill on any willing
provider legislation in the past, Chairman Rokeberg understood that
any willing provider legislation allows that a patient may choose
anyone they wish and the insurer must pay the same reimbursable
rate no matter the provider. He asked if Dr. Hipsher agreed with
that statement.
DR. HIPSHER agreed with Chairman Rokeberg's statement in part.
REPRESENTATIVE HALCRO asked Dr. Hipsher if he believed that HB 121
would increase the cost of providing coverage by small employers.
DR. HIPSHER answered in the negative.
Number 1639
CHAIRMAN ROKEBERG referred to Dr. Hipsher's March 24 letter, which
refers to fee differentials in paragraph 5 as follows: "Federal
law says that dentists cannot charge uninsured patients at a
different rate than insured patients." Chairman Rokeberg
questioned what federal law that referred to.
DR. HIPSHER said that he did not have the specific federal law. He
explained that dentists cannot, for the purpose of charging
patients, make up a difference because an insurance plan may pay at
a lower rate. Dentists balance bill their normal patients for the
difference. Dr. Hipsher indicated, therefore, that charging
uninsured patients at a different rate than insured patients is
neither ethical or legal. In further response to Chairman
Rokeberg's question that Dr. Hipsher could not charge someone with
less money a lower amount for a procedure, Dr. Hipsher explained
that if he were to enter into an agreement with a PPO and he were
to charge 70 percent of his normal fee, he would not be able to
charge his normal patients the difference. He said that he could
not increase the fees to his normal patients to make up the
difference.
CHAIRMAN ROKEBERG asked, "You can't have a two-tiered fee schedule
because of federal law?" Chairman Rokeberg did not believe that
was correct and asked Dr. Hipsher if he was sure.
DR. HIPSHER indicated he was unsure of the federal law, but
dentists cannot do that from an ethical standpoint.
CHAIRMAN ROKEBERG asked if a dentist joined a PPO and agreed to
charge 75 percent of the customary fee schedule; could a non-PPO
patient be charged 100 percent.
DR. HIPSHER replied he does charge the patient 100 percent, adding,
"As a matter of fact, I should probably charge the PPO 100 percent
and then I have to indicate that as a discount ... on my
accounting, as a 30 percent discount or a 25 percent discount to
the PPO person - and that may or may not have tax implications ...
to that patient because that is actually a forgiveness of debt."
Number 1764
CHAIRMAN ROKEBERG referred to the fee differential portion of Dr.
Hipsher's March 24 letter which reads: "HB 121 is asking that the
same rules of fairness apply to the insurance companies regarding
reimbursement. This means that the patient should be entitled to
the same reimbursement level for a given procedure regardless of
the provider that renders that treatment. Differential
reimbursement to a patient based on their choice of provider is a
monetary penalty imposed on the patient for exercising their choice
of provider." Chairman Rokeberg surmised that was the rationale
for subsection (c)(1) of HB 121, which reads: "(c) A health care
insurer may not (1) directly or indirectly reimburse a covered
person at a different rate because of the person's choice of
dentist;"
DR. HIPSHER said that if a person elects (indisc.--scratching
sound), they are monetarily penalized because normally the PPO
would pay nothing for that procedure or would pay a substantially
reduced rate.
CHAIRMAN ROKEBERG clarified that would be a PPO or point-of-service
option [POS].
DR. HIPSHER agreed.
CHAIRMAN ROKEBERG pointed out that the committee packet includes a
legal opinion from Mr. Ford, Legislative Counsel [Legislative Legal
and Research Services, Legislative Affairs Agency]. Mr. Ford
indicates that HB 121 does not preclude an insurer from offering a
point-of-service option or using a preferred provider type of
coverage, but it destroys any financial incentive to do so.
Chairman Rokeberg noted the effect, then, is that it would prohibit
the establishment of new PPOs or point-of-service option type
plans. Chairman Rokeberg surmised that HB 121 mandates a
constructive fee for service only type menu to small businesses and
individuals in the state of Alaska. He asked if Dr. Hipsher would
disagree.
