Legislature(2013 - 2014)BARNES 124
03/07/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB247 | |
| HB316 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 247 | TELECONFERENCED | |
| *+ | HB 316 | TELECONFERENCED | |
HB 316-WORKERS' COMPENSATION MEDICAL FEES
4:47:00 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 316, "An Act relating to workers' compensation
fees for medical treatment and services; relating to workers'
compensation regulations; and providing for an effective date."
4:47:04 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, stated that for the past decade, Alaska has faced
the highest workers compensation rates in the nation. The
Alaska Workers' Compensation Board, the legislature, and the
administration agree that effective reform is needed. She said
this bill proposes to change the fee schedule for workers'
compensation claims to a schedule based on the federal Centers
for Medicare and Medicaid Services fees with a conversion factor
set by the Alaska Workers' Compensation Advisory Board (AWCAB).
She reviewed the section-by-section analysis of the bill.
4:47:48 PM
MS. LATHAM stated that Section 1 would amend the physician,
outpatient and ambulatory surgical center, and inpatient
hospital fee schedules to be based on the federal Centers for
Medicare and Medicaid Services fees. Section 2 refers to the
fee schedule that is currently in statute. This section would
go back into effect on January 1, 2019. She related that there
is a sunset provision for this new schedule.
4:48:04 PM
MS. LATHAM stated that Section 3 would require the Workers'
Compensation Advisory Board (WCAB) to annually review and adjust
fees set under Section 1. It also requires the WCAB to set a
conversion factor for the fee schedules in Section 1. It
provides for maximum reimbursement for fees rendered in another
state. It requires the board to set the rate for air ambulance
service and to set the markup and reimbursement limits for
durable medical equipment. It requires the board to set the
markup, dispensing fee, and reimbursement limits for
prescription drugs. It also requires a prescription drug
dispensed by a physician to include in an invoice the code from
the National Drug Code Directory published by the U.S. Food and
Drug Administration (FDA). Section 4 lists reference materials
the department may incorporate, including future amended
versions, into regulations. Sections 5-8 are part of the sunset
clause, which she'll explain in a few minutes.
4:49:10 PM
MS. LATHAM stated that the fee schedule currently in use is not
working. In 2004, the state established a usual, customary, and
reasonable fee schedule that was set at the 90th percentile and
reflective of the geographic area in which services were
rendered. The UCR schedule has been in effect since 2004 and
since then the state has had the highest workers' compensation
rates in the nation. Medical costs constitute $.76 of every
dollar spent on workers' compensation in Alaska, which has had a
serious impact on premium rates paid by all Alaskan employers.
Medicare costs have risen 25 percent over the past year despite
a 14 percent decline in the frequency of workers' compensation
claims over the same period. Alaska's premiums are priced at
160 percent above the national median. High premiums are a
drain on resources in both the public and private sectors.
Clearly the fee schedule Alaska is using is not effective in
reducing costs. Upward pressure is constantly applied to the
UCR schedule and once a fee schedule is published; charges tend
to rise to and above the level of payment, which guarantees an
annual increase in the UCR charges.
MS. LATHAM asked why the state should switch to a resource-based
relative value scale. This methodology was created in the late
80s by a team of researchers from Harvard, which included
statisticians, physicians, and economists. They determined that
each procedure was equated to a relative value unit that
included a combination of physician's work, practice expenses,
and malpractice insurance. This system is owned and updated by
the American Medical Association (AMA). The AMA assigns a
relative value unit to each current procedural technology (CPT)
code. Other states using this system commonly apply a
geographical adjustment factor. The value is multiplied by a
fixed conversion factor, which is a dollar amount that converts
a relative value unit into a payment amount for service. This
is the basis for Medicare and Medicaid's payment schedule and 32
states have adopted this methodology.
4:51:12 PM
MS. LATHAM stated that HB 316 specifies that there are three fee
schedules that will be used for workers' compensation billing.
The physician fee schedule, an outpatient and ambulatory
surgical fee schedule, and an in-patient hospital fee schedule.
