Legislature(2001 - 2002)
03/28/2001 06:06 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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." This was the second hearing for this bill in the Senate Finance Committee. Co-Chair Kelly drew attention to the proposed committee substitute Version "B", which was introduced, but not adopted during the previous hearing. He pointed out that a provision regarding the exemption of nurses was inadvertently omitted in this committee substitute, which a proposed amendment would reinsert. He pointed out that this amendment reflects an agreement with the nurses association. Senator Wilken moved for adoption of CS SB 37 22-LS0323\B, 3/27/01 as a working draft. Without objection it was ADOPTED. Amendment #1: This amendment adds a new subsection on page 7, lines 15-19 of the committee substitute to Section 1. Chapter 50. Collective Negotiation by Physicians. Sec. 23.50.020 as follows. (p) Nothing in this section shall be construed as exempting from the application of the antitrust laws the conduct of providers or negotiations or agreements between providers and a health benefit plan if the purpose or effect of the conduct, negotiations, or agreements would be, directly or indirectly, to exclude, limit the participation or reimbursement of, or otherwise limit the scope of services to be provided by separate or competing classes of providers who practice or seek to practice within the scope of the occupational licenses held by the providers. Senator Wilken moved for adoption. There was no objection and the amendment was ADOPTED. Amendment #2: This conceptual amendment deletes Section 3, the July 1, 2006 sunset date, from page 8, lines 30 and 31 of the committee substitute. Co-Chair Kelly moved for adoption. He explained this sunset date was inserted in the bill as a result of concerns over increased health care costs. He assured that most of the concerns have been addressed, such as making the negotiations voluntary, establishing veto provisions for both the carriers and providers, that "soften the impact" of a worse case scenario. He surmised that the need for the sunset is therefore no longer necessary and warned that the insurance corporations would wait for the sunset date rather than participate in negotiations. The amendment was ADOPTED without objection. Co-Chair Kelly addressed the Department of Administration fiscal note that describes possible impacts to the state employees' self- insurance plan. He noted that the committee substitute Version "B" eliminates self-insured plans from the negotiation requirements and therefore, there would be no fiscal impact to the state. He recommended the Committee adopt a zero fiscal note for the Department of Administration. Senator Green asked the impact of the provision regarding self- insured plans. Co-Chair Kelly explained that the state, municipalities and most labor organizations would not be required to abide by the negotiation requirements established in this legislation. He clarified that physicians would not have the protection of the state action doctrine if they entered into negotiations with self- insured organizations. Senator Green wanted to know the segment of the population effected by the removal of the self-insured from the legislation. Co-Chair Kelly did not know. Senator Wilken moved to adopt a zero fiscal note for the Department of Administration. Co-Chair Kelly clarified for Senator Austerman that the new fiscal note would delete reference to a potential $3.5 million to $9.1 million increase to the state. Senator Austerman assumed that health maintenance organizations (HMO) and similar organizations are not self-insured. Co-Chair Kelly pointed out that there are no HMOs operating in the state, but there are preferred provider organizations. Senator Austerman asked if any of the preferred provider organizations are self-insured. Co-Chair Kelly answered they are not. Senator Hoffman asked about the second paragraph of the fiscal note analysis regarding any increased costs that would be borne by the employee, and asked if the removal of the self-insured portion of the bill would eliminate this. Co-Chair Kelly responded that the matter was irrelevant with the proposed zero fiscal note. Senator Austerman commented that the expenses shown on the current fiscal note were estimates and that there is no way to know if health care costs would increase or not. Senator Green expressed that she did not understand the reasoning behind the legislation. She judged the sponsor's legislative findings to be questionable and she did not agree with them. She asserted that there would be a fiscal impact as a result of the bill. She cited from the findings, "There are however instances in which a health benefit plan dominates the market to the degree that fair negotiations…" She wondered how many people remained available to participate in the negotiations when the self-insured are removed from the process. She recalled discussions regarding the impact on the Comprehensive Health Insurance Association (CHIA) caused by changing health care coverage for state employees to a self-insured system. She stressed that this action removed a large segment of the population from private insurance plans. She was concerned that this legislation targets the small group remaining. Co-Chair Kelly directed the discussion to the motion on the table to adopt a fiscal note. There was no objection and a zero fiscal note for the Department of Administration was adopted. Senator Green stressed that if a fiscal note applies to the state and its employees only, it could be claimed that the legislation would have an indeterminate fiscal impact, but that it does not give assurance to those with private insurance that there would be no cost increase. He requested the Department of Community and Economic Development address this concern. Co-Chair Kelly did not agree that the consumer costs would increase an estimated 15 to 20 percent as a result of this legislation. This he explained is because the program is "completely voluntary". He stressed that the insurance companies could decline to participate in negotiations and the physicians would have no retaliation options nor could they refuse patients covered by that insurance company. Senator Green expressed her concerns were based on the size of the pool of participants that are not self-insured. [Note: teleconference connection is very poor. Much of the testimony is inaudible.] BOB LOHR, Director, Division of Insurance, Department of Community and Economic Development, testified via teleconference from Anchorage that once the self-insured participants are excluded from the bill, the number of people covered by this legislation would decline. Mr. Lohr noted that if physician fees were negotiated at a higher rate, the increase could result in a rise in the cost of insurance. Senator Green wanted a percentage figure. Mr. Lohr estimated "ten-percent of the total published." [Continued testimony inaudible.] Senator Green asked if it is typical that the remaining privately insured participates attempt to enter a self-insured pool. Mr. Lohr replied there would be an economic incentive to increase the volume of members in an insurance plan for the purposes of negotiations. He indicated that plan administrators would look to do this or possibly reduce benefits or eliminate coverage completely. Senator Green asked about the impact on CHIA. Mr. Lohr explained that CHIA is based on the number of health insurers participating in the market and that percentage of the total market. He said the assessment to fund CHIA is determined by the board of directors for CHIA. [Additional comments inaudible.] Co-Chair Kelly reiterated earlier assumptions that health care prices would increase because of negotiated prices. He countered that this legislation provides either side with veto power and that insurance companies could refuse to negotiate fees. He remarked, "This constant talk about prices being raised, I think is uncalled for. It doesn't follow what is in the bill." He admitted that quality of care issues are a different matter, such as determining what procedures constitute emergency services. He noted that there could be price increases in this area. AT EASE 6:28 PM / 6:29 PM Senator Wilken offered a motion to report from Committee CS SB 37 22-LS0323\B as amended with forthcoming zero fiscal note from the Department of Administration, Division of Retirement and Benefits. Without objection, the bill MOVED from Committee.