DR. HIPSHER disagreed with Chairman Rokeberg's statement. He
questioned why a PPO couldn't still exist and why couldn't doctors
still negotiate with insurers.
CHAIRMAN ROKEBERG understood that under a PPO, the dentist would
agree to be reimbursed at a lower rate.
Number 1896
REPRESENTATIVE CON BUNDE, Alaska State Legislature, came forward as
the bill sponsor. He noted he understood that the reduced rate is
for volume of service. In other words, a doctor would join a PPO
and offer a lower rate because that rate could be made up in the
volume of patients. If a patient wants to go to a dentist outside
the PPO, that patient would co-pay the 30 percent beyond the 70
percent benefit to the dentist who is not in the PPO.
CHAIRMAN ROKEBERG noted the alternative in which there is actually
a penalty on the copayment if the patient seeks care outside the
plan. Chairman Rokeberg pointed out that a patient seeking care
outside a PPO plan typically receives a 50 or 60 percent
reimbursement level.
REPRESENTATIVE BUNDE identified that as the financial disincentive
for the patient to have choice.
CHAIRMAN ROKEBERG asked Dr. Hipsher if that would be a correct
description of a PPO doctor.
DR. HIPSHER answered in the affirmative.
CHAIRMAN ROKEBERG inquired as to the percentage differential
between what a patient would pay inside a panel versus the penalty
for seeking services outside the panel.
Number 1973
DR. HIPSHER informed the committee of one of his patients who is a
foster parent with children covered under an Aetna HMO. He noted
he had hoped this patient would testify. When this patient
received services for her children from Dr. Hipsher, Aetna paid
nothing on the claim. Since the children are foster children, the
children are also covered under state Medicaid. Medicaid also
denied the claim because the foster parent failed to take advantage
of all the insurance benefits available. This patient is left
holding the entire bill because she was mandated to take those
children to see a doctor and dentist within 30 days of her taking
over the foster care. Dr. Hipsher said that case was extreme, but
noted that the average is 15 to 20 percent lower than the normal
PPO fees.
CHAIRMAN ROKEBERG said that when using the 70 percent reimbursement
of a procedure, when a patient receives service outside of the plan
there would be a further discount of 20 percent against the 70
percent.
DR. HIPSHER agreed with Chairman Rokeberg's assessment, but noted
that it would vary.
CHAIRMAN ROKEBERG informed Dr. Hipsher that the committee attempted
to contact the patient who was to testify, but that patient did not
get back in touch with the committee.
DR. HIPSHER noted that this patient had indicated that she would
provide written testimony to the committee.
Number 2063
CHAIRMAN ROKEBERG expressed concern with the provisions in HB 121
that prohibit rate differential for reimbursement. According to
Mr. Ford's memorandum, there is no incentive to establish PPOs or
point-of-service type programs in Alaska if HB 121 became law.
Chairman Rokeberg agreed with Mr. Ford. Chairman Rokeberg
indicated he had asked Dr. Logan [President, Alaska Dental Society]
at the March 19 hearing if the Alaska Dental Society would agree to
modify HB 121 to provide for the point-of-service option. If that
modification occurred, Chairman Rokeberg further indicated the need
to establish a floor on the rate differential allowed on
reimbursement. In other words, a patient would be allowed to step
out of a panel under a PPO and that patient would be reimbursed at
perhaps 10 to 15 percent less as a maximum differential.
Therefore, the patient would have the choice, and reimbursement
would be minimized to dentists outside the PPO. Chairman Rokeberg
noted Dr. Logan had not seemed very excited about that option.
DR. HIPSHER said that he would not be particularly excited about
that option either. He did not believe droves of patients would be
leaving HMOs and PPOs because of that situation.
CHAIRMAN ROKEBERG clarified that Alaska does not have any HMOs.
DR. HIPSHER indicated that there could be HMOs in Alaska at some
point.
CHAIRMAN ROKEBERG stated, "Not with the legislation passed in this
legislature."