The WCAB would then be responsible for setting conversion
factors for all of the three fee schedules and annually renewing
and adjusting fees. They would also set the fees for air
ambulance or Medevac. They would set the markup for durable
medical equipment, the dispensing fee and markup rates for
reimbursement of prescription drugs. She highlighted the safety
net in HB 316, in the form of the sunset provision. This bill
will give the WCAB four years to set the new rates and measure
the success of those reforms. The new resource-based relative
value scale and the conversion factors would go into effect
January 1, 2015 and sunset January 1, 2019. Section 2, which
includes all of the old language using the UCR schedule go back
into effect January 1, if the legislature did not take any
action. She stated that HB 316 is the first step in developing
a solution to the escalating medical costs that Alaska faces
with its workers' compensation system. The concepts introduced
in HB 316 were unanimously approved by the WCAB this last
September.
4:52:43 PM
MS. LATHAM outlined some concern about the WCAB setting the
conversion factors, in particular, due to their expertise in
setting fee schedules. Another board, the Medical Services
Review Committee (MSRC), is defined under AS 23.30.095. Its
mission is to assist and advise the Department of Labor &
Workforce Development (DLWD) and the WCAB in matters involving
appropriateness, necessity, and cost of medical and related
services. However, the current a nine member MCRC has not met
since 2009. She related that four members have medical
expertise and the committee will develop a proposed committee
substitute requesting the MSRC to advise the WCAB when setting
conversion factors. She anticipated that the proposed committee
substitute would be before the committee soon.
4:53:35 PM
CHAIR OLSON remarked that several months ago the committee
started contacting all the stakeholders to solicit advice. The
committee has begun to receive information back that is being
incorporated into the CS.
4:54:24 PM
JOHN BITNEY, Lobbyist, stated that he represents the Alaska
Surgery Center. He indicated that the concern the Alaska
Surgery Center expressed was having the board be a rate-setting
entity. He believed that some provisions in the proposed
committee substitute will address this. He indicated he has
provided written comments, but reiterated that he thinks the
proposed committee substitute will address this; however, he
will review the committee substitute once it is finalized.
4:55:17 PM
DAVIS PETERSON, Orthopedic Surgeon; President, Alaska State
Orthopaedics Society, stated he has previously submitted a
written statement that includes details. He said that his
society would prefer an RVRVS type for billing purposes for the
administrative simplicity and since the RVRVS system is
maintained for updated codes and modifications of codes as
technology develops, which is readily maintained. In the past
problems have existed with private coding services that were not
maintained appropriately and were quickly outdated. He
emphasized that his organization would prefer a conversion
factor system, and like some of the other stakeholders,
including the Alaska State Medical Association, would prefer
that rate setting and conversion factor adjustment be completed
by a separate entity, preferably made up of commission level
individuals. Additionally, his group would prefer uniformity be
developed among employers and stakeholders, in terms of forms,
paperwork, and submissions, so physicians will not need to deal
with multiple entities that make administrative changes more
complicated. He said that, currently, his society is being
faced with the ICD 10 changes that require software adaption and
billing for Medicare purposes that will entail additional cost
to officers, including hiring additional employees for coding.
As much as possible, he hoped for consistency in order to save
time, training, and money in the long run, which will help with
efficiencies.
4:58:22 PM
SALLIE STUVEK, Human Resources Director, Fairbanks North Star
Borough (FNSB), stated that she oversees the Division of Risk
Management, which handles the workers' compensation benefit
program for the FNSB and the FNSB School District, which are
self-insured plans. The FNSB continues to see increases in
medical cost and believes that the changes proposed in HB 316
are a step in the right direction, and the FNSB is in full
support of those changes. She stated that the FNSB
administration and the assembly support the proponents of the
WCAB's adopted resolution in September 2013. She referred to a
letter of support and FNSB Resolution [Number 2014-09] in
support of the changes outlined [in Resolution 13-01 of the
Alaska Workers' Compensation Board].
4:59:29 PM
DAVE JONES, Assistant Superintendent, Kenai Peninsula Borough
School District (KPBSD), stated that he previously testified
before this committee with respect to the large medical cost
increases the KPBSD's workers' compensation plan has
experienced. He said he will not repeat the testimony. He
stated that the fee schedules within HB 316 represent a good
start toward addressing the state's medical cost concerns. He
would like to see treatment guidelines developed to regulate
usage, too. He urged members to move HB 316, which will help
control the workers' compensation costs.
5:00:38 PM
JULIE CISCO, Risk Manager, Kenai Peninsula Borough School
District (KPBSD), said she seconded everything Mr. Jones said.
