Legislature(2005 - 2006)BELTZ 211
02/08/2005 01:30 PM LABOR & COMMERCE
Download Mp3. <- Right click and save file as
|Overview by Greg O’claray, Commissioner, Department of Labor and Workforce Development|
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 67-CLAIMS AGAINST HEALTH CARE PROVIDERS BRIAN HOVE, staff to Senator Seekins, sponsor of SB 67, said it amends AS 09.55 by adding a new section that places a $250,000 limit on non-economic awards for health care providers. 1:32:58 PM It intends to alleviate a growing two-pronged crisis in Alaska's health care industry. First is the dearth of liability insurance carriers and second, the declining number of practicing, not just licensed, physicians. 1:34:32 PM Liability coverage is necessary for health care providers. Medical malpractice insurance companies have found Alaska uneconomic and have left the market. This has created much uncertainty and opened the door to higher rates across the board. A more critical problem is Alaska's shortage of physicians. Alaska ranks near the bottom in the number of physicians per capita and over half of them exceed the age of 50. It is difficult to recruit new entries when other states have capped non-economic damages at or near $250,000. The bottom line is Alaska is viewed as an undesirable place for medical insurance carriers to do business and as a result there are fewer physicians to set up shop. Mr. Hove said that SB 67 follows the national trend and doesn't affect awards for quantifiable damages such as lost wages and medial expenses and does not affect awards for gross negligence or reckless behavior. Furthermore, it is not intended to be a silver bullet solution to an entire range of issues facing our health care industry. However, it does provide a step in the right direction in terms of stabilizing the medical insurance market here in Alaska and boosting our efforts to attract the next generation of physicians. 1:35:23 PM CHAIR BUNDE asked what other states have passed similar legislation? MR. HOVE replied California and others, but he would have to get the list. SENATOR ELLIS asked what "significant losses" means on page 1, line 14. MR. HOVE explained that referred to the losses that were substantially greater in 2003 than in prior years. It is a trend. 1:37:52 PM Public testimony 1:38:09 PM MR. JIM JORDAN, Executive Director, Alaska State Medical Association (ASMA), supported SB 67. It's critical to help us turn around our acute and critical and chronic shortage of physicians.... It is entirely unfair to Alaska citizens if SB 67 is not enacted. It is needed so that we have sufficient well- trained physicians available when we need them.... Some will no doubt say that to set damages for non- economic awards at $250,000 is unfair. I submit to you that life is unfair and if it's your loved one who is injured or who dies, there's no amount of money that can compensate you for that loss. Society and the Legislature will never be able to determine what is fair to each person. What we have to decide as a society is not what is fair, but what is equitable. The Legislature has made similar decisions of equity. Mr. Hove mentioned driving an automobile requires $50,000 of liability insurance - keeping in mind that $50,000 minimum required is to cover not only economic damages, but also non-economic damages. The same holds true with the workers' compensation system where there is no specific recognition for pain and suffering. Two hundred and fifty thousand dollars is a lot of money to compensate someone for the impossible-to-quantify category of pain and suffering, even for those with small economic damages. We feel that this was an equitable solution. Passage of SB 67 is a critical element in attracting doctors to Alaska. We need a gold standard in this state. We will not prosper unless we have the needed medical infrastructure and it will be unfair to those who die because of not having a doctor available to care for them when care is needed. 1:41:21 PM CHAIR BUNDE asked how many doctors per hundred thousand should Alaska aspire to have. 1:41:50 PM MR. JORDAN replied that the national average per capita is 286 per hundred thousand compared to Alaska's 72 per hundred thousand, which translates to about 470 physicians short. That leads to the question of how many we really need. 1:42:39 PM Providence Medical System did a workforce study for their service area in 2002. It was short 200 physicians. 1:42:59 PM Projections indicate in 2009 a shortage of 261. 1:43:18 PM CHAIR BUNDE said he has heard discussions that Alaska is unique by not having many hospitals and would be better served by nurse practitioners and physician's assistants. He asked if the insurance problem applies to them as well. 1:43:52 PM MR. JORDAN replied that he has heard that nurse practitioners face similar challenges. 1:44:08 PM SENATOR SEEKINS said there are two categories of physicians that are measured - the number of licensed physicians in the State of Alaska and the number of practicing physicians. There seems to be a large disparity between those numbers. 1:44:50 PM MR. JORDAN responded that he is talking about practicing physicians, not licensed physicians. 1:45:03 PM SENATOR SEEKINS asked him to elaborate on why there is the disparity between the two. 1:45:15 PM MR. JORDAN explained the disparity is created when physicians get out of medical school and get licensed in a lot of states, but don't know where they will want to practice. That is the largest category. A smaller category is part-time practitioners who are called locum tenans. They are substitute doctors who fill in for physicians who are ill or want to go on vacation. 1:46:04 PM SENATOR SEEKINS said he called a doctor who is practicing in Montana, but is also licensed in Alaska, but had never practiced here. That is fairly common. 