Legislature(2001 - 2002)
03/28/2001 09:09 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 37(L&C)
"An Act relating to collective negotiation by physicians with
health benefit plans, to health benefit plan contracts with
individual competing physicians, to the application of state
antitrust laws to agreements involving providers and groups of
providers affected by collective negotiations, and to the effect of
the collective negotiation provisions on health care providers."
Co-Chair Kelly explained that essentially SB 37 would create, in
law, a structure by which physicians could negotiate with insurance
companies collectively without violating anti-trust laws if they
had the oversight of a state agency. He noted that the state
action doctrine would create the oversight of the negotiations by a
state agency; in this case they chose the Department of Law. He
referred to a supreme court case back in 1943, which accepted the
fact that the anti-trust provisions would not work in every
situation. He suggested that it would be a situation where it was
not appropriate to apply strict anti-trust provisions and where
there was a need for state oversight. He concluded that what they
were creating was the ability for physicians to come together and
negotiate with insurance companies on a voluntary basis.
KRIS KNAUSS, staff to Senator Pete Kelly, explained that within
geographical service if there were more than 40 physicians in an
area then only 30 percent of them could negotiate and if there was
less than 40 then 100 percent could negotiate, which means that in
the more urban areas, such as Anchorage, only 30 percent of the
market would be negotiating with insurance companies. He pointed
out that in the latest version of SB 37 they excluded the self
insured from the bill and changed some of the language in the bill
with regards to a physician negotiating only with an insurance
agency and those negotiations becoming confidential rather than
having a public process or hearing. He indicated that there was
not a competitive group of large insurance companies in the state
and what they were trying to do was open the door for the smaller
insurance companies to negotiate with physicians.
Co-Chair Kelly explained that one of the problems was in the past
few years the number of insurance companies went from 18 to six and
as they continued to buy each other up they gained more and more
market power. He noted that with the physicians they have had
nothing of the like happen to them and they also have the anti-
trust laws working against them; therefore, if they were to get
together with a colleague to discuss something with regards to
negotiations with insurance companies the Federal Trade Commission
(FTC) could shut them down and fine them. He stated that SB 37
would allow the physicians to come together on a voluntary basis
and negotiate with the insurance companies and they would not be
threatened with legal action because of it.
Senator Olson wondered why the self-insured were excluded if it
meant solo-practitioners were being excluded.
Co-Chair Kelly replied that the solo-practitioner would not be able
to take advantage of the bill; they would be excluded from the
provisions of the bill.
Senator Olson wondered if the definition of self-insured meant
covering malpractice.
Co-Chair Kelly clarified that it was not the self-insured
physician, but rather, for example, the State of Alaska and the
teamsters would be considered self-insured.
Senator Green further clarified that self-insured had to do with
groups of people that had chosen to be self-insured, rather than
have a third-party deal with the insurance companies.
CLYDE SNIFFEN, Department of Law, testified via teleconference from
Anchorage, expressed that they continued to have concerns with the
bill.
JANET PARKER, Deputy Director, Division of Retirement and Benefits,
Department of Administration, indicated that she was there to
answer any questions regarding the fiscal note.
Senator Wilken wondered if she was speaking to the fiscal note
dated March 15.
Ms. Parker yes.
Senator Wilken pointed out that it would seem that SB 37, by
increased competition, would drive costs down, but according to the
fiscal note the cost is being driven up by almost $9 million in the
state plan. He said that he was in favor of the bill, because it
appeared to drive down costs.
Ms. Parker explained that what they were doing was giving providers
the opportunity to ban together and negotiate. She noted that they
were not going to try and negotiate their reimbursement down, but
rather negotiate it up.
Co-Chair Kelly indicated that throughout the course of SB 37 they
heard many people testify that it would drive costs up. He pointed
out that the negotiations were completely voluntary and if the
insurance companies do not want to negotiate than they do not have
to. He also pointed out that the provisions of the bill stated
that the physicians could not act in a retaliatory manner and they
could not boycott. He stressed that all SB 37 was doing was
allowing physicians to act in such a manner that they could at
least come to a group to decide whether they wanted to negotiate in
the first place and then the insurance companies have the option of
saying "no." He does not see how there could be an increase of 5
to 13 percent in healthcare costs.
Ms. Parker replied that there really was no way of knowing, because
it had not occurred yet. She explained that they have just done
some studies based on federal legislation that were similar.
Co-Chair Kelly clarified, "There were some studies on that and
there were also studies that said the methodology on the study that
you're referring to was completely out of wack and it sounds to me
- and Ms. Parker I certainly don't mean to criticize what you've
said, because I know these aren't the numbers that you've come up
with necessarily, I mean I'm not holding you accountable for these
exact numbers in here, but they are the numbers that I've been
hearing from a number of organizations and testifiers and I think
it's a number that's just flat been pulled out of the air."
Ms. Parker said, "I plead the fifth."
Co-Chair Kelly commented that it brought up a good point, that
being, how could something that is completely voluntary drive up
costs. He did not think that it would drive up costs. He
reiterated that all SB 37 did was provide some oversight to allow
physicians to come together so that they would have some market
power to deal with insurance companies that were getting larger and
more powerful; therefore, there would be some kind of equality and
equity in the bargaining position. He stressed that SB 37 was not
a "sky is falling" bill as had been presented.
Co-Chair Kelly reported that the bill would be HELD in Committee.
AT EASE 9:27 AM/9:30 AM
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