Legislature(2005 - 2006)BUTROVICH 205
02/22/2006 01:30 PM HEALTH, EDUCATION & SOCIAL SERVICES
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SB 299-NONDISCRIMINATION HEALTH CARE PROVIDERS 2:32:37 PM CHAIR FRED DYSON announced SB 299 to be up for consideration. SENATOR RALPH SEEKINS, Alaska State Legislature, sponsor, began by paraphrasing the full title, which read: An Act relating to preventing unfair discrimination against a health care provider who is willing to meet a health insurer's terms and conditions for participation in the insurer's plan, policy, or contract for health care services; amending the definition of 'provider' as it relates to authorized collective negotiations by physicians affecting the rights of providers under health benefit plans; and providing for an effective date. He said AS 21.36.090(d) pertains to unfair discrimination against a person who provides services covered under a group health insurance plan. It comes into play as a function of the relationship between health care providers and group health care systems. Recently, the U.S. Supreme Court upheld Kentucky's "any willing provider" (AWP) law, which offers a more robust alternative to Alaska's current law. Thus SB 299 would replace AS 21.36.090(d) with case-tested AWP language, Senator Seekins told members. He noted that the move towards AWP language also required a change to the definition of "health care provider." Consequently, the original definition as used in Title 23 had to be restored. This is found in Section 2 of the bill. Senator Seekins said the AWP concept promotes the individual's ability to choose a health care provider. The AWP law says a health insurer cannot discriminate against any provider that is willing to meet the terms and conditions for participation established by the health insurer, assuming the provider is located within the geographic coverage area of the health benefit plan. He explained that this is especially pertinent when, for example, a woman in the second trimester of pregnancy changes jobs and may be forced to change health care providers if her current provider isn't recognized by her new health insurance plan. If the patient's non-network physician is willing to accept the network fee schedule - and meets the insurance company's licensing and credentialing standards - the patient should be able to continue to see the known and trusted doctor. He concluded by saying SB 299 adopts into Alaska law the "any willing provider" concept, thereby promoting and preserving Alaskans' ability to choose their own health care providers. Senator Seekins informed the committee that a number of experts were present to testify and offer examples. 2:36:13 PM SENATOR SEEKINS, in response to Senator Wilken, said there was no fiscal note that he knew of. SENATOR OLSON asked how the "638" contractors in rural Alaska would be affected. He explained that this relates to Public Law 638, which applies to health corporations in Bush Alaska that receive federal funds. SENATOR SEEKINS deferred to one of the experts. 2:38:09 PM GEORGE RHYNEER, MD, Alaska Physicians and Surgeons, informed members that he is a cardiologist from Eagle River, in practice in Alaska for 35 years. He noted that Alaska Physicians and Surgeons is a Southcentral physician group that, in this case, is representing its patients. He suggested all patients would support this because it provides freedom of choice. He gave examples. For instance, he prefers to refer patients to a certain endocrinologist, but finds some cannot see that doctor because they'd be severely penalized economically by the insurance company. Furthermore, people with life-threatening illnesses aren't benefited by switching physicians. Not having the ability to choose one's own physician is counter-therapeutic. For best outcomes in illness, Dr. Rhyneer said, it's imperative that the patient trust the physician and have choice. He also talked about the economic effect on physicians when an insurance company can select or deselect doctors to be on the panel. He said it makes it especially difficult to recruit physicians to come to Alaska if, after they set up business and establish patients, an insurance company can threaten deselection unless the doctor kowtows to an onerous economic relationship. Dr. Rhyneer concluded by saying there are innumerable good reasons for having this legislation. 2:42:51 PM CHAIR DYSON asked about the relationship between Alaska Physicians and Surgeons Group and the Alaska Medical Association. DR. RHYNEER explained that the latter is a professional organization, partnered with the American Medical Association. The first organization was started six or seven years ago as more of a business and legislative group. They are separate organizations, although many members of one belong to the other. CHAIR DYSON referred to unspecified documentation he'd been given that says passage of this law will drive up costs. He offered his understanding that the bill says whoever the provider is must agree to the fee schedule offered by the third- party payer. He asked whether that is Dr. Rhyneer's understanding of what is being done. DR. RHYNEER affirmed that. CHAIR DYSON asked Dr. Rhyneer to clarify his statement that doctors would have to agree to an onerous remuneration schedule. DR. RHYNEER explained that when an insurance company has a large share of the business in a community and can direct its patients from one group of physicians to another - by having or not having them on its panel - then it's hard for a physician to refuse the offered pay scale, even if it's less than overhead costs, because all those patients could be sent elsewhere. CHAIR DYSON related his understanding that in this bill a doctor would give a group discount for having all those referrals. If one patient decided to stick to another doctor, however, then the other doctor would have to agree to this discount schedule in order to be paid by the third-party payer. DR. RHYNEER affirmed that. He suggested in larger communities such as New York City or Chicago, with thousands of physician groups and perhaps hundreds of hospitals, it's easier to defend that kind of predatory activity by insurance companies. 