1:46:48 PM MR. JORDAN added that Dr. Molly Southworth in her public health thesis did an extensive review of the physicians in the state and how many are actually practicing is one of the issues she looked at. She went through nearly all the licensing files and found a lot were licensed, but not practicing. 1:47:13 PM SENATOR ELLIS said that AARP opposes the legislation saying its real goal is medical error reduction. He asked if Mr. Jordan had any recommendations on that matter. 1:47:51 PM MR. JORDAN replied that depends on how the error rate is measured. According to one of the two major insurers for physicians in the state, the number of claims is constant over a long period of time. The American Medical Association (AMA) embarked on a rigorous patient safety campaign and has supported legislation at the federal level - looking at a system the looks at systemic problems as opposed to playing the blame game. 1:49:10 PM SENATOR ELLIS asked if insurers had represented to Mr. Jordan if this bill were to become law insurance rates would be frozen or reduced for doctors in Alaska. 1:49:39 PM MR. JORDAN replied no. All the variables keep changing. For instance, the cost of defending claims over the last five-year period was 33% higher than the previous five-year period. 1:50:33 PM California adopted a $250,000 cap in 1975 and premium rates increased 182% there compared to 570% in the rest of country. 1:51:16 PM SENATOR BETTYE DAVIS asked if any other states that have passed a similar bill have had premiums lowered and more doctors practicing there. 1:51:52 PM MR. JORDAN identified Texas is a state that experienced an increase in insurers. The first year after the law was enacted, the major carrier reduced its rates by 12% - although he couldn't say whether that was attributable to the law only. 1:52:37 PM CHAIR BUNDE asked him to get that data. 1:52:48 PM SENATOR SEEKINS said of the two major carriers in this state, both have said if one pulls out, they don't want to insure other half. He asked if both are for-profit insurance companies or mutual insurance companies that pay dividends back to the owners of the company if there is a savings, in effect, a reduction in premium. 1:53:37 PM MR. JORDON replied that both are mutual insurance companies - one is a reciprocal and the other is a mutual. Essentially they are self-insured. These are just mechanisms through the various state insurance laws that allow them to do that in a particular manner. Yes, they do pass back any savings. So, there is no profit motive... 1:54:20 PM DR. MICHAEL NORMAN, Anchorage Anesthesiologist, opined that new physicians are being trained in mostly large metropolitan areas and feel secure being close to those centers. If you can even get them to come to Alaska for an interview, one of their concerns is the remoteness of the state. 1:56:34 PM The only significant thing that helped recruiting in Alaska in the last 15 years was the organized HMO medical system that drove people to Alaska because it had no organized health care systems. That system is gone now. 1:57:02 PM Young medical students' main concern is their practice environment. One of the concerns they all talk about is how much is malpractice, if it's even available, what the referral base is and things like that. The biggest problem is its availability. The company that recently withdrew from Alaska withdrew because its losses exceeded premiums for three years in a row. California has a non-economic damage cap and at present the company from there is still able to do business in Alaska. MR. NORMAN said he couldn't afford to practice any more if he didn't have malpractice insurance, because it would risk his whole life of work. He mentioned that Colorado has a favorable working environment - the scenery and medical centers, too. MR. ROD BETIT, President, Alaska State Hospital and Nursing Home Association (ASHNHA), strongly supported SB 67. His concern is about access to care at a reasonable cost now and in the future. This bill is only trying to change one area of the liability laws that prevents recruiting of physicians; it does not attempt to limit attorney fees. Alaska already has significant outpatient shortages in family practice, general practice, internal medicine and pediatrics. There are also shortages in psychiatry, allergy, immunology, neurosurgery, rheumatology and gastro-endocrinology. He said in general Alaska is doing okay in ER, pulmonary, OBGYN, general surgery, hematology, oncology and cardiology. Physicians also look at salary. Figures indicate that Alaska is losing ground in the gap it used to have in salaries compared to the West Coast for all health care professionals. It used to be in the double digits and its now in the low single digits. 2:05:18 PM Alaska also has one of the highest uninsured rates in country - approaching 20%. But it gets exceptionally high marks in lifestyle. The cost of medical liability insurance is the biggest issue and he thought dealing with just non-economic damages was a good start. 2:07:16 PM MR. MIKE HAUGEN, Executive Director, Alaska Physicians and Surgeons, said if the system breaks and Alaska loses a lot of doctors, it will take us years to recover. He gave the example of what happened in Medicare. Anchorage had about 30 internists two years ago who treated senior citizens and because Medicare rates were so low, a lot of the doctors could not make a living at it and 11 of them left. While Senator [Ted] Stevens got an Alaska supplemental appropriation, which helped stabilize the market, Anchorage still hasn't recovered from that loss of physicians. My point is that doctors don't grow on trees. It takes a long time to recruit them and a long time to train them. The other point I'd like to make is that even with passage of this legislation, the uncertainty will remain for insurance companies for years into the future. If history is any indication, there will be an appeal of this law and it will take three to six years to work its way through the court system and ultimately be resolved in the Supreme Court. He concluded saying that passage of this bill is a starting point. 