Legislature(2001 - 2002)
03/08/2001 01:35 PM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
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= bill was previously heard/scheduled
SB 37-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE
CHAIRMAN PHILLIPS announced SB 37 to be up for consideration. He
said he had information from the Department of Law and had talked
to the Division of Insurance for their recommendations.
SENATOR KELLY, sponsor of SB 37, said that he was awaiting the work
of the committee.
MR. ED SNIFFEN, Department of Law, testified that if the bill was
to take on a form similar to statutes in Washington, it would
satisfy their anti-trust concerns. He explained that the most
important feature in the Washington law that is not present in SB
37, is that it doesn't allow for negotiation of anything that would
constitute a violation of state or federal anti-trust laws.
In Washington, any discussion about price or price
related terms is not allowed under any circumstance. With
respect to other terms, the way that system works is a
health care year or a health insurer, and there is some
question as to whether those terms are adequately
defined, they would petition the Washington Department of
Health to engage in the conduct or activities that they
would propose. The Department of Health could do a couple
things. They could ask for an informal opinion from the
Attorney General on whether or not the negotiations would
pose an anti-trust problem or they could proceed with
reviewing the application on their own. And during that
process, they can request information and hold hearings
and do other things to insure that the process is fair.
One of the things about the Washington law that we don't
see in SB 37, which I think would be helpful in getting
around the state action review, is the Department of
Health in Washington has the authority to actually
control certain terms of the contracts. They can
establish rules that govern provisions of any negotiated
contract, so they can insure that it was fair and
included the terms the Department thought were necessary.
It's that level of state involvement that gets us around
the state action doctrine.
MR. SNIFFEN said the regulations Washington has are also fairly
detailed, but not as detailed as we would like. He recommended
Alaska have more detailed information from physicians before
negotiations started. SB 37 requires a brief report of what they
intend to do and the Department would like information about the
geographic areas, the specialties involved and other things.
He said the restriction in Washington's bill is similar to SB 37 on
the percentage of physicians that can be represented. There is a 30
percent number in current SB 37, which they would like to see
closer to 20 percent to insure that the market imbalance isn't
shifted too far in favor of one group. Also, the time allowed for
review by the attorney general of 30 days doesn't seem realistic
considering the information the Department would have to look at
and he suggested 90 days.
Number 1000
SENATOR KELLY responded that the problem he sees is that he is not
necessarily trying to get around anti-trust provisions. He is
trying to get at what the State Action Doctrine was created for. It
excepted the federal anti-trust laws for some situations that
needed to have state oversight so that the individuals could get
around federal anti-trust laws. "The problem with the Washington
bill is that it takes essentially the federal statutes and
incorporates it into law. You have little or no relief to
physicians who simply want to get together on a voluntary basis and
not be able to boycott or have retaliatory actions, but to be able
to discuss things on a voluntary basis with insurance companies
without being sued for a violation of the anti-trust laws."
SENATOR KELLY said the Washington laws really didn't provide a
state action doctrine as envisioned by Parker v. Brown, the Supreme
Court decision that allowed it.
MS. KAREN DECKER-BROWN said she is in the final phase of a nurse
practitioner program and is concerned how it would impact her
practice once she seeks employment. She has heard from patients who
would like to continue using nurse practitioners, but some
physicians are not hiring anyone but doctors.
MS. DECKER-BROWN said because Alaska doesn't have HMOs, she sees 5
- 10 doctors arriving instate per week to set up shop in Alaska,
because of their dissatisfaction with the whole HMO picture.
MS. LAURA SARCONE, ANA, ANPA AND AK-ACNM, said she submitted
amendments that would replace section 23.50.020 (n), page 6, lines
28 - 31 and page 7, lines 1 - 2. She is waiting to hear if that
amendment is included. If it is, they feel their scope of practice
issues have been addressed at this point. If that's not the case,
they would have to revisit the issue. She added that she would
follow the bill closely since there are other areas of interest to
her organization.
CHAIRMAN PHILLIPS said that Senator Kelly indicated the legislative
drafters were working on the amendment now.
CHAIRMAN PHILLIPS asked if she would still oppose the bill if the
amendment is adopted.
MS. SARCONE said they would follow the bill closely because there
are other areas in the bill that could affect their interests.
MR. MIKE HAUGEN, Executive Director, Alaska Physicians and
Surgeons, said he wanted to respond to Mr. Sniffen's package.
I have reviewed the Washington Administrative Codes
specifically on their bill. I need to do a little bit of
explaining. First of all, in the Washington model of this
bill, what they've done as far as we're concerned is
nothing more than incorporate what is called a messenger
model of communication guidelines promulgated by the
Federal Trade Commission into their bill. The messenger
model communications are not negotiations. Under the FTC
guidelines, all the messenger is allowed to do is pass
information between the providers, the doctors and the
health insurers. No negotiation is allowed to happen. I
specifically referenced the Washington Administrative
Code 246.25.040, which states that the messenger or the
third party communicator cannot provide any
recommendations as to whether or not they should accept
or reject the health care offer. They only deliver the
offer to providers and communicate to providers an
evaluation of the positive or negative aspects of it. I
think part of the reason the Washington model is made
unworkable is simply because it's not real negotiation.
It's nothing more than the federal rules we currently
operated under without a state action doctrine bill.
Secondly, as far as Washington state's provisions that
they are not allowed fee negotiations - while we feel it
is critical that the fee negotiations be included simply
because it's been the FTC's interpretation that even non-
fee related items in contracts can affect the price - So
whether or not we're talking about fee related issues, if
the doctors overstep the bounds of the state action
doctrine law, they will be subject to an anti-trust
violation.