Number 2161
REPRESENTATIVE BUNDE respectfully disagreed with Mr. Ford's belief
that there is no financial incentive for the PPO. Representative
Bunde pointed to the financial incentive of volume which many say
will allow dentists to operate at a lower cost. If people are
willing to pay a penalty to seek care outside the program,
Representative Bunde interpreted that to be a financial incentive
for people to stay within the program.
CHAIRMAN ROKEBERG pointed out that if there was a point-of-service
option, the patient would be able to make the choice with the
understanding that the patient would have to pay a higher premium
or a higher copayment.
REPRESENTATIVE BUNDE stated that what Chairman Rokeberg described
would exist under HB 121.
CHAIRMAN ROKEBERG suggested that due to the equality of
reimbursement there would not be the formation of any PPO or
point-of-service type programs to lower overall health care costs.
Chairman Rokeberg predicted that the small employers would be
affected by this and ultimately opt out of any dental coverage.
REPRESENTATIVE BUNDE noted that was a point of disagreement.
REPRESENTATIVE MURKOWSKI asked for clarification regarding the
definition of point-of-service options and further asked if they
exist here.
CHAIRMAN ROKEBERG referred the question to Ms. Burke, Director,
Division of Insurance, Department of Commerce and Economic
Development, stating, "Mrs. Burke."
Number 2270
MARCI BURTON, Regional Director for Managed Care and Physician
Integration, Providence Health System, responded via teleconference
from Anchorage. Ms. Burton offered to help answer Representative
Murkowski's question. Ms. Burton stated that Alaska does have
point-of-service options. A point-of-service option is similar to
a PPO. It allows a patient to go outside of a negotiated network
to a provider of the patient's choice. There is a differential in
the coverage that the plan or employer provides. Ms. Burton said,
in her experience, those differentials typically range from 10 to
20 percent, and there can often be an additional copayment. Ms.
Burton informed the committee that Providence Health System offers
its employees a coordinated care plan which would be an example of
a point-of-service plan. She explained that Providence Health
System has a negotiated network of primary care providers which are
typically general medical physicians. As long as the patient sees
or receives referrals from one of those physicians, the patient has
benefit coverage of 80 percent. If the patient chooses to see
another provider without a referral, the patient may do so with
coverage at 60 percent. She pointed out that in the Providence
Health System there are only primary care physicians. Since a
discount rate could not be negotiated with specialty physicians, an
adequately-sized network could not be created, and the plan was
opened up to all the providers. Therefore, it is necessary to have
a network large enough to serve a group in order to be effective.
Number 2355
REPRESENTATIVE MURKOWSKI indicated Ms. Burton's explanation of the
point-of-service option was helpful, but she understands that with
a PPO the patient can also opt to seek services outside the list of
preferred providers, if the patient is willing to make up the
difference.
MS. BURTON agreed, but noted that coverage can vary quite a bit
from plan to plan.
CHAIRMAN ROKEBERG clarified that it depends upon how the plan is
structured. Often, one can be prohibited from seeking service
outside of the PPO, whereas if the point-of-service option is
specifically provided in the plan, that choice is available from
the beginning.
REPRESENTATIVE MURKOWSKI asked if the plan specifies that one
cannot go outside the panel of the PPO, the person obtaining
service outside the plan would pay at 100 percent.
CHAIRMAN ROKEBERG said he believes that is correct, referring the
question to Ms. Burke of the Division of Insurance. He asked if
that distinction between the PPO and the POS is valid.
Number 2398
MARIANNE BURKE, Director, Division of Insurance, Department of
Commerce and Economic Development, came forward. She requested
that Representative Murkowski's question be restated.
CHAIRMAN ROKEBERG clarified Representative Murkowski had asked
about the distinction between a PPO and a POS. If an individual
utilized service outside of a PPO, that individual would receive
zero reimbursement. The chairman asked if that was correct.
MS. BURKE replied she is unaware of any zero reimbursement
arrangements, but is aware of significantly less reimbursement.
