Legislature(2001 - 2002)

03/01/2001 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SB  37-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE                                                                   
                                                                                                                              
CHAIRMAN PHILLIPS announced SB 37 to be up for consideration.                                                                   
                                                                                                                                
SENATOR PETE KELLY, sponsor, said:                                                                                              
                                                                                                                                
     The health  care industry nation-wide  is changing rather                                                                  
     rapidly  and so is the health  insurance industry. In  the                                                                 
     last few  years, the major health  insurance companies  in                                                                 
     the United  States have gone from 18 down to six  and as I                                                                 
     understand  it, the number might  be lower than that  now.                                                                 
     The bottom line is that  there are fewer and more powerful                                                                 
     insurance companies in the  market and as they have become                                                                 
     fewer in number, they have  gained more and more power and                                                                 
     wield much  more power in the market place. Unfortunately                                                                  
     physicians'  position in the  market place has not grown.                                                                  
     As  a matter  of fact,  it's  restricted somewhat  by  the                                                                 
     provisions  of the Sherman Clayton  Anti-Trust Act,  which                                                                 
     does  not allow  them to gather  together as  a group  and                                                                 
     negotiate with the large insurance companies.                                                                              
                                                                                                                                
     This was foreseen  by the courts many years ago,  and they                                                                 
     created what is called as  State Action Doctrine, which is                                                                 
     where a state can have active  oversight and allow for the                                                                 
     gathering  together  of  groups  in the  market  place  to                                                                 
     negotiate. And as long as  they have that state oversight,                                                                 
     they  won't be guilty  of infringement  of the Anti-Trust                                                                  
     provisions of the Sherman Clayton Act.                                                                                     
                                                                                                                                
     Active  oversight  will  keep the  physicians  group  from                                                                 
     forming  a monopoly and  will give them  the needed  power                                                                 
     they  need to negotiate  against these  smaller in number                                                                  
     and  greater   in  power  insurance  companies   that  are                                                                 
     beginning  to have almost monopoly  power in the State  of                                                                 
     Alaska.                                                                                                                    
                                                                                                                                
     This  State Action Doctrine  is a  federally endorsed  and                                                                 
     court endorsed  provision and is resisted somewhat  by the                                                                 
     insurance  companies because right now they have  a lot of                                                                 
     power  in the market  and they want to  keep it that  way.                                                                 
     The  State Action  Doctrine allows  some  fairness in  the                                                                 
     market  place  so  that  people  can  continue  to  be  in                                                                 
     business while they go up  in negotiations against some of                                                                 
     the largest companies in the world.                                                                                        
                                                                                                                                
SENATOR  KELLY said  the committee  would hear that  there are  huge                                                            
costs  associated with  this legislation  and that  it would  change                                                            
business as we know it  in the state. He didn't agree. He reiterated                                                            
that it  has oversight by  the State Attorney  General's Office  and                                                            
everything in the bill is voluntary and it has a sunset date.                                                                   
                                                                                                                                
Number 3350                                                                                                                     
                                                                                                                                
SENATOR  LEMAN  said he  had  a letter,  dated  February  8, from  a                                                            
registered  nurse who expressed concern  that this could  affect her                                                            
practice.                                                                                                                       
                                                                                                                                
SENATOR KELLY responded  that the last committee amended the bill to                                                            
address her  concerns, although  he has been  told that they  didn't                                                            
like the  language. He has  asked them to  provide language  that is                                                            
acceptable to them. It is his intent to exempt the nurses.                                                                      
                                                                                                                                
MR. CLYDE SNIFFEN, Department  of Law, said they have concerns about                                                            
the bill that  are addressed in a letter dated February  25. He said                                                            
that a  group of physicians  in Fairbanks  requested this bill  last                                                            
year when it  was drafted as HB 256.  The Department of Law  has the                                                            
same concerns  now, because the language in the bill  hasn't changed                                                            
any. He elaborated that  the State Action Immunity Doctrine requires                                                            
that  if a state  wants to  clearly  specify it  intends to  replace                                                            
competition with regulation,  it needs to take an active role in not                                                            
only supervising, but implementing  and reviewing that kind of anti-                                                            
competitive  conduct.  That  would  happen  through  the  Regulatory                                                            
Commission of Alaska that  regulates practices of utilities up here.                                                            
"That process  requires submission of utility companies  information                                                            
regarding  rates and services.  The information  is reviewed  by the                                                            
RCA;  hearings  are   held;  experts  are  involved,   testimony  is                                                            
provided; there's an appeal  procedure. Competition is replaced with                                                            
regulation."                                                                                                                    
                                                                                                                                