2:46:40 PM SENATOR ELTON said it seems if an employer cannot negotiate a price break on health care, then either the employer's health care costs could rise or changes could be made to employees' benefits. DR. RHYNEER responded that in other jurisdictions there has been no apparent change in the cost to companies or providers of insurance, through their premiums, when AWP laws have been established; it appears, from "observations and measurements," that AWP has no deleterious effect on that relationship. SENATOR ELTON expressed interest in the observations cited by Dr. Rhyneer. He noted that others have cited observations pointing to the opposite conclusion. DR. RHYNEER said in Alaska almost all money spent on health care remains in Alaska. It goes towards improving care, machinery, modernization and the availability of nurses; very little goes elsewhere to shareholders and so forth. He pointed out that so- called managed care has had a serious effect on the availability, and probably the quality, of health care delivered outside of Alaska. SENATOR ELTON reiterated that data would be helpful. SENATOR OLSON remarked that he thought money from Providence Alaska Medical Center went back to the main offices outside the state, which helped to ensure that other health care ventures were put in place. DR. RHYNEER replied that he has heard that rumor, both in the past and recently. However, he is on the board for that institution, and every month they get a rundown of the finances. He said he has never seen evidence that money is transferred to the Seattle office, which is an owner. He added that the corporation does require remuneration for the services it provides to the local hospitals - the outsourcing, the billing, and so forth, which are done in Seattle. However, the majority of the "margin" money is used for capital improvements. SENATOR OLSON expressed concern for owners of small businesses, who often have trouble affording health insurance for employees. DR. RHYNEER said he believes there is a far more elaborate answer than he could provide. "I think this, from observations, plays a very small part in that issue," he added. SENATOR OLSON asked whether the concept in this bill works against that, however. DR. RHYNEER replied that there is no evidence it does. SENATOR SEEKINS returned to earlier discussion, saying, "I think the answer to your question about whether or not your physician has to accept that fee is correct, but you get to go and say, 'Will you do this for me?' It's not that you have to accept the entire panel of people that you send to that physician." 2:53:12 PM SENATOR WILKEN asked whether this legislation will help attract physicians to Alaska or will deter them. SENATOR SEEKINS opined that it will help, expanding the universe of available physicians. 2:54:15 PM MIKE HOGAN, Executive Director, Alaska Physicians and Surgeons, noted that his organization is a 170-member physician group in Anchorage. He spoke in strong support of SB 299. In answer to Senator Wilken's question, he said his group has been working with other entities to create the most favorable health care environment in Alaska to attract new physicians - this is one of their chief goals, and this bill is one piece among several pieces of legislation over the years. He said the likely relationship with insurance carriers is one criterion that new doctors will look at. Now that the Supreme Court has cleared the AWP idea, he surmised there will be an increase in legislation in other states. He offered his belief that this will attract new physicians and be good for patients. SENATOR ELTON pointed out an element not being discussed: the ability of employers of large numbers of people to negotiate health care costs, which also would benefit patients. He said it seems the AWP system will give less incentive for any health care provider to negotiate a fairly significant break for the employer - and thus for the employee. MR. HOGAN referred to the group-discount model, called "steerage," saying it works much better in states with an overabundance of physicians. The state medical association has calculated Alaska to be 400 physicians short, out of a private physician population of about 1,200. Some plans other than Blue Cross have had trouble establishing significant panels in this state. He asked Senator Elton to elaborate on his concern. SENATOR ELTON explained that he understands the benefit of patients' ability to choose their doctors. However, this also reduces employers' ability to negotiate lower rates, and that ability would benefit patients through either lower costs or a broader menu of health care options. MR. HOGAN reported that Kentucky has looked at this issue and costs for the last ten years; he indicated he could provide that information, and said the state contends that it hasn't significantly affected costs. Acknowledging that legislators will have to weigh the argument posed by Senator Elton when deliberating, he nonetheless emphasized focusing on patients' ability to choose their health care providers. SENATOR ELTON requested that Mr. Hogan provide the information from Kentucky. CHAIR DYSON pointed out that when there is are negotiated lower prices for one group of employees, it works against people who don't have insurance and thus pay their own way. 3:00:12 PM SENATOR OLSON asked how this bill would affect the "638" contractors. MR. HOGAN said he didn't know, but could provide an answer. CHAIR DYSON asked to hear from any testifiers who had time constraints or wouldn't be available the following Wednesday. 