She concurred with Ms. Burton's description of the point-of-service
option. Under the traditional system, the indemnity system, for a
$100 dental procedure the plan pays for 80 percent and the patient
pays for 20 percent. The dentist receives $100. Under a preferred
provider arrangement, the patient has the option of using a
preferred provider or using a dentist outside the network. The
preferred provider has agreed to accept less than $100 for the same
procedure in exchange for being on this preferred provider list.
If a patient sees a preferred provider for a $100 procedure, the
dentist will receive $70 from the insurance company and the patient
will pay $20. The dentist receives $90 rather than $100. If the
patient in the preferred provider arrangement goes out of network,
the dentist will receive $100 but the insurance company will only
pay 50 or 60 percent. The patient pays the remainder. Thus, there
is a disincentive to the patient to go out of network. From the
dentists' viewpoint, they receive $100 if they are out-of-network,
but they receive less if they are preferred providers in exchange
for the referrals.
REPRESENTATIVE BUNDE questioned, "(Indisc.) a point-of-service
then. I think you've clarified PPO, but now..." [TESTIMONY
INTERRUPTED BY TAPE CHANGE]
TAPE 99-29, SIDE B
Number 0001
MS. BURKE answered, "...that a PPO, a point-of-service option is
usually associated with an HMO. And, again, since we have no HMOs
in this state. ... Basically you select the provider, the
practitioner that you want, and that person becomes your, if you
will, preferred provider."
CHAIRMAN ROKEBERG feels they should examine a point-of-service
option within any type of PPO plan or any insured plan written in
Alaska that would provide that choice with some statutorily
stipulated differential. The disincentive to the patient would
still exist but the impact to the dentists would be minimized.
MS. BURKE agreed with Mr. Ford's legal advice. There will be no
formation of PPOs without the incentive to the creator of a
preferred provider arrangement - insurer, employer, whomever - of
overall lower cost allowing lower premiums that make the product
more attractive to purchasers.
CHAIRMAN ROKEBERG asked Dr. Hipsher if it is his testimony that he
would not be happy with some type of point-of-service provision in
statute that would have to be mandated for a PPO in Alaska.
Number 0105
DR. HIPSHER strongly disagreed with the assumption being made that
all employers have to purchase dental insurance. There are other
options available to employers. It is necessary to disassociate
dentistry from medicine because they are "two totally different
animals." They are boiling HB 121 down to a matter of cost; if
it's a matter of cost, employers need to examine other avenues to
save money and still provide their employees ["patients"] with
dental care. What is being spoken of definitely applies in
medicine, but does not necessarily apply in dentistry. There are
other alternatives because dentistry does not meet the need of an
insured situation.
CHAIRMAN ROKEBERG questioned what those alternatives would be.
DR. HIPSHER replied one alternative would be going into an ERISA
[Employee Retirement and Income Security Act] plan where the
employers can manage a direct reimbursement plan. He noted they
have a great deal of data to show that employers can save a lot of
money. Some employers in the East are saving as much as 50 percent
over their insured dental plans by going to direct reimbursement
plans.
CHAIRMAN ROKEBERG asked how they saved the money.
Number 0154
DR. HIPSHER said the employers are only paying for the care that is
actually rendered. Currently, probably only one out of every two
people go to a dentist. Out of those people who do go to the
dentist, many are only getting exams and cleanings once a year;
their utilization rate is very low.
CHAIRMAN ROKEBERG confirmed Dr. Hipsher was basically speaking of
a fee-for-service self-insured ERISA-type arrangement, rather than
a premium.
DR. HIPSHER agreed, emphasizing that dentistry does not meet the
need for an insured risk. He indicated yearly dental costs for
employers can be estimated because a number of people are in
routine care situations.
CHAIRMAN ROKEBERG commented the majority of the people in the state
who are non-ERISA do not have that choice, and those are the only
people this legislation affects. He asked if Dr. Hipsher
understood this.
DR. HIPSHER answered in the affirmative.
CHAIRMAN ROKEBERG continued that a very limited amount of
individuals and small employer groups would affected by this
legislation.
