Legislature(2001 - 2002)

03/08/2001 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.  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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