Legislature(2015 - 2016)BARNES 124

03/07/2016 03:15 PM LABOR & COMMERCE

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Audio Topic
04:08:15 PM Adjourn
03:16:38 PM Start
03:17:15 PM Presentation: Division of Insurance, Department of Commerce, Community & Economic Development
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Dept. of Commerce, Community, & Economic TELECONFERENCED
Development - Director Lori Wing-Heier, Division
of Insurance
-- Testimony <Invitation Only> --
Scheduled but Not Heard
Scheduled but Not Heard
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 7, 2016                                                                                          
                           3:16 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
MEMBERS ABSENT                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
COMMITTEE CALENDAR                                                                                                            
PRESENTATION:   DIVISION  OF INSURANCE~  DEPARTMENT OF  COMMERCE~                                                               
COMMUNITY & ECONOMIC DEVELOPMENT                                                                                                
     - HEARD                                                                                                                    
HOUSE BILL NO. 248                                                                                                              
"An Act  requiring the electronic  submission of a tax  return or                                                               
report with  the Department  of Revenue;  relating to  the excise                                                               
tax  on  alcoholic  beverages; and  providing  for  an  effective                                                               
     - SCHEDULED BUT NOT HEARD                                                                                                  
HOUSE BILL NO. 304                                                                                                              
"An Act  requiring the electronic  submission of a tax  return or                                                               
report with the  Department of Revenue; relating to  the taxes on                                                               
cigarettes  and  tobacco   products;  taxing  electronic  smoking                                                               
products; adding  a definition  of 'electronic  smoking product';                                                               
and providing for an effective date."                                                                                           
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided  a presentation  and  update  on                                                             
health care insurance.                                                                                                          
ACTION NARRATIVE                                                                                                              
3:16:38 PM                                                                                                                    
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to  order at 3:16 p.m.   Representatives Olson,                                                               
Kito,  Colver,  Hughes,  Tilton,  [Josephson],  and  LeDoux  were                                                               
present at the call to order.                                                                                                   
^PRESENTATION:   DIVISION OF  INSURANCE, DEPARTMENT  OF COMMERCE,                                                               
COMMUNITY & ECONOMIC DEVELOPMENT                                                                                                
 PRESENTATION:  DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE,                                                              
                COMMUNITY & ECONOMIC DEVELOPMENT                                                                            
3:17:15 PM                                                                                                                    
CHAIR OLSON announced that the only  order of business would be a                                                               
presentation  and   update  from   the  Division   of  Insurance,                                                               
Department  of   Commerce,  Community  &   Economic  Development,                                                               
provided by Lori Wing-Heier, Director.                                                                                          
3:17:23 PM                                                                                                                    
LORI   WING-HEIER,  Director,   Anchorage  Office,   Division  of                                                               
Insurance,   Department  of   Commerce,   Community  &   Economic                                                               
Development, informed the committee  that her division has lifted                                                               
the  order  of impairment  from  Moda  Health Plan,  Inc.  (Moda)                                                               
insurance  company  so  that  the company  is  once  again  doing                                                               
business in Alaska.  She said  it was difficult to deny consumers                                                               
access to an insurance company  because of the division's concern                                                               
over  Moda's  financial  circumstances.    Moda  has  voluntarily                                                               
entered into  a financial plan  with the  state and the  State of                                                               
Oregon, and  is disposing of $180  million of assets in  order to                                                               
return funds to the insurance  company to ensure its solvency and                                                               
thereby continue  to serve  its consumers  in Alaska  and Oregon.                                                               
Furthermore,  Moda  agreed  to  deposit $15  million  in  a  bank                                                               
account under the state's control  as a "security blanket" so the                                                               
state could  pay claims if  necessary.  Ms.  Wing-Heier explained                                                               
that Moda is domiciled in  Oregon, thus Oregon has greater access                                                               
to its assets.  The division  is hopeful that Moda will remain in                                                               
the health insurance market in  Alaska through 2017; however, the                                                               
division  cannot force  Moda to  stay  in the  individual or  the                                                               