SB 37 attempts  to replace competition with some kind  of regulation                                                            
that doesn't  rise to  the level  of active  state involvement  that                                                            
would  exempt this  type of  conduct from  the anti-trust  laws  Mr.                                                            
Sniffen said. The amount  of authority given to the Attorney General                                                            
under  this  bill  is  very limited  and  a  very  small  amount  of                                                            
information would  be provided to him in the beginning  to determine                                                            
if  negotiations  should  be  allowed  or  whether   the  negotiated                                                            
contract is  appropriate. Other things  in the bill just  don't give                                                            
the state the  kind of active involvement the State  Action Immunity                                                            
Doctrine would require  before this kind of activity would be exempt                                                            
from federal anti-trust laws.                                                                                                   
                                                                                                                                
They  have concerns  with  the  definition  of concerted  action  of                                                            
boycotts  and there  is confusion  as to  what kind  of conduct  the                                                            
physicians would be able  to engage in if things weren't going their                                                            
way. He didn't know if  the concept of market power in this bill had                                                            
any connection  to what the market  power really is in Anchorage  or                                                            
other parts of Alaska.                                                                                                          
                                                                                                                                
MR. SNIFFEN said he hadn't  seen any information saying these issues                                                            
were really  a problem  in Alaska.  He thought  physicians in  rural                                                            
areas might  already have a certain  amount of power in negotiating                                                             
with health  care plans. In a large  area like Anchorage,  there may                                                            
be   specialty   groups  of   physicians,   like   neurologists   or                                                            
dermatologists,  where there  just aren't a  lot of them and  health                                                            
care plans don't have a  lot of choice in dealing with those limited                                                            
specialties.                                                                                                                    
                                                                                                                                
In comments  from Senator  Kelly's office there  was a concern  that                                                            
the large  insurance companies  are already  exempt from  anti-trust                                                            
laws and that  is why we need to have  this balancing of  power. But                                                            
Mr. Sniffen explained  that the bill does not address  itself to the                                                            
health insurers;  it only addresses health benefit  plans. Those are                                                            
different  from  health  care   insurers  and  it  is  an  important                                                            
distinction.  One insurer  may have  a large portion  of the  health                                                            
care market here in Alaska,  but there are many health benefit plans                                                            
that may or may  not be insured by that insurer. To  say that health                                                            
insurers  are exempt from  anti-trust laws  may or may not  be true,                                                            
but health  insurers are  not the target of  this bill; it's  health                                                            
benefit plans.                                                                                                                  
                                                                                                                                
CHAIRMAN  PHILLIPS  asked if  he had  concerns  or was  he in  total                                                            
opposition to this approach.                                                                                                    
                                                                                                                              
TAPE 8, SIDE B                                                                                                                
                                                                                                                                
MR.  SNIFFEN  said it  would  be difficult  to  change  the bill  to                                                            
satisfy  their concerns.  It would  have to include  oversight  by a                                                            
regulatory body such as  the RCA or the Division of Insurance with a                                                            
hearing mechanism.                                                                                                              
                                                                                                                                
CHAIRMAN   PHILLIPS   said   he  could   understand   philosophical                                                             
opposition,  but he would  like to see alternative  language  if Mr.                                                            
Sniffen could  do that. He asked if the AG's office  looked into the                                                            
Fairbanks problem.                                                                                                              
                                                                                                                                
MR. SNIFFIN  answered that they hadn't,  but Mr. Lohr could  comment                                                            
on that further.                                                                                                                
                                                                                                                                
CHAIRMAN PHILLIPS said that he was farther down on his list and                                                                 
could answer that question when the committee got to him.                                                                       
                                                                                                                                