Any steps that the state can make to get workers' compensation
costs under control will be greatly appreciated. She said the
KPBSD will continue to support HB 316.
5:01:10 PM
DAVE KESTER stated he is representing himself. He said he is a
commercial insurance broker and prior to that worked as a
workers' compensation underwriter for an insurance company. He
also said he has served for ten years as a member of the
Workers' Compensation Board, having just been reappointed to his
fourth term. He clarified that he is not representing the
Workers' Compensation Board. He participated in the working
group this summer that heard from a large array of stakeholders
in Fairbanks, Juneau, Kenai, and Anchorage, including large and
small employers, members of labor, medical providers, adjusters,
attorneys and others. Many public members expressed their
concern about the rising medical costs in workers' compensation.
As a result, the board adopted Resolution 13-01 to support
addressing system costs under the Alaska Workers' Compensation
Act. He offered his belief that HB 316 is taking a lot of those
into account and offered his support for the bill. He indicated
that the current system cannot sustain these types of escalating
medical costs and a different medical fee methodology as
presented in HB 316 will have a big impact. He cautioned that
without it he feared employers would be subject to additional
increases, which will make them uncompetitive and the state
uncompetitive. The legislative intent for the Alaska Workers'
Compensation Act was to ensure the quick, efficient, fair, and
predictable delivery of indemnity and medical benefits to
injured workers at a reasonable cost to employers. He said that
reasonable cost is far exceeded for employers. He asked members
to carefully consider the sunset clause. He suggested that
fixing the problem and then returning to a methodology that got
us into this problem in the first place seems counterproductive.
He also advocated implementing evidence-based treatment
guidelines and encouraged the committee to consider implementing
the guidelines into the bill. Additionally, the suggested that
having the MSRC give input to help the board is a very good
idea. He admitted that the board doesn't consist of medical
experts. The WCB had considered seeking that kind of expertise
when it adopted the resolution. He appreciated the committee's
time and efforts to try to fix the system.
5:05:12 PM
CHUCK BRADY, President, Workers' Compensation Committee of
Alaska (WCCA);, Manager, Workers' Compensation, Arctic Slope
Regional Corporation, stated that he is primarily responsible
for workers' compensation in the Lower 48; however, he is very
much involved with Alaska, too. He referred to a letter
submitted today on behalf of the WCCA voicing support of HB 316
with suggestions. The suggestions are consistent with what he
previously heard, including that input by the MSRC is probably a
good idea since they have medical expertise. Another suggestion
is that the fee schedule alone will not get the state where it
needs to be. In his experience in the claims field, every state
that has introduced fee schedules as a means of controlling
costs has experienced a limited effect over a short period of
time until medical providers find a way to bill around it. He
said that medical fee schedules alone are not effective but they
can be if they are introduced with utilization and frequency
standards to control treatment. Additionally, there needs to be
changes to AS 23.30.090 (a) to deal with the effects of the 1999
U.S. Supreme Court decision for Hebden v. WCAB [Bethenergy
Mines, Inc..), 632 A.2d 1302 (Pa.Commonwealth 1993)] which
essentially gave treating doctors a blank check for two years
with no real recourse by employers or insurance carriers to
question what was being done or to limit the cost within the
first two years. Finally, the sunset clause is of concern since
the state could be right back where it started in four years.
He offered support HB 316 with the additional comments.
5:07:40 PM
CHAIR OLSON answered that some components will come out shortly.
He indicated that next year, the committee could take up best
practices for pain management and other components that will
interface with this bill.
5:08:03 PM
RACHEL PETRO, President; Chief Executive Officer, Alaska State
Chamber of Commerce (Alaska Chamber), stated that the Alaska
Chamber represents hundreds of businesses across Alaska as well
as local chambers. She stated that the Alaska Chamber submitted
a letter that articulated all of their concerns. She emphasized
workers' compensation reform is a top priority for the Alaska
Chamber and all of the members. It's a competitiveness issue.