group insurance market.                                                                                                         
3:21:40 PM                                                                                                                    
CHAIR OLSON asked how many are currently impacted.                                                                              
MS.  WING-HEIER  said enrollment  is  currently  at over  22,000;                                                               
however,  she  anticipated that  the  number  will level  off  at                                                               
21,000 in the individual market.                                                                                                
REPRESENTATIVE  LEDOUX  expressed  her understanding  that  state                                                               
employees are only covered by the Moda dental plan.                                                                             
MS. WING-HEIER  said the state  is self-insured and Moda  acts as                                                               
an administrator  of dental  plan claims,  thus the  state dental                                                               
plan is not affected.  The  22,000 Alaskans that were referred to                                                               
earlier are not state employees,  but participate in the [Patient                                                               
Protection  and Affordable  Care Act  (PPACA)] individual  health                                                               
care insurance market.                                                                                                          
REPRESENTATIVE LEDOUX  asked whether all insurance  is "under the                                                               
MS. WING-HEIER  said Moda is  only insuring PPACA plans,  and its                                                               
share  of the  22,000 individuals  insured  is a  little over  50                                                               
percent of  the individual market  in Alaska.   Premera insurance                                                               
company and Moda were in competition for this market.                                                                           
3:24:01 PM                                                                                                                    
REPRESENTATIVE  HUGHES asked  if the  federal government  had not                                                               
reneged on its  obligation to pay Moda risk  corridor payments in                                                               
the amount of $150 million  over two years, whether the situation                                                               
with Moda would have been averted.                                                                                              
MS.  WING-HEIER advised  the reduced  funding would  have made  a                                                               
difference,  but not  "totally."   In  2014,  Moda received  12.6                                                               
percent of the expected funding,  and is expected to receive more                                                               
during the three-year  term of the program.   The reduced funding                                                               
caused some insurance  cooperatives to fail and  although Moda is                                                               
not  a cooperative,  it is  a regional  insurer, and  the reduced                                                               
funding was very much a  contributing factor to Moda's situation.                                                               
In response to  Chair Olson, she said Moda operates  in Oregon in                                                               
the same manner as  it does in Alaska.  She was  unsure as to the                                                               
status  of   a  cooperative   in  Oregon,   and  the   status  of                                                               
cooperatives  that have  failed elsewhere  is being  discussed in                                                               
Washington D.C.                                                                                                                 
CHAIR   OLSON   lauded   Alaska's   decision   not   to   utilize                                                               
REPRESENTATIVE  HUGHES expressed  her  concern  that the  federal                                                               
government could  fail to  fund Medicaid.   She then  asked about                                                               
the  status   of  the   Alaska  Comprehensive   Health  Insurance                                                               
Association (ACHIA) program  which provides "high-risk insurance"                                                               
in Alaska.                                                                                                                      
MS. WING-HEIER referred to draft  legislation proposed by Premera                                                               
and Moda  that would use ACHIA  as a reinsurance mechanism.   The                                                               
insured market would be assessed in  the same manner as ACHIA and                                                               
all would contribute  "a little" to offset  high-dollar claims in                                                               
the individual market.                                                                                                          
REPRESENTATIVE  LEDOUX questioned  the  need for  ACHIA now  that                                                               
PPACA prevents discrimination for preexisting conditions.                                                                       
3:28:58 PM                                                                                                                    
MS. WING-HEIER answered that the  division considered using ACHIA                                                               
as  a mechanism  for the  individual  and small  group market  in                                                               
Alaska  if it  became  necessary.   Also,  there  are 211  people                                                               
currently  participating,   most  of  whom  participate   in  the                                                               
Medicare Supplemental  Insurance (MEDSUPP) drug coverage,  who do                                                               
not  have another  market from  which to  choose in  Alaska.   In                                                               
further  response to  Representative LeDoux,  she explained  that                                                               
after  Medicare  becomes one's  insurance,  one  buys a  Medicare                                                               