2:09:18 PM DR. PAUL WORRELL, President, Alaska State Medical Association, reiterated that 50% of Alaska doctors are over 50 years old. Our current system is chasing doctors away. Recruitment of new physicians needs to be seriously dealt with.... I can tell you when you run out of doctors and nurses, the people just quietly die.... I can tell our problematic legal system in Alaska is making it harder for us to recruit new doctors to Alaska. He said the problematic legal system is also making it harder to keep the existing doctors. One of the smartest doctors in the state told him he had so many lawsuits that he no longer had time to see patients. Another sees only patients with colds and runny noses. He closed supporting SB 67. 2:11:37 PM SENATOR ELLIS asked if he saw any positive results from the round of tort reform a couple of years ago with legislation sponsored by Representative Brian Porter. DR. WORRELL said he helped work on passing that bill, but in the last week before it passed it was stripped of the parts that dealt with the medical profession's needs. "Basically, our needs were traded for the bill to pass.... That's partly why we're back now." 2:12:57 PM SENATOR ELLIS thanked him for his explanation, although he hadn't heard it described that way by other people. 2:13:14 PM MS. KATHY DALE opposed the $250,000 cap saying this bill won't help her family. She related the story of how her husband, who passed away, was misdiagnosed until he went to the Mayo Clinic. Her point was that: The doctors in Alaska are not willing to police their own ranks. They're not willing to speak out against the physicians that aren't qualified.... Lowering the cap protects the negligent doctors, but it harms Alaskan families and those are the ones who are most severely injured. 2:15:13 PM At the time of his death, she was told that her husband's economic lifetime was over and, therefore, it was not an economic loss. She was only eligible for non-economic damages. She added that lowering the cap prevents low-income families from filing a suit and limits the recovery that Medicare, Medicaid and the PERS system can receive if someone is treated by a negligent doctor. She pointed out that the California cap adjusted for CPI is really greater than $820,000 in today's dollars and that insurance companies can adjust their risk pools based on $400,000 just as they can on $250,000. The big losses they sustained in 2002 were not due to claims, but to the drop in the stock market where their risk pools were invested. The only way they can make that up is to raise premiums. 2:16:53 PM MR. LES SYREN, Alaska Action Trust, opposed SB 67. He was concerned about allegations that all the doctors are leaving the state because of insurance premiums. He noted that the state has caps in place already and suggested waiting to see if they bring down premiums first. "We don't need to subsidize insurance companies on the backs of helpless injured patients." CHAIR BUNDE asked him to provide a list of the members of the Alaska Action Trust. 2:21:10 PM MR. MIKE POWERS, Hospital Administrator, Fairbanks Memorial Hospital, supported SB 67 and said a cap on non-economic damages is important because it relates to access to health care. Four national studies have indicated it leads to increased access to health care services. A poll released in April by the Health Care Coalition on Liability and Access reveals Americans believe the growing crisis in health care liability is pushing costs up and forcing good doctors out of medical practice. Another study by the US Agency for Health Care Research in Quality found that states with damage caps have about 12% more physicians per capita than states without such a cap. Finally, the Center for Studying Health System Change found as a result of rapidly rising malpractice insurance premium, physicians in some areas are referring more patients to emergency departments and refusing to provide on-call and declining elective referrals. Nationwide the advantage is being seen of having a cap on non- economic damages. In response to Ms. Dale's comment about doctors not policing themselves, he said that Fairbanks Memorial Hospital has a rigorous peer review process in place, which results in corrective actions, and suspension or denial of privileges when necessary. 2:24:51 PM MR. RICHARD COBDEN, Chairman, Alaska Health Care Network, said he also represents the Alaska Orthopedic Association. He is a doctor at Fairbanks Memorial Hospital. They all support SB 67. He related how premiums are going up and how hard it is to recruit doctors because of it. Accessibility to health care at a reasonable cost is the key issue for patients who even now must wait to be seen. In Alaska it's difficult, if not impossible, for some people to get immediate care when they need it.... Mr. Powers has already stated that it is increasingly difficult to get internists to come to Alaska. At Town and Valley Clinic where I work, we have been recruiting internists for two years. This year we finally got one. Unfortunately he comes from Nome. So, it doesn't change the demographic much for the State of Alaska for internists and we're still looking for three others.... He concurred that most physicians in this state are nearing or over 50 and as premiums come due, they think more and more about early retirement. "We're going to go away quietly, not with a big noisy bang.... And we're not getting new physicians in." 2:28:12 PM Thirteen months ago Northwest Mutual and CNA pulled out of Alaska with 30 days notice. The remaining two companies don't want the entire burden. CHAIR BUNDE thanked him for his testimony and said this bill would be held for further testimony.