Legislature(2007 - 2008)BELTZ 211

05/08/2007 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 155 EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Moved CSHB 155(FIN) Out of Committee
+ HB 228 WORKERS' COMP. MEDICAL TREATMENT FEES TELECONFERENCED
Moved CSHB 228(L&C) Out of Committee
*+ HB 205 REAL ESTATE BROKERS/SALESPERSONS TELECONFERENCED
Moved CSHB 205(FIN) Out of Committee
*+ SB 165 TOURISM DISCLOSURES AND NOTICES TELECONFERENCED
Moved SB 165 Out of Committee
+ HB 217 TOURISM DISCLOSURES AND NOTICES TELECONFERENCED
Scheduled But Not Heard
<Pending Referral>
+ Bills Previously Heard/Scheduled TELECONFERENCED
      CSHB 228(L&C)-WORKERS' COMP. MEDICAL TREATMENT FEES                                                                   
                                                                                                                              
2:05:20 PM                                                                                                                  
CHAIR ELLIS announced CSHB 228 (L&C) to be up for consideration.                                                                
                                                                                                                                
DEREK MILLER, staff  to Representative Kelly, sponsor  of HB 228,                                                               
said in  2005 the Alaska Legislature  passed SB 130, which  was a                                                               
major rewrite  of the Workers'  Compensation statutes. As  a part                                                               
of that,  medical payments were  frozen at the 2004  fee schedule                                                               
so that  a review could  be done  to find the  underlying reasons                                                               
for premium  increases. This review was  to be jointly done  by a                                                               
special workers'  compensation legislation task force  in concert                                                               
with the  Department of Labor  and Workforce  Development (DOLWD)                                                               
Medical  Review   Committee.  The  task  force   was  to  develop                                                               
recommendations to  moderate program  increases in the  future as                                                               
part  of  the conditions  of  this  medical  rate freeze  and  to                                                               
complete  its work  by February  of 2006.  The rate  freeze would                                                               
sunset in  August 2007  and a plan  is not yet  in place  for the                                                               
post rate freeze  sunset period and that is  why this legislation                                                               
was introduced.                                                                                                                 
                                                                                                                                
MR. MILLER  said under HB  228 the  medical rate freeze  would be                                                               
extended for  two years to  allow time for recommendations  to be                                                               
developed and  it also implements  an annual rate  increase based                                                               
on the  medical component of  the consumer price index  (CPI). In                                                               
closing, he said this  is not meant to be a  long-term fix, but a                                                               
stop-gap measure.                                                                                                               
                                                                                                                                
2:07:36 PM                                                                                                                  
He said this  bill is supported by the Alaska  State Hospital and                                                               
Nurses Home Association, the Alaska  Physicians and Surgeons, the                                                               
Alaska  State Medical  Association, the  Alaska Municipal  League                                                               
Joint  Insurance  Agency,  the  State Chamber  of  Commerce,  the                                                               
Department  of  Labor  and  Workforce  Development  (DOLWD),  the                                                               
Division  of Insurance  and Bradner's  Alaska Legislative  Digest                                                               
that on  page 6  said this bill  is a "must  have" for  the Palin                                                               
administration.                                                                                                                 
                                                                                                                                
2:07:56 PM                                                                                                                    
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Commerce,  Community &  Economic  Development  (DCCED), said  she                                                               
supported HB  228 and that  she wanted  to highlight some  of its                                                               
points.  She  stated  with  the  freeze  having  been  in  place,                                                               
Attachment 1  shows the portion  of workers'  compensation system                                                               
cost nationally  is 58 percent  - comprised of  medical expenses.                                                               
In Alaska,  that percentage is  at 69 percent and  rising. System                                                               
cost means what is paid out  for treatment of injured workers and                                                               
indemnity as lost wages. They are  not the same thing as premium,                                                               
but they are a component of premium.                                                                                            
                                                                                                                                
MS.  HALL explained  that in  her premium  calculations that  she                                                               
ultimately approves  through public  rate hearings, she  looks at                                                               
historical system costs  and their trending. For  example, if she                                                               
charged $10  for a single  workers' compensation claim  today and                                                               
trended that over the next  10 years, potentially it would likely                                                               
to  trend up  to  $15 or  $20.  On top  of  that, she  explained,                                                               
insurance companies have what is  called an "expense factor" that                                                               
they put on top of that.                                                                                                        
                                                                                                                                