MS.  LAURA SARCONE,  Alaska  Nurses  Association, the  Alaska  Nurse                                                            
Practitioner's  Association and the  Alaska Chapter of the  American                                                            
College of Nursing,  strongly opposed SB 37, which  would give broad                                                            
anti-trust   immunity  in  negotiations   between  individuals   and                                                            
competing physicians and health benefit plans. She said:                                                                        
                                                                                                                                
     A  lot of  physicians  believe  that the  anti-trust  laws                                                                 
     prevent them from negotiating  fair fees with large health                                                                 
     plans  and insurance  companies. Therefore,  they support                                                                  
     this legislation  in order to  "level the playing field."                                                                  
     Existing   anti-trust   law,   however,   already  allows                                                                  
     physicians  to form physician  controlled group practices                                                                  
     or  other joint  ventures  that  enable them  to increase                                                                  
     their  bargaining  power  and offer  their  services  more                                                                 
     efficiently and effectively.  Non-physician providers also                                                                 
     already have this capability.  The real complaints doctors                                                                 
     have against  the anti-trust  laws is it prevents them  as                                                                 
     competitors  from jointly  negotiating  fees. SB 37  would                                                                 
     allow   individual   competing   physicians   to  jointly                                                                  
     negotiate  fees that  remove competition  from the health                                                                  
     care  field altogether.  This  can only  result in higher                                                                  
     prices  to consumers  and lower quality  health care.  The                                                                 
     immunity  proposed  in SB  37 is unnecessary.  Anti-trust                                                                  
     laws  already provide  a remedy against  anti-competitive                                                                  
     abuses  by health  benefit plans  in their  dealings  with                                                                 
     health  care   providers.  State  and  federal   laws  and                                                                 
     initiatives  can address the  practices of health benefit                                                                  
     plans.                                                                                                                     
                                                                                                                                
     Permitting  provider cartels  will not solve problems;  it                                                                 
     will   only  create   new  ones.   This   bill  would   be                                                                 
     particularly  harmful to advanced nurse practitioners  and                                                                 
     certified  nurse midwives  whose expanded  role in health                                                                  
     care has  often been opposed  by physicians. The American                                                                  
     Medial  Association has  made it their  priority to  limit                                                                 
     the  scope of practice  of advanced  nurse practitioners,                                                                  
     certified   nurse  midwives,   and   other  non-physician                                                                  
     practitioners.  Their  members have repeatedly  sought  to                                                                 
     restrain  the  trade of  non-physician  practitioners  and                                                                 
     their statements and behavior  to this effect are a matter                                                                 
     of public record.                                                                                                          
                                                                                                                                
