Legislature(1999 - 2000)
05/10/1999 03:22 PM House 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
HB 211-MANAGED HEALTH CARE INSURANCE CHAIRMAN ROKEBERG announced that the last order of business before the committee is HB 211, "An Act relating to liability for providing managed care services, to regulation of managed care insurance plans, and to patient rights and prohibited practices under health insurance; and providing for an effective date." CHAIRMAN ROKEBERG informed the committee that, as the sponsor of HB 211, he would forego any comments and take testimony from those present. He announced that HB 211 would be carried over as an interim project. Number 2337 DR. JIM JORDAN, Executive Director, Alaska State Medical Association (ASMA), noted that the committee has been provided with testimony as well as much background material. Therefore, he said that he would not present testimony, but would be available for questions. DR. JEROME LIST, DDS, MD, Alaska State Medical Association, echoed Dr. Jordan's comments regarding the information the committee should have. He also noted that he could provide the committee with a written copy of his oral testimony given today. Dr. List began saying, the practice of medicine takes place in the context of a complex series of relationships between patients and treating physicians. The doctor's sole responsibility is the obligation towards the patient. Therefore, any inappropriate intrusion into that relationship would adversely impact the outcome of what doctors are trying to accomplish which is to treat patients. Dr. List pointed out that insurance companies have been involved in selling managed care policies which have increasingly encroached on the aforementioned relationship. This situation has flourished in the Lower 48. He indicated that one of the ideas behind HB 211 is to learn from some of the errors and problems that have been experienced with managed care in the Lower 48 in order to prevent such from happening in the State of Alaska. DR. LIST commented that the patient and the physician have a diminishing ability to bargain with insurance companies. Furthermore, health insurance market shares are being concentrated over a decreasing number of insurance companies. Alaska has had, perhaps, three major insurance companies. He predicted that there will be more mergers like those with the oil companies. He said, "I think that what that boils down to is that small practices, physician practices, solo practitioners don't stand a chance in an adversarial situation with these monster companies." This legislation, HB 211, would help introduce some provisions allowing physicians to play on a more level playing field. DR. LIST recognized that most health care insurance coverage comes from the workplace. Most patients, unless they own their own company, do not have much choice in their health care coverage. Still, the employers with such authority face a gross imbalance in bargaining with health insurers. TAPE 99-57, SIDE B Number 0005 DR. LIST emphasized the hope that HB 211 will help resolve some of those issues. He pointed out that typically, physicians practices in Alaska are solo or small group practices which may be accentuated by Alaska's rural nature. "A sole practicing physician is not an equal contracting party compared to a large insurance company." He specified, "The key to HB 211 is the underlying concept that physicians are the appropriate ones to determine the most appropriate care for a specific patient." This concept can be found in the definition of "medical necessity" on page 10, lines 15-23 of the bill. Medical necessity has been inappropriately intertwined with what is covered by a certain health insurance policy. Dr. List felt it important to separate that out. Furthermore, the physician should be the sole individual making the determination of what is medically necessary. Medical insurers should review claims in order to determine if the health care provided is medically necessary. He stressed that "we" are not adverse to such review by insurance companies. Physicians feel that the definitional standard needs to be established. The definition in HB 211 has been developed by the American Medical Association (AMA). Number 0095 DR. LIST informed the committee that it has been provided with the "white paper" which was presented to Congress earlier this year by the Health Insurance Association of America (HIAA). In this paper, the HIAA states that approximately 97 percent of the cases reviewed for proper utilization found the course of treatment recommended by physicians to be well within HIAA's recommended guidelines. Perhaps, 3 percent of the cases were determined to be inappropriate in eight different categories. The HIAA further stated that if the current standard, which is comparable to HB 211's definition of medical necessity, is adopted "the result would '...Raise health care costs, reduce quality, and lead to increases in health care fraud'." Dr. List was aware of the arguments against this however, the definition of medical necessity should be in the physician's hands rather than an insurance company's hands. Number 0157 DR. LIST pointed out that the language in Section 2 of HB 211 is patterned after language in Texas which has been adopted in Missouri and Georgia. This language "is intended to eliminate the 'hiding place' behind ERISA [Employee Retirement and Income Security Act] preemption." He informed the committee that the Texas law has been challenged, but has been upheld thus far in federal district court. Dr. List predicted that there would be testimony opposed to the accountability section of HB 211 based mainly on