Number 0206
DR. HIPSHER said the employers have not opened their eyes because
the insurance people are not telling them the full story. There is
a nationwide movement in dentistry toward direct reimbursement
plans because employers are discovering they can save a lot of
money and still offer their employees ["patients"] excellent care.
CHAIRMAN ROKEBERG commented, then, the local pizza parlor owner
should make a deal with Dr. Hipsher and send all the pizza parlor
employees to him.
DR. HIPSHER disagreed; that is not the situation. The employees
could still go to any dentist they choose, but the pizza parlor
only pays for the treatment rendered, and may only pay a percentage
of that treatment. A multitude of plans can be designed. All he
is saying is that employers need to look at the alternatives.
CHAIRMAN ROKEBERG noted, then, Dr. Hipsher is saying that who needs
an insurer - a middleman - and accompanying premium, when one could
go to direct reimbursement.
DR. HIPSHER stated that is exactly true for dentistry and vision.
CHAIRMAN ROKEBERG commented it might be the way to go, with the
premium schedules he's seen with caps of $1,500.
DR. HIPSHER said it is. He advises a lot of people that they would
save a lot of money if they simply pay their dentistry as they go,
rather than participating in their insurance plan.
Number 0267
CHAIRMAN ROKEBERG closed the public hearing on HB 121, after
confirming no one else wished to testify. He noted some amendments
had been distributed to the committee and designated Representative
Halcro's proposed amendment to page 2, line 14, as amendment 1.
Proposed amendment 1 read:
Page 2, following line 14:
Insert a new subsection to read:
"(e) This section does not apply to a health care
insurer if, as a result of the application of this
section, premiums paid by the insured would
increase by two percent or more above what would be
paid by the insured without including the
provisions of this section in the health care
insurance plan or contract."
Reletter the following subsection accordingly
CHAIRMAN ROKEBERG mentioned Representative Halcro's separate sunset
amendment.
REPRESENTATIVE HALCRO confirmed he was withdrawing that amendment.
[Representative Halcro's withdrawn sunset amendment, labeled
1-LS0454\G.1, Ford, 3/23/99, read:
Page 2, following line 16:
Insert a new bill section to read:
"* Sec. 3. AS 21.42.390 is repealed July 1, 2004."]
CHAIRMAN ROKEBERG stated he was withdrawing his proposed amendment,
indicating it would have deleted subsection (c)(1). [Chairman
Rokeberg's withdrawn amendment read:
Page 2, line 8
Delete lines 8-9
Renumber remaining sections accordingly]
CHAIRMAN ROKEBERG's preference is to see a point-of-service option
with a fee minimum: for example, no less than 10 or 20 percent
differential. This would still provide incentive for the creation
of PPOs, but ensure that dental professionals are at least
partially reimbursed for their procedures and minimize the effect
on their patients. The chairman noted another approach is to keep
in mind the committee's goal is to make dental insurance plans
available to non-ERISA small businesses and individuals. He
indicated proposed amendment 1, from Representative Halcro, was the
other way to do it.
Number 0368
REPRESENTATIVE HALCRO moved amendment 1.
REPRESENTATIVE MURKOWSKI objected for purposes of discussion.
REPRESENTATIVE HALCRO stated the bill is supposed to be
cost-neutral; it is not supposed to cost employers any additional
money. Both the sponsor and Dr. Hipsher have said this is true.
Representative Halcro noted that is the concern. According to the
Department of Labor, 86 percent of the businesses in Alaska employ
fewer than 20 people. Representative Halcro indicated he believes
these employers' ability to afford quality health care needs to be
protected. He completely supports the intent and concept of HB
121; he has spoken at length with four or five dentists in his
district about this legislation. Representative Halcro noted he
becomes very nervous when government "starts dabbling" in health
care. Since the legislation is not supposed to increase costs to
employers, he suggested this be included in the statute, mentioning
there are current provisions in state and federal statute regarding
mental health coverage allowing employers to opt out if the
employers can prove a 1 percent increase in the total cost of
providing the service. Representative Halcro's amendment gives 2
percent. He stated, "I think that's fair - I think the intent,
obviously, is to make sure that health care is available to all
workers in the state of Alaska but it's something the employer has
to afford and I don't think that government should be dictating the
terms and conditions without giving some kind of provision to
protect small business." With that, Representative Halcro moved
amendment 1.