     The  Judiciary   Committee  adopted  an  amendment   which                                                                 
     intends  to prohibit physicians  from reaching agreements                                                                  
     to  limit  the  coverage  or  reimbursement   of services                                                                  
     provided by non-physician  providers. With all due respect                                                                 
     to  members of  that committee,  I want  to state clearly                                                                  
     that  this amendment  would be ineffective  in protecting                                                                  
     advanced  nurse practitioners  from continuing efforts  by                                                                 
     physicians  to limit our role in the health care  delivery                                                                 
     system.  We  greatly  appreciate  Judiciary's  attempt  to                                                                 
     protect  our interests,  however, we  do not believe  this                                                                 
     amendment  preserves  the vital  protection  we currently                                                                  
     enjoy under existing anti-trust  laws. While the amendment                                                                 
     suggests  that  advanced nurse  practitioners  may retain                                                                  
     some  anti-trust  protection   against  the  most blatant                                                                  
     exclusionary  practices,  it  does not  insure protection                                                                  
     against the more subtle  practices that, in fact, pose the                                                                 
     greatest risks.  The proposed amendment would  not prevent                                                                 
     physicians  from  collectively  negotiating   with health                                                                  
     plans  for  contractual  terms  that have  the  effect  of                                                                 
     placing  non-physician  providers at  a great competitive                                                                  
     disadvantage.  Consider, for example, contract  terms that                                                                 
     would  require that  a physician  be present  for certain                                                                  
     procedures  even though advanced  nurse practitioners  can                                                                 
     furnish  those procedures  independently  under state  and                                                                 
     federal  law  - or  contract terms  that  impose "quality                                                                  
     standards"   that  forbid  or   discourage  referrals   to                                                                 
     advanced  nurse practitioners  - or  terms that establish                                                                  
     reimbursement  rates  that are  so low  for non-physician                                                                  
     providers  that  it  is not  viable  for  any of  them  to                                                                 
     participate  with health plans  as independent providers.                                                                  
     Historically,  the playing  field upon  which we, as  non-                                                                 
     physicians,  have sought  to compete  with physicians  has                                                                 
     not been a  level one and this has been primarily  because                                                                 
     of physician's dominance  of the health care market place.                                                                 
     Non-physicians have managed  sometimes against all odds to                                                                 
     establish  a place in  that market.  We provide consumers                                                                  
     with  greater  access  and  more  choice.  Advanced  nurse                                                                 
     practitioners  and  certified  nurse midwives  are health                                                                  
     care providers  with increased access, improved  outcomes,                                                                 
     lower  costs and  increased  satisfaction  rate. In  1998,                                                                 
     over  1,400  Alaskan  mothers  chose   a certified   nurse                                                                 
     midwife  to  attend  the  birth  of  their  babies.   That                                                                 
     represents  16.7  percent   of all  vaginal   births  that                                                                 
     occurred in the state that  year. Consumers in Alaska want                                                                 
     to choose  the health care provider  who best meets  their                                                                 
     needs.  SB 37 will both limit  choice and increase costs.                                                                  
                                                                                                                                
MR. MICHAEL HAUGEN, Executive Director, Alaska Physicians and                                                                   
Surgeons, supported SB 37. He said:                                                                                             
                                                                                                                                
     SB  37  would   allow  physicians  to  get  together   and                                                                 
     negotiate  as a  group with  third party  payers provided                                                                  
     that  the State  of  Alaska manages  the  negotiation  and                                                                 
     provides oversight.                                                                                                        
                                                                                                                                
He said that  the dramatic consolidation  of the health care  market                                                            
has left the state  with a few dominant carriers for  private health                                                            
insurance who  offer contracts on a "take it or leave  it" basis. In                                                            
his  opinion,  the  negotiation  playing  field  is  wildly  out  of                                                            
balance. SB 37  would help that balance and might  actually increase                                                            
the access of  citizens of the State of Alaska to  additional health                                                            
insurance  carriers.  He explained  that currently  anti-trust  laws                                                            
prohibit his members from  getting together to discuss fees and non-                                                            
fee related issues.                                                                                                             
                                                                                                                                
     It's very  difficult for an out-of-state  or small player                                                                  
     in   this  market  to   establish  a   foothold.  We   are                                                                 
     geographically  isolated from the rest of the  country and                                                                 
     our  population is fairly  small relative  to the rest  of                                                                 
     the  country.  He has  talked to  other  health insurance                                                                  
     carriers who  would like to do business in the  state, but                                                                 
     for financial reasons find  it very difficult to establish                                                                 
     a large  panel of doctors in  this state. They have  to do                                                                 
     it one doctor  at a time. This bill would allow  groups of                                                                 
     doctors  to  get  together  and  actually  negotiate   one                                                                 
     contract  with  an additional  carrier  or more  than  one                                                                 
     carrier  and  assure that  carrier  that if  the contract                                                                  
     terms  are  acceptable,   not  only  to  the carrier   and                                                                 
     doctors, but  also to the Attorney General's office,  that                                                                 
     carrier  would  instantly  have  a  very  large  panel  of                                                                 
     doctors available for their  customers. At that point, the                                                                 
     carriers  are in a position to  actively market and  spend                                                                 
     the  money that's  required to  market a new  plan in  the                                                                 
     state. Currently, they find that almost impossible.                                                                        
                                                                                                                                