She appreciated the committee introducing the bill. She stated
that the Alaska Chamber's letter made recommendations to improve
the bill. More specifically, it would like to see more policy
direction given to the board in respect to giving them the
responsibility of setting the fee schedules. Additionally, the
Alaska Chamber would like to see a more robust and defined
public process for the promulgation of regulations through the
board. She agreed with earlier comments regarding adoption of
evidence based treatment guidelines and utilization review
standards. Finally, the Alaska Chamber considers the MSRC as a
great option to help provide advice to the Workers' Compensation
Board. She said the Alaska Chamber looks forward to working
with the committee to achieve real reform on workers'
compensation in Alaska.
5:09:55 PM
SARAH LEFEBVRE, Staff, Exclusive Paving and University Redimix;
Member; Alaska Workers' Compensation Board, agreed with Mr.
Kester, especially with respect to the sunset clause. She
doesn't believe that type of mechanism works well and said
further changes are needed. She said this is an excellent bill
and an excellent start. She discouraged any changes that could
possibly impede its progress, and her only concern was the
sunset clause.
CHAIR OLSON said the committee will consider the sunset clause.
5:11:30 PM
KAREN PURDUE, Chief Executive Officer; President; Alaska State
Hospital and Nursing Home Association (ASHNHA), stated that
hospitals and nursing homes are large private sector employers
so they bear the burden of workers' compensation costs. As
employers and health care providers, ASHNHA supports the concept
of workers' compensation fee reform. She indicated that where
it makes sense AHNHA is willing to be paid less than they are
today. However, she outlined a few concerns about fees and
rates set out in the bill. It might seem easy to use Medicare
and multiply those rates geographically; however, hospitals and
nursing homes are paid in five different ways under Medicare
law. She said that ASHNHA submitted a letter that covers more
details. She highlighted that Medicare is a poor payer for
Providence Alaska Regional; Fairbanks Memorial, Kenai, and
Bartlett Memorial Hospital. She cautioned against using
Medicare since it pays about $.30 on the dollar in Alaska. She
said ASHNHA needs some reassurance in the process. The
commercial rates that Premera and Aetna pay might be a target
that the committee could consider to provide a minimum or
backstop in this discussion. Secondly, in terms of the critical
access hospitals, which are 13 of the small hospitals in Alaska,
Congress has already exempted them from Medicare fee schedules.
She explained that these small hospitals have an exemption,
since they cannot kept their doors open based on volume so they
have a cost-based reimbursement system. For example, Idaho
exempts "cause" from their workers' compensation Medicare based
fee schedule and she recommended that this be the case in
Alaska. She pointed out that the letter also outlines skilled
nursing facilities. She said that the ASHNHA stands ready to
work with the committee.
5:14:57 PM
GREG MILLES, Physical Therapist; WCC, Owner, Home Town Physical
Therapy, stated that he has a small private outpatient clinic.
He supported ASHNHA's comments but asked to tread lightly.
Currently this bill is based off Medicare fee schedule. He
related his understanding that this practice has occurred in the
Lower 48. Small practices and some larger facilities are
beginning to minimize the health care exposure to Medicare. He
thought this could impact how much health care coverage will be
provided for the workers' compensation patients, which could
have the effect of minimizing patients' health care and how
quickly these patients return to work.
CHAIR OLSON pointed out this is a work in progress and the
committee is receiving a lot of feedback.
5:17:00 PM
RUTH CARSON, Physical Therapist, Equinox Physical Therapy,
stated she has a small physical therapy practice in Fairbanks.
She agreed with Ms. Purdue and Dr. Milles that the current
Medicare and Medicaid fee schedule will make it more difficult
to run her business. She understands the need to reform, but
she must work harder to keep her doors open.
5:18:01 PM
WALTER PARRISH, testifying on behalf of himself, stated that
cutting these costs will interfere with his health care. He
said he thought it is a savings to the workers' compensation
board to have that in effect. He said, "My old saying is if it
ain't broke don't fix it."
5:18:44 PM
JULIANA AMENT, Physical Therapist, DPT, MOMT Owner, stated that
she is a small business owner, a health care provider as a
physical therapist, and a member of the Alaska Chapter of the
American Physical Therapy Association. While the association
supports the efforts to reform and improve this workers'
compensation system, she still has a number of questions and
concerns about the bill. The proposal is broad and far reaching
and may have serious ramifications if all of its implications
are not fully vetted or understood. She urged members to
proceed with caution. The proposed RBRVS-based system may not
be ideal for Alaska. The proposed workers' compensation fee
schedule would have its foundation in the Medicare physician fee
schedule, which is a fundamentally flawed and broken system.