3:01:12 PM GREG LOUDON, Health Care Consultant, Willis of Alaska, spoke in opposition to SB 299. He began by discussing cost containment, a broad term for a toolbox of methods to reduce costs for health plans. He said contracting with a select group of providers is one of the best methods his organization has for limiting costs. They can't expect discounts from providers without offering them directed health care dollars in exchange. He related examples. He explained that contracting is key to offering and using cost- containment methods; he mentioned the quality of the provider and ongoing care. Mr. Loudon said it isn't just a matter of price. When choosing health care providers, they check the background and experience as well as any complaints. Health plan members know there has been a basic level of quality assurance, and can choose providers outside of the contract - but at a lower reimbursement level. He said health savings accounts and health reimbursement accounts are dependent on getting good data, including price and quality data. The contracts provide good data. These management programs are another way to contain costs, he suggested, and should work with the contractor providers to try to improve the quality of care and decrease the time people spend in hospitals or other high-cost treatment options. 3:04:13 PM SENATOR OLSON asked how to ensure health maintenance organizations (HMO) don't become a predominant provider of health care in Alaska. MR. LOUDON replied that he doesn't see how this bill would prevent that. He offered his understanding that the reason Alaska doesn't have HMOs is that any provider which wants to take risks is required to file as an insurance company. He said there are lots of hoops to jump through besides the contracting issue this bill addresses. 3:05:10 PM COLLEEN SAVOIE, Willis of Alaska, noted that her organization represents a number of insured plans and large (indisc.) entities. She spoke in opposition to SB 299 because it would result in increased medical costs. She pointed out that employers are struggling with the increased cost of health care. They are reducing benefits, increasing the employee contribution rate or eliminating it altogether. Using a preferred provider network has been very successful so far in helping to control health care costs, Ms. Savoie said. She gave an example, noting that SB 299 would include hospitals as well as other providers. She asserted that AWP-type legislation will affect costs. She cited a 2001 study published in the Journal of Health Economics as saying health expenditures are higher when AWP laws are enacted. Ms. Savoie also noted that the National Association of Health Underwriters in 2003 identified AWP legislation as a threat to market stability. She told members the Federal Trade Commission (FTC) opposes AWP legislation. Directing attention to a report by the FTC and the Department of Justice, published in July 2004, Ms. Savoie encouraged members to review this report. She noted that it says AWP laws have anti-competitive effects; make provider discounts less likely; and restrict the ability of health insurers and plans to structure offerings with varying levels of choice. Thus they actually reduce the options. 3:09:58 PM SENATOR ELTON requested copies for the committee of the 2001, 2003 and 2004 reports Ms. Savoie had referenced. JACK McRAE, Senior Vice President, Blue Cross Blue Shield of Alaska (Blue Cross), informed the committee that his company has about 50 percent of Alaska's physicians on contract now, and believes this saves the membership hundreds of thousands of dollars. With the contracts, the company is able to negotiate with the physicians. He emphasized that his company does pay when people go to non- contracted physicians, though it may pay less. Furthermore, regarding continuity of care, Mr. McRae said Alaska's legislature addressed the issue in 2000 by passing a so-called patients' bill of rights, which Blue Cross supported. Under that, a patient continues to be seen by the physician until treatment is completed, and Mr. McRae said Blue Cross continues to pay the bills as before; he gave an example. Mr. McRae mentioned the FTC study and concluded by highlighting another study by Arthur Andersen (ph), completed for 1998-2002 that showed AWP legislation would increase costs by 12 percent. 3:12:57 PM WILLIAM PFEIFER, D.C., Alaska Chiropractic Society, thanked Senator Seekins and the committee for bringing up this bill, which he believes is needed in Alaska. However, he pointed out language concerns that he hadn't yet had time to address with the sponsor. He referred to page 1, line 12, through page 2, line 1, which read, "This subsection does not affect different reimbursements to different types of health care providers, nor does if affect coverage for the service of a particular type of health care provider." Saying it seems to reverse the intent of the legislation, Dr. Pfeifer proposed exploring that further with the sponsor in order to clarify it or have it deleted. He referred to page 2, line 9, "(B) does not include insurance under the Alaska Workers' Compensation Act, AS 23.30. He said there may be some good rationale for that. However, having sat on the medical services review committee for workers' compensation this last year, he'd filed a minority report because the recommendation was to allow the insurance company or employer to choose the treating physician of an injured worker. Dr. Pfeifer expressed concern that the aforementioned language might have some other meanings, and requested clarification. He also voiced concern about the redefinition of "health care provider", which includes facilities. Dr. Pfeifer said it's not that he thinks hospitals and such should be protected under AWP. However, classifying them as providers removes the existing language that says (indisc.). Dr. Pfeifer pointed out that facilities don't have an occupation or a license, and said there is no reference back to that. He cited the example of an insurance company that contracts with a hospital for x-rays; he expressed concern about excluding small facilities (indisc.) and mentioned financial agreements and absorption by broader bases. Dr. Pfeifer expressed hope that he'd have an opportunity to work with the sponsor before the bill moved forward. CHAIR DYSON requested that Dr. Pfeifer work with the sponsor before next week, when the bill would likely move from committee. 3:16:50 PM ROSE KALAMARIDES, Administrator, Alaska Teamster-Employer Trust, spoke briefly in opposition, saying Mr. Loudon and Ms. Savoie of Willis of Alaska had summed up her organization's position. CHAIR DYSON thanked participants. He held SB 299 in committee.