Supplemental  Insurance  plan  to  supplement  the  coverage  for                                                               
pharmaceuticals, which can be very expensive.                                                                                   
REPRESENTATIVE   LEDOUX  asked   whether  AARP   supplemental  is                                                               
available in Alaska.                                                                                                            
MS.  WING-HEIER  said  not  for MEDSUPP,  thus  the  division  is                                                               
keeping ACHIA open  for those who cannot  get coverage elsewhere.                                                               
In further response to Representative  LeDoux, she said there are                                                               
211 participants  in ACHIA  and about  50 percent  participate in                                                               
MEDSUPP for high-priced drugs.                                                                                                  
REPRESENTATIVE  LEDOUX asked  about  coverage for  others in  the                                                               
MS.   WING-HEIER   was   unsure.     In   further   response   to                                                               
Representative LeDoux, she explained  that for PPACA, people have                                                               
to "buy the  entire package, but even within  the [PPACA] there's                                                               
limits to  what one,  what the  plan will  pay."   So, it  may be                                                               
better for someone to have  Medicare and buy MEDSUPP, rather than                                                               
to have  to buy  an entire individual  market policy  from PPACA,                                                               
which can have quite high co-pays.                                                                                              
REPRESENTATIVE COLVER  observed that for  a state retiree  who is                                                               
eligible  for Medicare,  MEDSUPP  is carried  by  the state,  and                                                               
asked whether there  is a cap to what the  Division of Retirement                                                               
and Benefits, Department of Administration, pays.                                                                               
MS. WING-HEIER  was unsure of  the workings of the  state benefit                                                               
plan.  She  added that she was unaware of  any state employees or                                                               
state retirees in the ACHIA program.                                                                                            
3:35:29 PM                                                                                                                    
MS. WING-HEIER  continued to  explain that at  the time  Moda was                                                               
taken off  of the  exchange, there  were four  days left  of open                                                               
enrollment, which meant  some who had enrolled but  not paid, and                                                               
others who were waiting to the  last minute, only had one choice:                                                               
Premera.  In  response to Chair Olson, she said  the four-day gap                                                               
affected  about 3,200  people, who  were  concerned and  anxious.                                                               
The  division worked  with  all  parties, and  all  known to  the                                                               
division were reinstated with Moda.                                                                                             
CHAIR OLSON asked whether the division was sufficiently staffed.                                                                
MS.  WING-HEIER said  the  division retained  its  same level  of                                                               
staffing  in Fiscal  Year 2017  (FY 17).   At  the height  of the                                                               
activity related  to Moda, the National  Association of Insurance                                                               
Commissioners (NAIC)  opened a call  center to assist  with phone                                                               
calls  and  to  provide  callers  with  the  latest  information;                                                               
however,  some did  purchase a  Premera plan  to comply  with the                                                               
deadline in January, then Moda  was returned to the exchange, and                                                               
they are stuck  with higher premiums for one year.   The division                                                               
considered holding another enrollment  period, but those with the                                                               
intent to  purchase coverage were  accommodated.   Ms. Wing-Heier                                                               
noted that  more information  will come to  the forefront  on the                                                               
proposed ACHIA  bill; in  fact, federal  funds are  available for                                                               
the reinsurance program.  Further,  the division will continue to                                                               
seek relief  from the Alaska Congressional  delegation.  Alaska's                                                               
individual  market is  small and  sick, but  the division  cannot                                                               
force members  of a younger  and healthier population  to enroll,                                                               
join the insurance pool, and spread the risk.                                                                                   
3:42:59 PM                                                                                                                    
CHAIR OLSON  asked whether health  insurers need a filing  to add                                                               
medical tourism to their policies.                                                                                              
MS. WING-HEIER  said no.   She said  medical tourism  is growing,                                                               
and the division has contacted  individual members of the medical                                                               
community  about its  desire to  protect  providers from  medical                                                               
tourism, because  certain procedures are cheaper  in Seattle than                                                               