As far as Mr. Sniffen's comments about having the
Department of Law or Health, in the case of Washington,
control terms and contracts, that's something we would
have to look at down the road, but on its face, we don't
have a problem with that in that the bill currently gives
the Department of Law the ability to make regulations
anyway and spell out in detail what they would be.
As far as providing more detailed information, defining
geographic areas and extending the time period from 30 to
90 days, again, those can all be worked out at a later
date with the Department of Law. Some of them may be good
recommendations.
The bottom line as far as the Washington state law goes,
we think it's unworkable and that's why Texas abandoned
that approach, particularly the public comment sections.
We feel the Department of Law represents the people of
Alaska and that is more than adequate in representing
their interests.
Number 1640
CHAIRMAN PHILLIPS asked why only one physician group had applied in
Texas since 1999.
MR. HAUGEN replied that he knew there was a fight over the
implementing regulations. He was told the Attorney General in Texas
wrote the rules such that it became incredibly burdensome on the
physician's groups to make the bill work. Legislators got upset
with the AG's office and they are trying to clarify in another bill
what the intent was.
CHAIRMAN PHILLIPS asked if this bill could run into the same
stonewall.
MR. HAUGEN answered that it may, but they feel they have to keep
the ball moving forward. They hope the legislature makes the intent
of the bill as clear as possible to the Attorney General's office.
CHAIRMAN PHILLIPS asked him to comment on the Texas legislation
that will make negotiation mandatory.
MR. HAUGEN answered that he wasn't aware of that, but that was not
their intent.
CHAIRMAN PHILLIPS asked how this would benefit the public and the
doctors as a matter of public policy.
MR. HAUGEN replied that it would benefit the doctors, because right
now there is an enormous amount of paranoia among them with
anything related to contracts. They see great inefficiencies in the
current system and they are precluded and are scared to talk to
each other or carriers about those inefficiencies. As far as
benefiting the public goes, it would increase competition in
Alaska, which would benefit consumers by creating a large panel for
a carrier instantly that currently doesn't have much a presence in
the market. He thought current players opposed this bill, because
they didn't want to see increased competition.
SENATOR DAVIS asked how many patients approached him saying that
they thought this would protect their rights and it was something
they needed.
SENATOR KELLY answered that is a technical bill and most people,
when they go to the doctor, are sick and aren't thinking about
legislation and regulations that encircle the health care industry.
"I do know when you have large entities who control large portions
of the market like these few insurance companies do, they have the
money and the lives to provide; therefore, they have power. They
can dictate very much to the doctors how they operate when dealing
with their patients. That isn't necessarily healthy…"
SENATOR DAVIS said she agreed with him about them not wanting to
change the anti-trust laws, but if there were some real concerns
about price fixing or being salaried, someone should be saying that
other than the doctors, themselves. Everything she saw came from a
physician's standpoint. She asked why he thought this bill would
allow doctors to share information back and forth and set rates
based upon what they feel. It might turn out like the group in
Texas that has a law allowing them to do it, but they still don't
trust each other.
SENATOR KELLY responded that in Texas, he didn't think it was a
matter of not trusting each other, but the regulations hadn't been
straightened out yet. He explained that the group in Fairbanks
thought they were obeying the law, because they were having
discussions among themselves about contract negotiations. They were
threatened with legal action just from engaging in conversation.
"This bill says they can engage in that conversation on a voluntary
basis. If the insurance companies don't want to negotiate with
them, they don't have to."
MR. HAUGEN said he thought Senator Kelly was correct.
SENATOR KELLY added that a physician may have a procedure that he
would recommend for a patient, but he would have to get permission
under some contracts to give that treatment to the patient. If the
insurance company said no, they weren't going to pay for it, that
would be end of it. They can even have gag orders in the contracts
that would restrict the doctors from mentioning things to their
patients. Physicians want the freedom to discuss with, not only
other doctors, but with their patients. It gives the physicians
more power to speak up for their patients.
MS. KAREN DECKER-BROWN asked what Senator Kelly's personal interest
in sponsoring this bill is. She asked if any of his family members
are employed by physicians.
CHAIRMAN PHILLIPS responded that Senator Kelly was representing his
constituents.
SENATOR KELLY responded that, "It is truly irrelevant what my
family is doing. My wife is a receptionist for a clinic. She has
been for a year."
MS. DECKER-BROWN said that he would be impacted by this bill since
his wife was being paid by those physicians.
SENATOR KELLY said that the outcome of the bill would not affect
her.
MR. SNIFFEN responded to the Mr. Haugen's comments on the
Washington legislation. He said he didn't think it was a messenger
model, but was kind of a hybrid, which provides the kind of
oversight that is necessary that the U.S. Supreme Court thinks is
necessary to invoke the state action doctrine.
MR. BOB LOHR, Director, Division of Insurance, said the thrust of
the proposed approach is consistent with the Washington state model
that is suggested by the Department of Law, but their focus is on
fee provisions, specifically eliminating the authority to negotiate
fees. He explained that is what most of the proposed amendments
would do. Their primary concern is the cost impact of this
agreement and they take a different view of the impacts than the
physicians' representatives have. If this were designed to increase
availability of health coverage in Alaska, that would be good, but
the Division of Insurance hadn't heard health care insurers lining
up to say given the opportunity to negotiate with a group of
physicians, they would like to come to the state. They would like
to hear that from those groups, if that were truly the case.
TAPE 01-9, SIDE B
CHAIRMAN PHILLIPS asked if there were further questions and there
were none. He adjourned the meeting at 2:22 p.m.
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