CHAIRMAN ROKEBERG confirmed Ms. Burke had seen amendment 1. He
asked how this would work as a practical matter in relation to the
Division of Insurance.
Number 0489
MS. BURKE replied the individual employer would have to provide
documentation of increasing costs; this would be through the
employer's premiums. On the insurer's side, the insurer would have
to provide documentation that the costs are increasing for the
individual plan offered in the state. Ms. Burke explained the
problem with the documentation is that it is not possible to
isolate the number of factors which could cause costs to increase
- to show costs increased just as a function of not being able to
have a preferred provider. She mentioned increased utilization or
a spike in unusual care as other possible cost increase factors.
Ms. Burke said, "Whenever we try to quantify that, we can't isolate
a single occurrence and say, 'X number of dollars is a result of
this.'"
CHAIRMAN ROKEBERG questioned, then, if this was doable and if the
department would incur costs.
MS. BURKE answered that the Division of Insurance would incur
additional effort and cost to oversee this because it would require
the division to invest additional staff time to verify the data
submitted.
Number 0569
REPRESENTATIVE BUNDE admitted his view of insurance companies is
perhaps highly skewed by authors like Mr. Grisham [John Grisham].
He expressed the belief that it would not be difficult to show a 2
percent increase.
REPRESENTATIVE HALCRO referred to discussion at the March 19
hearing that the legislation was preventative in nature, and there
was no current problem. He questioned Ms. Burke regarding the
fiscal note, noting that if there currently isn't a problem, how
would the Division of Insurance know what the fiscal would be and
how much work it would entail?
MS. BURKE responded she could not quantify for it at this time, but
amendment 1 would mandate that additional data be checked and
verified to see if there had been an increase as a result of the
legislation. As statutes currently exist, the division verifies
data sent in to support an increase in premium in the aggregate.
At this time, insurance companies do not separate that increase
into the various components such as increased utilization, change
in statutes, change in mandates, et cetera. Ms. Burke commented
she would share Representative Bunde's skepticism about the
industry she regulates, noting they are creative. The companies
would not hesitate to come in with a 2 percent increase that they
would have to verify to the division. If the companies said the
increase was a result of this legislation, they would have to prove
that to the division. There is where the additional work on the
division's part would enter.
Number 0739
CHAIRMAN ROKEBERG commented on the absence of Gordon Evans,
lobbyist for Health Insurance Association of America (HIAA). He
asked Ms. Burke, "But perhaps you would know [what] the annual
adjustments in health insurance premiums are on an annualized
basis, (indisc.) increases?"
MS. BURKE replied there is a 16 percent increase in utilization
between 1997 and 1998 for individual policies in the state of
Alaska. She noted that is actual utilization: going to physicians
and incurring fees. For small groups, 2 to 50 as defined in Alaska
Statute, there was an approximately 22 percent utilization
increase. This translates into a 17 percent increase in individual
rates; the 1 percent is tied to the premium tax as well as the
increased overhead with more clients. A portion of that 1 percent
covers the increase in claims. Ms. Burke commented the large
groups are individually negotiated with employers and can vary
dramatically depending on the plan's coverage.
CHAIRMAN ROKEBERG asked about the trend in annual premium increases
over the last 5 or 10 years or so.
Number 0835
MS. BURKE said the trend has been up, stating, "And if you trended
it, using an actuarial term, over time, we have about a 15 to 20
percent increase ... per annum."
CHAIRMAN ROKEBERG noted, then, this would generate some type of
fiscal note. He questioned if it would be an indeterminate fiscal
note.
MS. BURKE replied the division could come up with an estimate but
she could not give a number now.