in  Anchorage.    Studies  have  shown  that  other  states,  for                                                               
example,  Rhode Island,  have  the same  problem,  and the  state                                                               
needs  to find  an alternative  to  "fee for  services [that]  is                                                               
becoming  somewhat  of  an  antiquated way  to  pay  for  medical                                                               
REPRESENTATIVE  LEDOUX  said  she believes  in  supporting  local                                                               
businesses; however,  when local businesses are  not competitive,                                                               
the  state  should let  people  go  out-of-state  or out  of  the                                                               
country if treatment is less expensive.                                                                                         
MS. WING-HEIER observed that the other  side of the story is that                                                               
if one goes outside it is  difficult to keep providers in Alaska,                                                               
and also that doctors in  Alaska are reluctant to provide follow-                                                               
up care.                                                                                                                        
REPRESENTATIVE LEDOUX  suggested that  it is  possible to  let an                                                               
insured person return outside for follow-up care.                                                                               
MS.  WING-HEIER cautioned  that some  cannot make  multiple trips                                                               
outside due  to their health  situation.  In further  response to                                                               
Representative LeDoux, she  said a choice is  often approved when                                                               
the cost of  the procedure is less  expensive; however, residents                                                               
also want  care available in  Anchorage, Fairbanks,  or Southeast                                                               
Alaska, and she urged for a "happy medium."                                                                                     
3:49:25 PM                                                                                                                    
REPRESENTATIVE  LEDOUX  surmised  that if  people  are  routinely                                                               
allowed to travel with a companion  for medical care, the cost of                                                               
medical care would  come down because there is  a natural market.                                                               
She provided an example.                                                                                                        
CHAIR OLSON  added that a provider  or hospital that is  a member                                                               
of   the  Aetna   network  anywhere   in  the   country  can   be                                                               
preauthorized to  provide the same  benefit as an  Alaska network                                                               
MS.  WING-HEIER pointed  out  that  part of  the  solution is  to                                                               
educate  insured about  the proper  utilization  of their  plans.                                                               
Alaska  residents go  to  the emergency  room  for primary  care,                                                               
which drives  rates up.   Also, insured  need to use  the network                                                               
and a preferred provider, although  there are many reasons people                                                               
do not.   She  informed the committee  that networks  are getting                                                               
broader,  and  insurance  companies  are  negotiating  for  lower                                                               
costs.  However, she acknowledged  that "there may be some things                                                               
because  of ...  the  geographic distances  we  cover that  we're                                                               
never going to be able to overcome."                                                                                            
REPRESENTATIVE HUGHES was told by  a family member working in the                                                               
medical community  in Anchorage that approximately  70 percent of                                                               
those  utilizing  emergency  room services  should  be  utilizing                                                               
primary  care services.   She  suggested that  hospital emergency                                                               
rooms should  divert patients  to primary  care providers  at the                                                               
time  of admission.   Representative  Hughes then  asked for  the                                                               
mission of the Division of Insurance.                                                                                           
MS.  WING-HEIER  said  the  division's   mission  is  to  protect                                                               
consumers.     In  that  endeavor,  the   division  must  address                                                               
insurance  rates, solvency,  networks,  and issues  of access  to                                                               
care  as  directed  by  PPACA,  and  under  the  insurance  plans                                                               
regulated by the division.                                                                                                      
REPRESENTATIVE  HUGHES  recalled  last year  there  were  several                                                               
large associations in Alaska  that received insurance termination                                                               
notices,  and she  inquired as  to whether  this could  have been                                                               
prevented by the division.                                                                                                      
3:55:47 PM                                                                                                                    
MS. WING-HEIER explained that the  intent of PPACA is to increase                                                               
the number  of those in the  individual and small or  large group                                                               
market, and thus  the Act does not allow for  insurance issued by                                                               