MR. HAUGEN  said the  fear is  that if physicians  could  negotiate,                                                            
that would  sharply  increase fees  and force the  carriers to  pass                                                            
them on to the  subscribers in the form of higher  premiums. This is                                                            
unfounded, as the Attorney  General's Office will ultimately approve                                                            
and  oversee  the negotiations  including  the  fee  schedules.  The                                                            
doctors do  not have the  final veto power.  The bill also  includes                                                            
provisions  on page 7, line  25 that allow  the Attorney General  to                                                            
adopt regulations necessary to implement this chapter.                                                                          
                                                                                                                                
MR. HAUGEN  said the idea  of a State Action  Doctrine is a  federal                                                            
policy and is designed  to be implemented in some form and since the                                                            
Attorney General's  office is the expert on anti-trust  issues, they                                                            
would also have the responsibility  for implementing it. To say this                                                            
bill  would  replace   competition  with  regulation   is  a  little                                                            
inaccurate  because in  his opinion  right now  competition  between                                                            
health  insurers and  their relative  size to a  very small  doctors                                                            
practice doesn't exist.                                                                                                         
                                                                                                                                
Additionally,  on  page 5,  the parties  are  required  to give  the                                                            
Attorney General's  office information on the subject  matter of the                                                            
negotiations  and the  attendant discussions.  It  also provides  on                                                            
lines 3  and 13, page 5,  that he may disallow  the negotiations  if                                                            
they are  not satisfied.  He said they need  to see some  guidelines                                                            
that would satisfy the AG's office.                                                                                             
                                                                                                                                
MR. BOB LOHR, Director, Division of Insurance, said:                                                                            
                                                                                                                                
     On  September  20, 2000  the Alaska  Health  Care Network                                                                  
     (AHN),  an association of 86  Fairbanks physicians agreed                                                                  
     to settle  U.S. Trade Commission charges that  the AHN and                                                                 
     its  members  agreed to  fix prices  dealing  with health                                                                  
     plans  and obstructed the entry  of new health plans  into                                                                 
     Fairbanks.  AHN acted as the  collective bargaining  agent                                                                 
     of  its  physician  members orchestrating   agreements  on                                                                 
     prices  and other terms.  This resulted  in higher prices                                                                  
     and fewer choices for patients of Fairbanks doctors.                                                                       
                                                                                                                                
MR. LOHR  said that  SB 37 would  make conduct  like that legal.  It                                                            
would  not violate  federal  anti-trust  law,  if the  State  Action                                                            
Doctrine requirements  are met. "However, in my opinion  and that of                                                            
the Division,  it would be bad public  policy or bad medicine.  This                                                            
bill will increase health  care costs. The amount of the increase is                                                            
not known."                                                                                                                     
                                                                                                                                
MR. LOHR said further that to date not one other state has                                                                      
implemented a law comparable to SB 37.                                                                                          
                                                                                                                                
     Why  should  Alaska   be on  the  cutting   edge  of  this                                                                 
     experiment?  All  agree  that  qualifying  for  the  State                                                                 
     Action  exemption is  fraught with peril.  You don't  know                                                                 
     whether a state scheme qualifies  for it until after it is                                                                 
     challenged  in federal court. Even if it does  qualify for                                                                 
     the  exemption,  it  will increase  costs  to  the Alaska                                                                  
     health  care  consumer.  It will  increase  the  costs  of                                                                 
     insurance  coverage and this  will quite likely result  in                                                                 
     reduced  availability  of coverage,  increase  numbers  of                                                                 
     people being  thrown into the uninsured pool and  possibly                                                                 
     reduce health  care benefits under existing plans.  To the                                                                 
     extent  that  self-insured  plans may  be covered,  and  I                                                                 
     believe  that's doubtful, it  could encourage a migration                                                                  
     into the self-insured pool.                                                                                                
                                                                                                                                
MR. LOHR continued:                                                                                                             
                                                                                                                                
     Our  attorneys  advise  us  that  self-insured  plans  are                                                                 
     covered  by the Employee  Retirement  and Income Security                                                                  
     Act  (ERISA) and these  plans would  thereby be preempted                                                                  
     from  state  law coverage.  So  whether  or not  the  bill                                                                 
     attempts   to  incorporate  them  currently,   it  is  the                                                                 
     Attorney  General's opinion that  they would be preempted                                                                  
     by federal law.                                                                                                            
                                                                                                                                
