Legislature(2001 - 2002)

03/28/2001 09:09 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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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