associations.   The division resolved  the issue with  the Alaska                                                               
Bar Association and the Alaska  Federation of Natives by a return                                                               
to federal law and verification  that the associations are a bona                                                               
fide employer.   With this information, the  division can approve                                                               
the filings.   Due to conflicting state  and federal regulations,                                                               
the  division   worked  with  the   insurance  brokers   and  the                                                               
associations to find a solution.                                                                                                
REPRESENTATIVE HUGHES  asked whether Ms. Wing-Heier  was aware of                                                               
a provision in  PPACA which gives the state the  ability to relax                                                               
the aforementioned prohibition.                                                                                                 
MS. WING-HEIER stated that the  division reviewed a court case in                                                               
Washington  and studied  the effect  on  associations in  Alaska.                                                               
The  federal regulation  under  [the  Employee Retirement  Income                                                               
Securities  Act   of  1974  (ERISA)]  required   proof  that  the                                                               
association  was  an  employer.     Without  a  ruling  from  the                                                               
Department  of Labor  & Workforce  Development,  the division  is                                                               
accepting a letter in this regard.                                                                                              
REPRESENTATIVE HUGHES  requested confirmation  on whether  or not                                                               
there was an opportunity to alleviate this matter.                                                                              
3:59:29 PM                                                                                                                    
REPRESENTATIVE  LEDOUX  questioned  whether the  division's  core                                                               
mission  includes concern  about the  negative effect  of medical                                                               
tourism on the medical community.                                                                                               
MS. WING-HEIER  stated her concern  is that insurance  matters do                                                               
not  become  the  reason physicians  don't  practice  in  Alaska.                                                               
Other  states with  similar demographics  have been  able to  get                                                               
providers, insurers,  users, and  regulators to control  the cost                                                               
of insurance, and the division has  a role in finding a solution.                                                               
In further response  to Representative LeDoux, she  said her role                                                               
is  to   make  insurance   available  and   affordable,  although                                                               
"affordable"  varies with  consumers' circumstances.   She  said,                                                               
"Somehow if we could get  those physicians and all the providers,                                                               
or get to the  reason of why is the cost of  the services so high                                                               
..." premiums could be lowered.                                                                                                 
REPRESENTATIVE LEDOUX  asked if  the division decides  whether an                                                               
insurance company can offer medical tourism.                                                                                    
4:03:26 PM                                                                                                                    
MS. WING-HEIER explained that the  state controls insurance plans                                                               
for 20 percent  of the market, excluding plans for  the state and                                                               
federal government,  military, veterans, Medicaid,  Medicare, and                                                               
the  Indian Health  Service.   The  cost of  medical services  is                                                               
paramount  to  all and  the  division  needs  to be  involved  in                                                               
CHAIR  OLSON added  that  the medical  insurance  component is  a                                                               
small  portion  of  the  responsibilities   of  the  Division  of                                                               
Insurance, which  also includes  regulation of  homeowners, auto,                                                               
commercial, aviation, marine, and life insurance.                                                                               
MS.  WING-HEIER  observed  that  [PPACA]  is a  new  law  and  is                                                               
continually changing, and as problems  arise they are being dealt                                                               
with, such as the difficulties related to Moda.                                                                                 
4:06:06 PM                                                                                                                    
REPRESENTATIVE HUGHES  referred to  the rate increases  that have                                                               
been  requested by  insurance companies,  and  asked whether  the                                                               
division has the  tools to investigate why  medical providers are                                                               
charging more than in the Lower 48.                                                                                             
MS. WING-HEIER informed the committee  that the division has been                                                               
seeking the  statutory authority  to glean information,  as other                                                               
states  have, to  determine  the source  of  the providers'  cost                                                               
4:08:15 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:08 p.m.