CHAIRMAN ROKEBERG indicated the 2 percent cost increase figure in
amendment 1 did not seem a valid figure to use given the
circumstances of a 15 percent annual increase in premium.
REPRESENTATIVE HALCRO noted the common thread of the testimony is
that dentistry is not over-utilized, that people only go to the
dentist when they absolutely have to. He asked Ms. Burke if it is
correct, however, that adjustments in the premiums are not broken
down into dental health, it is simply total costs.
Number 0912
MS. BURKE answered that the policy is priced as a total. There are
breakdowns by policies that do not include dental options. Ms.
Burke agreed the observation that dentistry is not over-utilized is
valid, based on the division's experience. Preventative dentistry
is "pretty flat-lined." However, even in dentistry there are
unanticipated and extraordinary costs like periodontal diseases or
crowns. These costs can cause quite an increase in the cost of
dentistry for a particular employer.
CHAIRMAN ROKEBERG expressed his concern about the percentage,
asking Representative Halcro if he wished to speak to his
amendment.
REPRESENTATIVE HALCRO indicated the intent is to protect small
businesses who provide health care for their employees, with the
assertion in the statute that this legislation would not raise the
cost of coverage for employers. He agreed a fiscal note would be
difficult to determine. Representative Halcro expressed his
concern that the situation which would be remedied by the amendment
could occur.
Number 1020
MS. BURKE explained one way this could be quantified. A PPO
arrangement provides the service for 10 percent or 20 percent less
than the market value. If an employer was unable to have this type
of arrangement and the state went to a pure indemnity system, that
would increase the cost in this range.
CHAIRMAN ROKEBERG commented, "Or if the panel -- if the fee
differential reimbursement was not -- was leveled by this bill,
then they may (indisc.) premium, and that's where the percentage
would come about, right?"
MS. BURKE answered that is correct.
CHAIRMAN ROKEBERG continued, "And then you could make a
calculation, or you would discount any overall inflation before you
had the differential."
REPRESENTATIVE BUNDE questioned whether the substitution of
Representative Halcro's withdrawn amendment [sunset clause] would
alleviate his concerns about unintended consequences.
Number 1102
REPRESENTATIVE HALCRO pointed out that the 2 percent increase only
applies to the effect of this legislation, not to overall premiums.
He asked Ms. Burke to confirm again that there is, however, no way
to discern this.
MS. BURKE replied that because there are a number of variables
acting at the same time, they could make educated guesses, but she
would not be able to definitely say it was an increase of X number
of dollars, or percentage, as a result of this.
REPRESENTATIVE HALCRO withdrew amendment 1, noting he did not want
to incur a fiscal note. He did think it was very important to
bring up the concern that whenever government becomes involved in
mandating health care rules or coverages, the cost is usually borne
by the employer. Representative Halcro indicated the legislature
should protect the interests of small employers since they are such
a significant percentage of Alaskan businesses. He mentioned his
previous discussion with Representative Bunde about the sunset
clause; Representative Halcro asked the chairman for permission to
reintroduce that withdrawn amendment as a last line of defense.
Number 1207
CHAIRMAN ROKEBERG ruled Representative Halcro out of order. The
chairman moved a conceptual amendment on page 2, line 9, after
"dentists". The conceptual amendment would read something to the
effect: "except for point-of-service options which may reimburse
dentists at a discount not to exceed 10 percent". Chairman
Rokeberg commented, "I don't think the words are artful but I think
they have the elements with which the drafter can work, which would
allow a point-of-service option within a PPO with any type of an
insured plan offered, and the intention of the reimbursement is
(indisc.) 10 percent is the differential that can be discounted if
you go outside the panel." He questioned if the committee
understood the amendment.
REPRESENTATIVE BRICE and REPRESENTATIVE MURKOWSKI both answered in
the negative.
MS. BURKE questioned, "Would that 10 percent apply to the co-pay,
to the amount the dentist (indisc.)..."