Number 3000                                                                                                                     
                                                                                                                                
CHAIRMAN PHILLIPS said  he understood the Judiciary Committee put in                                                            
an exemption for  nurses and asked why that was not  satisfactory to                                                            
the  Nurses  Association.  He asked  if  they  had a  legal  opinion                                                            
stating that the proposed exemption didn't cover them.                                                                          
                                                                                                                                
MS. SARCONE responded that language on page 6 says:                                                                             
                                                                                                                                
     This section  does not exempt from the application  of the                                                                 
     anti-trust  laws an agreement or conspiracy that  excludes                                                                 
     services  provided by a provider  or a group of providers                                                                  
     or that  limits the participation  or reimbursement  of or                                                                 
     otherwise  limits  the scope  of  services provided  by  a                                                                 
     provider  or a group  or providers which  is [indisc.]  to                                                                 
     the performance  of services that are within the  scope of                                                                 
     the occupational licenses held by the providers.                                                                           
                                                                                                                                
CHAIRMAN PHILLIPS said that was her own interpretation of what                                                                  
was said, not a lawyer's.                                                                                                       
                                                                                                                                
MS. SARCONE  replied  it was an  interpretation  arrived at  through                                                            
discussions  with policy  people in their  national organization  in                                                            
Washington  D.C. when they  worked on the  same bill at the  federal                                                            
level. This  amendment is almost verbatim  to an amendment  that was                                                            
added and failed to the federal bill.                                                                                           
                                                                                                                                
CHAIRMAN PHILLIPS said  that there is a sunset provision of 2006 and                                                            
asked if she opposed that.                                                                                                      
                                                                                                                                
MS. SARCONE answered that she opposed the whole bill.                                                                           
                                                                                                                                
CHAIRMAN   PHILLIPS  asked if  they had  this bill  as law for  five                                                            
years, would they not find out what the real costs would be.                                                                    
                                                                                                                                
MS. SARCONE  answered if mechanisms  were put in place at  the front                                                            
end  of this  legislation  that would  create  adequate  data to  be                                                            
collected,  they would have some answers  at the end of five  years.                                                            
                                                                                                                                
MR. LOHR  answered the same  question saying  he thought they  would                                                            
get a better indication  of the costs with a five year trial period,                                                            
but the  question of whether  or not to use  the Alaska health  care                                                            
market,  which  is  acknowledged  to be  a  fairly  fragile  market,                                                            
difficult to attract  to attract new entrants, as  a basis for doing                                                            
the experiment  is a good  idea. He also  cautioned that after  five                                                            
years he  wouldn't have exact  information.  He said in Texas  there                                                            
was only  one applicant  under a  similar law  that was passed  last                                                            
year. Staff for  the Texas Attorney General's office  told him today                                                            
that they are  surprised at the limited  number of applications  and                                                            
they  attribute  that  to fear  of  litigation  by  physicians.  The                                                            
doctors  are not  certain this  will qualify  for  the State  Action                                                            
exemption,  even  though the  Texas  law  provides for  far  greater                                                            
discretionary  authority by the Attorney  General of Texas  than the                                                            
Alaska law provides.                                                                                                            
                                                                                                                                
MS. NICOLE BAGBY,  Account Executive, Aetna, said  Mr. Mike Wiggins,                                                            
Vice President,  Aetna, was with her  to testify against  SB 37. MS.                                                            
BAGBY testified that:                                                                                                           
                                                                                                                                
     This   bill   would  allow   physicians   in   Alaska   to                                                                 
     collectively  bargain  for contractual  services and  fees                                                                 
     with  health insurance  companies if  the market share  of                                                                 
     the  insurer   is  greater  than   50  percent  within   a                                                                 
     geographic area. In testimony  before the Senate Judiciary                                                                 
     Committee,  representatives for  the physicians indicated                                                                  
     the legislation  was primarily aimed at two vendors,  Blue                                                                 
     Cross and Aetna.                                                                                                           
                                                                                                                                