She did not think it will be a good fit for Alaska. It has
taken only focused management strategies and cost shifting in
her clinic to be able to continue to see patients whose payers
are currently using an RBRVS system like Medicare. This bill
appears to have a five year sunset; which would greatly affect
her business's ability to continue to see workers' compensation
patients in North Pole. Given the potential for unintended
consequences and some of the ramifications this bill could
potentially have on small business health care providers and the
patients she sees, she strongly recommended the bill be turned
over to a subcommittee to review the variables and potential
outcomes. She offered to submit her statement in writing.
5:21:05 PM
RICHARD COBDEN, Orthopedic Surgeon, Fairbanks Orthopaedic
Center, stated that he is a sole practitioner, immediate past
Chief of Staff at Fairbanks Memorial Hospital, and a member of
the Alaska State Orthopaedics Association. He said he has two
problems with the bill. First, the CMS RBRVS Medicare based fee
schedule creates big problems for him and his colleagues. He
also said that most of them are barely getting by even though
the reimbursement rates are reported as very high. In fact, a
lot of the CMS reimbursement rates will change. On April 1 it
will revert back to 26 percent lower rates than the current
rates based on issues that the Congress has experienced. Basing
it on that kind of reimbursement system could be a catastrophe
for Alaska. Secondly, the average wholesale price (AWP) for
medications has always been used for reimbursement for
prescription medications, which should continue since the actual
invoice price included in the bill is significantly lower. He
said that physicians will no longer be able to give patients
prescription medications at a great convenience to them. He
asked members to consider the basic reimbursement rate, the
Medicare rate, and the other rates before deciding that Alaska
is just like the rest of the 50 states. He asserted that Alaska
is not, that it has big problems, very difficult medical and
orthopedic problems with injured patients and the state and
physicians have an obligation to take care of them. He would
like to continue to do this, but his colleagues have told him
that if the CMS rates drop and if the workers' compensation
rates drop, that they simply won't be able to see these
patients. He concluded that this is a huge problem for patients
who should be the number one priority.
5:23:11 PM
REPRESENTATIVE REINBOLD asked whether he could provide written
testimony outlining his concerns. She expressed an interest in
the April 1, 2014 rates dropping by 26 percent.
DR. COBDEN offered to do so. He indicated that he has already
prepared a written statement and will add to it.
5:23:47 PM
DEBORAH MURSCH, Financial Director, Willow Physical Therapy,
stated that she has a small physical therapy business and agreed
with the previous testimony. She said that her practice
disagrees with this bill. She hoped the committee will consider
the small physical therapist's practices in Fairbanks so they
can stay open and be able to provide medical care for patients.
[HB 316 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB247 ver A.PDF |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Sponsor Statement.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Sectional Analysis.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Fiscal Note-DOA-DRB-02-28-2014.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Fiscal Note-DOA-DRB-02-28-2014-actuarial.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Draft Proposed Blank CS ver U.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Supporting Documents- FAQs.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Supporting Documents-APDEA 02-24-2014.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Supporting Documents-Tools and Safeguards.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Supporting Documents-Assorted Letters.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB247 Supporting Documents-VBRS-PP Presentation.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB316 ver N.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Sponsor Statement.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Sectional Analysis.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Fiscal Note-DOLWD-WC-03-03-14.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Fiscal Note-DOA-RM-02-28-14.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-Letter NFIB 3-5-2014.PDF |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-Resolution ASHBA.PDF |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-WC Board Resolution 13-01.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-WC Fee Comparison.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-AHLA 3-5-2014.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-Legislative Research Brief.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-Letter AK Chamber 03-05-2014.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-Letter ASHNA 3-4-2014.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 |
| HB316 Supporting Documents-Letter FNSB 2-28-14.pdf |
HL&C 3/7/2014 3:15:00 PM HL&C 3/10/2014 3:15:00 PM |
HB 316 SB 2 |
| HB247 Supporting Documents-VRP Presentation-Fornia 3-07-2014.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 247 |
| HB316 Supporting Documents-Letter-ASRC-ANC 0306-2014.pdf |
HL&C 3/7/2014 3:15:00 PM |
HB 316 |