the argument of increased costs. With respect to that argument, he urged the committee to review the cost analysis provided by the ASMA's written testimony. In conclusion, Dr. List requested that the committee favorably consider HB 211 in order to provide better health care. Number 0236 MARCI BURTON, Regional Director, Managed Health & Physician Integration, Providence Health System, testified via teleconference from Anchorage. Ms. Burton informed the committee that the Providence Health System did not have an official position on this at this time. However, there are some recommendations and questions regarding intent. In response to Chairman Rokeberg, she said that she would provide written comments. MS. BURTON commented that HB 211 includes many beneficial sections to providers as well as to the relationship between the provider and the patient. Ms. Burton directed the committee to page 3, line 22 and requested that there be clarification regarding whether the language references calendar days versus business days. She suggested 10 business days in order to promote the ability to comply with this. She turned to page 4, line 19 which promotes effective communication between the physician and the patient. However, the definition of "advocate" could be open to interpretation. She requested clarification of the intent on page 4, line 31 because she has not seen a contract requiring a physician to match a lowest rate. Ms. Burton moved to page 5, line 9 and inquired, "Are you requesting that a model contract that's being used be given to the director or should every contract that's negotiated be given to the director?" On page 5, line 19 which provides that the covered services be reasonably available in the community where the covered person resides. She indicated it could be difficult to implement this because what is the definition of "reasonably available." Furthermore, how will rural areas be addressed? She commented that page 5, line 12 is great for providers, but will probably be an issue for insurance companies. Although the language on page 6, line 30 is great for a point of service plan, how will that be implemented? MS. BURTON referred to page 7, line 17 and commented that typically transitioning a covered person to another provider is a 90 calendar day period rather than six months which is what she has seen in contracts. She noted that her comments do not speak to if this is good or bad. With regard to page 8, line 16, she noted that nationally, it is becoming more popular for insurance companies to attempt to be a friendlier entity. She believed that AETNA and Blue Cross, in other markets, have an external appeal process for patients. She has heard that it is working well for both the patient and the insurance company. Perhaps, the committee should obtain information regarding if those truly work and are successful. She noted that the language on page 11, line 8 is similar to some of the "any willing provider" legislation. Although she acknowledged the importance of choice, Ms. Burton pointed out that this potentially limits the choice of the employer. The employer needs to be able to have the right of choice in order to control health care expenditures. Therefore, she requested that this section be tied to Section 21.07.030 of HB 211. She also recommended that page 11, line 13 be tied to page 2, line 7 in order to prevent misuse. She surmised the intent to be peer review which is good. MS. BURTON commented, in conclusion, that HB 211 does overall include things that protect providers to which she was appreciative. She reiterated that she would provide the committee with her comments in writing. CHAIRMAN ROKEBERG noted that Mr. Barry Christensen, Alaska Pharmacy Association, would provide the committee with written testimony. Number 0567 MARY VEALE, Physical Therapist, Alaska Chapter, American Physical Therapy Association, stated support for HB 211 which really protects patients overall. She was pleased that the issues of accountability, access to health care professionals, open communication between patients and health care professionals, peer review, and point of service were covered in the legislation. Ms. Veale noted that she would fax the committee her written statement. She also offered to provide help over the summer with this issue. CHAIRMAN ROKEBERG expressed his appreciation in working with Gordan Evans, lobbyist for HIAA. He reiterated that this is an interim project and would like to have any input from Mr. Evans, Reed Stoops (Lobbyist, AETNA Life & Casualty), and Jerry Reinwand (Lobbyist, Alaska Timber Insurance Exchange and Blue Cross of Washington & Alaska). He informed the committee that it is his intention to make health insurance available to the most people at the most affordable rate. However, there are other concerns regarding how the health insurance industry is designed in Alaska. He acknowledged the concerns of the medical professions, although he did not share those concerns, regarding the entry of managed care type organizations in Alaska. Chairman Rokeberg said that he wanted to foster an attitude and legal structure which would be inviting to such types of organizations which he believed could lower the cost and provide more service. Still, the patient's rights are of most paramount. He noted that there are several bills at the national level addressing some of these issues. Chairman Rokeberg believed that the prerogatives of the state in regulating insurance should be maintained. He indicated that the legislature can design things that work best for Alaska which is one of his intentions with HB 211.
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