MS. BAGBY explained that,                                                                                                       
                                                                                                                                
     Aetna's  primary business in  Alaska is to act as a  third                                                                 
     party  administrator  for close  to 100,000  self-insured                                                                  
     members  including the  State of Alaska  employees.  Aetna                                                                 
     also  insures only  about  10,000 Alaskans  through  fully                                                                 
     insured  products.  Our first  concern  is that  it's  not                                                                 
     clear  from the bill whether  it legally applies to  self-                                                                 
     insured entities,  which are those normally exempted  from                                                                 
     most  forms  of  insurance  regulation   by the  Employee                                                                  
     Retirement  and  Income  Security  Act  (ERISA).  We  will                                                                 
     assume  for  the  testimony   that  it  does,  but  it  is                                                                 
     something  we recommend  that the  committee investigate.                                                                  
     The  remainder of  our business,  10,000  members, is  not                                                                 
     large  enough to be considered  as having market power  or                                                                 
     market share using any reasonable definition.                                                                              
                                                                                                                                
     I would  like to point out that  this type of legislation                                                                  
     has  only been  adopted  in Texas,  a state  that has  far                                                                 
     greater  degree of  managed care  than Alaska.  The  Texan                                                                 
     bill  is still in its  infancy. We urge  the committee  to                                                                 
     carefully  review the regulations  that were necessary  to                                                                 
     implement the Texas legislation  to get a good idea of the                                                                 
     complexity  of the issues, which  must be overseen by  the                                                                 
     Attorney General's office.                                                                                                 
                                                                                                                                
     The cost to  the state will be substantial, if  you choose                                                                 
     to give physicians  this power. Every negotiation  must be                                                                 
     approved and reviewed by  the state to make sure the power                                                                 
     is not used  to circumvent the public interest.  The State                                                                 
     of Washington  has a far more limited statute,  which only                                                                 
     allows collective negotiations  for non-economic terms. To                                                                 
     our  knowledge,  this  is not  being  used since  it's  an                                                                 
     estimate, which a good indicator  that the issue is really                                                                 
     about fees.                                                                                                                
                                                                                                                                
     No  other  state  allows  the anti-trust   exemption.  The                                                                 
     chairman  of the Federal  Trade Commission  has testified                                                                  
     against   this  type  of  legislation.  The  Division   of                                                                 
     Insurance and the Department  of Law both have significant                                                                 
     concerns  about  SB  37.  The  practical  effect  of  this                                                                 
     legislation  will  be  to  increase  the  cost  of health                                                                  
     insurance in Alaska. It  is already difficult for Aetna to                                                                 
     negotiate  discounted fees with  providers with our  large                                                                 
     customers  due to the relatively  small number of medical                                                                  
     service  providers in Alaska.  Where we have been able  to                                                                 
     negotiate  discounts,  they are  only  in the  five to  10                                                                 
     percent   range.  The  benefit  for  providers   in  these                                                                 
     negotiations   is a  greater  number   of patients.   With                                                                 
     collective negotiations  allowed by physicians, it is very                                                                 
     hard to imagine these would go down rather than up.                                                                        
                                                                                                                                
     Last  year we  worked with  Representative  Rokeberg on  a                                                                 
     Patient's   Bill  of   Rights  that   partly  dealt   with                                                                 
     contractual  issues between insurers  and medical service                                                                  
     providers. That bill will  go into effect this summer. The                                                                 
     legislation  should go a long  ways in resolving problems                                                                  
      between physicians and insurers on non-economic terms.                                                                    
                                                                                                                                
SENATOR LEMAN  asked if the opposition  to this bill on the  federal                                                            
level was  from the previous  administration  or the new one  and if                                                            
it's  the  former,  has  she  been  able  to  talk  to  the  current                                                            
administration to see if they are going to take the same stand.                                                                 
                                                                                                                                
MR. MIKE WIGGINS, Vice President, Aetna Insurance, answered that it                                                             
was the prior administration's stance.                                                                                          
                                                                                                                                