2:10:12 PM                                                                                                                    
MS. HALL urged them  to look at Exhibit 4 and  said as of October                                                               
2006, an Oregon study shows  that the workers' compensation rates                                                               
in Alaska are  the highest in the country -  and they might climb                                                               
even higher unless  some better controls on  medical expenses are                                                               
found. This is not to  imply that people are necessarily charging                                                               
too much; medical costs in Alaska  are higher than in the rest of                                                               
the country, also. This is seen in all the state's systems.                                                                     
                                                                                                                                
2:11:38 PM                                                                                                                    
The last attachment in her presentation  she said is a review and                                                               
evaluation of this  bill by the National  Counsel on Compensation                                                               
Insurance.  The  second  paragraph   predicts  what  would  occur                                                               
without this  legislation and  it projects a  4.5 to  5.8 percent                                                               
increase in  system costs overall. HB  228 holds it at  a minimal                                                               
1.3 percent.  Ms. Hall  said the system  costs are  compounded by                                                               
other parts  of the rate  making process.  So, it is  critical to                                                               
look at this additional freeze.                                                                                                 
                                                                                                                                
2:12:50 PM                                                                                                                    
SENATOR BUNDE  said she mentioned  the medical costs  were around                                                               
60 percent in Alaska and lower  in other states and asked if that                                                               
is a  factor of the cost  of the medical procedures  in Alaska or                                                               
does something else in the system make that percentage higher.                                                                  
                                                                                                                                
MS. HALL  responded that  she just  recently reviewed  a two-year                                                               
National  Counsel on  Compensation  Insurance study  on that  and                                                               
found that, in  general, the cost of doing business  in Alaska is                                                               
more expensive than in other areas of the country.                                                                              
                                                                                                                                
SENATOR BUNDE recalled seeing something  recently saying that the                                                               
cost  of living  in  Anchorage is  probably less  than  it is  in                                                               
Portland and Seattle and yet the  cost of medical treatment is so                                                               
much higher.  A chart showed  that a colonoscopy costs  $2,500 in                                                               
Alaska and  $1,400 in the Lower  48. He found it  hard to believe                                                               
that the cost should be that much higher in Alaska.                                                                             
                                                                                                                                
MS. HALL said she didn't disagree with that.                                                                                    
                                                                                                                                
CHAIR ELLIS  said he shared that  concern and he hoped  to get to                                                               
the bottom of that. He  asked if building inflation-proofing into                                                               
the bill was reasonable                                                                                                         
                                                                                                                                
MS.  HALL  replied that  it  was  an  objective  way to  make  an                                                               
increase and she didn't think  it appropriate or fair to continue                                                               
to freeze  the medical fee  schedule at the December  2004 level.                                                               
To  use objective  criteria is  the  most appropriate  way to  do                                                               
that.                                                                                                                           
                                                                                                                                
CHAIR  ELLIS asked  Senator Bunde  if the  base is  fair and  the                                                               
mechanism is  reasonable, could he support  inflation proofing so                                                               
the legislature didn't have to spend time revisiting it.                                                                        
                                                                                                                                
SENATOR  BUNDE  said  it's  hard to  find  doctors  for  Medicare                                                               
patients   because   of   the   federally   mandated   level   of                                                               
reimbursement.  He asked  if she  could envision  injured workers                                                               
having  problems with  finding  someone to  treat  them at  these                                                               
rates.                                                                                                                          
                                                                                                                                
2:17:06 PM                                                                                                                    
MS. HALL  replied that her  division hadn't received  a complaint                                                               
about  access  to  medical  care and  she  didn't  envision  this                                                               
legislation having an impact on people getting medical care.                                                                    
                                                                                                                                
MIKE HOGAN,  Executive Director, Alaska Physicians  and surgeons,                                                               
supported HB 228.                                                                                                               
                                                                                                                                
2:18:45 PM                                                                                                                    
SENATOR STEVENS moved  to pass CSHB 228(L&C)  from committee with                                                               
individual recommendations and attached  fiscal notes. There were                                                               
no objections and it was so ordered.                                                                                            
                                                                                                                                

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