CHAIRMAN ROKEBERG interjected, "Yes, the co-pay, or the direct or
indirect reimbursement, it's probably what it should -- because the
term 'direct or indirect reimbursement' I take to mean either
direct reimbursement or a copayment. So that's a good point, ...
it'd be the direct or indirect reimburse to the covered person.
That's what it should read then, 'to the covered person,' it'd be
discounted -- what I'm trying to do is get a differential not to
exceed 10 percent. It's a very small differential but it's enough
to maybe save some of those organizations and keep them going."
REPRESENTATIVE MURKOWSKI requested the chairman read the conceptual
amendment again.
Number 1317
CHAIRMAN ROKEBERG said, "It's 'except for point-of-service options
which may directly or indirectly reimburse the covered person at a
rate differential of not to exceed 10 percent'. It's conceptual in
nature and we'll leave it to the drafter to get that. In other
words, you could -- Representative Bunde."
REPRESENTATIVE BUNDE said, "If I might use my [previous] analogy,
just to make sure that ... I understand where you're going, someone
within the program has a procedure that costs $100, they get
reimbursed at $80. They choose to go outside the program, the
dentist gets reimbursed at $70 ... in round numbers..."
CHAIRMAN ROKEBERG interjected, "(Indisc.) $72."
REPRESENTATIVE BUNDE continued, "Plus the patient would still be
responsible for the additional copayment to..."
CHAIRMAN ROKEBERG agreed.
REPRESENTATIVE BUNDE said, "Make that the outside dentist
(indisc.--talked over) $100 (indisc.) procedure."
CHAIRMAN ROKEBERG spoke over, "There'd be a slight -- ... the
penalty would be less when you stepped outside the network
(indisc.)..."
REPRESENTATIVE BRICE added, "Up to 10 percent."
CHAIRMAN ROKEBERG replied, "Right, outside -- or, you know, you
could make it 15 or 20, but now it seems typically it's about 20.
If it's 80, they step out 60, that'd be a 20 percent (indisc.)
actually 25 percent (indisc.).
REPRESENTATIVE BRICE asked if the chairman wished to limit it to 10
percent.
CHAIRMAN ROKEBERG answered, "It might make the sponsor happier,
but, I mean that's kind of an arguable thing - what's the magic
number? I'd like it a little higher."
Number 1397
REPRESENTATIVE BUNDE commented, "Insurance companies would say zero
(indisc.) they would say there would be zero reimbursement, and
dentists should say there'd be a 100 percent, ... I guess 90
percent's a compromise."
CHAIRMAN ROKEBERG added, "And it's against whatever they're paying,
if they're paying 80 percent, then it's, right, 10 percent less
than what the 80 percent is." He questioned if the committee
understood the intent of the conceptual amendment.
REPRESENTATIVE BUNDE stated it is something he can live with.
CHAIRMAN ROKEBERG said, "I appreciate that because I think it's
important to avoid the appearance even that we're going (indisc.)
creating legislation that creates a disincentive that ultimately
may cost people coverage, and we don't want do that, and may be
we'll toy with the percentage later on down the stream here as the
bill moves its way through the process. But I think it is a
compromise that, hopefully, will not be too objectionable to people
with the bill." The chairman asked if there were any objections to
the conceptual amendment. There being none, the conceptual
amendment was adopted. The chairman indicated that concluded the
discussion on HB 121.
Number 1497
REPRESENTATIVE HALCRO made a motion to move HB 121 out of
committee, as amended, with the attached zero fiscal note and
individual recommendations.
CHAIRMAN ROKEBERG asked if there were any objections. He indicated
there were two fiscal notes, one from the Division of Insurance and
one from the Department of Administration.
There were two objections from the committee. One was from
Representative Brice and the other was not discernable.
A roll call vote was taken. Representatives Rokeberg and Murkowski
voted in favor of moving the bill. Representatives Halcro,
Sanders, Harris, Brice and Cissna voted against it. Therefore,
CSHB 121(L&C) failed to move from the House Labor and Commerce
Standing Committee by a vote of 2-5.
| Document Name | Date/Time | Subjects |
|---|