SENATOR LEMAN said he thought it would take at least a couple more                                                              
weeks before they could get a position from the new administration.                                                             
                                                                                                                                
MR. WIGGINS agreed.                                                                                                             
                                                                                                                                
SENATOR DAVIS said she  has a lot of serious concerns and would like                                                            
to have time  to review them. After  conversations she had  with two                                                            
specialists  in different areas,  they wanted  to know why  the bill                                                            
was in front  of the legislature  in the first  place. They  felt it                                                            
was something  that wasn't needed  and there might be a small  group                                                            
of doctors who  want it. Implementing something state-wide  based on                                                            
what a few people in a  certain area want, in particular doctors who                                                            
have had litigation, is not a good direction to go.                                                                             
                                                                                                                                
SENATOR  DAVIS said  that  the State  of  Alaska who  insures  their                                                            
employees  would  probably  have  the coverage  premiums  go  up  if                                                            
doctors would go out and negotiate directly.                                                                                    
                                                                                                                                
SENATOR KELLY  responded that  over the years,  he has heard  from a                                                            
number of  doctors, including  the Alaskan  Physician's Association                                                             
and the  American Medical  Association testifying  in favor  of this                                                            
bill. They are not doing  this for a small group of doctors. He said                                                            
that right now  Texas and Washington have legislation  like this and                                                            
a number of other states have legislation pending.                                                                              
                                                                                                                                
SENATOR  DAVIS said  she  spoke with  two doctors,  but  she has  an                                                            
opportunity  to speak with more. Their  association said  they would                                                            
not take a stand  on this. If they thought it was  a good idea, they                                                            
would be out  in numbers to get its  passage. She also asked  if the                                                            
state is  interested in  implementing this,  what kind of  oversight                                                            
would the Attorney General  actually have? "Not only would they have                                                            
the  oversight,  but they  would  supervise  it,  review  it and  do                                                            
implementation  when needed,  and how  much would  it cost us  to do                                                            
it."                                                                                                                            
                                                                                                                                
SENATOR KELLY  responded that the answer was on page  7, line 25 and                                                            
26 allowing the AG's office  to write regulations for it. He thought                                                            
the Attorney General's  objections were insincere,  since they would                                                            
get  to write  the  regulations  that  could  address all  of  their                                                            
concerns.                                                                                                                       
                                                                                                                                
SENATOR KELLY  said, "If people don't  want to participate  in this,                                                            
they don't have to." If  doctors even want to discuss this, they are                                                            
liable to FDC for a lawsuit.                                                                                                    
                                                                                                                                
CHAIRMAN  PHILLIPS asked Mr.  Haugen how the  guidelines on  line 23                                                            
through 26, page 5, would be provided.                                                                                          
                                                                                                                                
MR.  HAUGEN  replied that  the  language  in  the bill  was  written                                                            
broadly enough to give  discretion on interpretation to the Attorney                                                            
General.                                                                                                                        
                                                                                                                                
SENATOR  LEMAN said  he found the  nurses testimony  compelling  and                                                            
would like to work with them on it.                                                                                             
                                                                                                                                
SENATOR  KELLY  asked Ms.  Sarcone  if the  language  they  inserted                                                            
exempting nurses  was not acceptable, and if acceptable  language to                                                            
them were found, would they still testify against the bill.                                                                     
                                                                                                                                
MS. SARCONE  responded,  "I don't  know what  you could  do at  this                                                            
point  that would  "take  care"  of me,  Senator."   She  was  still                                                            
concerned with  oversight, having  a public process and having  some                                                            
recourse for nurse  practitioners. The exemption protects  them from                                                            
the most blatant  exclusionary practices, but there  are more subtle                                                            
practices that are not  protected by that clause. She said she could                                                            
work it language  that would be more clear that they  could practice                                                            
and not be excluded.                                                                                                            
                                                                                                                                
SENATOR KELLY said that was his intention.                                                                                      
                                                                                                                                
CHAIRMAN PHILLIPS  asked the participants  to fax their concerns  to                                                            
him and  for the  Attorney  General's office  to come  up with  some                                                            
solutions and adjourned the meeting at 3:05 pm.                                                                                 

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