Legislature(2001 - 2002)

05/06/2002 02:01 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 06, 2002                                                                                            
                         2:01 P.M.                                                                                              
                                                                                                                                
TAPE HFC 02 - 103, Side A                                                                                                       
TAPE HFC 02 - 103, Side B                                                                                                       
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 2:01 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Carl Moses                                                                                                       
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Pete  Kelly;  Jerry  Burnett,  Staff,  Senator  Lyda                                                                   
Green;  Darwin  Peterson,  Staff,   Senator  John  Torgerson;                                                                   
Deborah Grundmann,  Staff, Senator Ben Stevens;  Paul Grossi,                                                                   
Director,  Division of Workers'  Compensation, Department  of                                                                   
Labor &  Workforce Development;  Cathy Giessel, Alaska  Nurse                                                                   
Practioner  Association  (ANPA),   Anchorage;  Marie  Darlin,                                                                   
Alaska Association of Retired  People (AARP), Juneau; Michael                                                                   
Haugen,  Executive Director,  Alaska  Physicians &  Surgeons,                                                                   
Inc.,   Anchorage;   Jon  Sherwood,   Division   of   Medical                                                                   
Assistance, Department of Health & Social Services                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jim  Jordan,   Executive  Director,   Alaska  State   Medical                                                                   
Association,   Anchorage;   Mike  Wiggen,   Vice   President,                                                                   
National   Accounts,   Aetna;   Jack  McCrae,   Senior   Vice                                                                   
President,  Blue  Cross,  Blue  Shield  of  Alaska;  Marybeth                                                                   
Gardner,  Family Nurse  Practioner,  Nurse  Midwife, Tok;  Ed                                                                   
Sniffen,  Assistant  Attorney  General,  Department  of  Law,                                                                   
Anchorage; Pat Senner, President,  Alaska Nurses Association,                                                                   
Anchorage;  Bob   Lohr,  Director,  Division   of  Insurance,                                                                   
Department of Community & Economic Development, Anchorage                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 37     An Act relating to collective negotiation by                                                                          
          physicians  with  health   benefit  plans;  and  to                                                                   
          health  benefit  plan   contracts  with  individual                                                                   
          competing physicians.                                                                                                 
                                                                                                                                
          HCS CS SB 37 (JUD) was reported out of Committee                                                                      
          with  a "do  pass" recommendation  and with  fiscal                                                                   
          notes  #6 by the  Department of Administration,  #8                                                                   
          by the  Department of Law and #9 by  the Department                                                                   
          of Community & Economic Development.                                                                                  
                                                                                                                                
SB 299    An  Act   relating  to  the  establishment   of  an                                                                   
          additional   south-central  panel  to   the  Alaska                                                                   
          Workers' Compensation  Board and to appointments to                                                                   
          that panel; and providing for an effective date.                                                                      
                                                                                                                                
          CS SB 299 (FIN) was reported out of Committee with                                                                    
          a "do pass" recommendation  and with fiscal note #1                                                                   
          by the Department of Law.                                                                                             
                                                                                                                                
SB 319    An  Act relating  to shallow  natural gas  leasing;                                                                   
          and providing for an effective date.                                                                                  
                                                                                                                                
          HCS CS SB 319 (RES) was reported out of Committee                                                                     
          with  a "do  pass" recommendation  and with  fiscal                                                                   
          note #1 by the Department of Natural Resources.                                                                       
                                                                                                                                
SB 345    An   Act  relating   to   medical  assistance   for                                                                   
          rehabilitative  services for certain  children with                                                                   
          disabilities;   relating  to   agreements  to   pay                                                                   
          medical  assistance for  covered services  paid for                                                                   
          or    furnished   to    eligible   children    with                                                                   
          disabilities  by a school  district; and  providing                                                                   
          for an effective date.                                                                                                
                                                                                                                                
          SB 345 was reported out of Committee with a "no                                                                       
          recommendation"  and with fiscal note #1  and #2 by                                                                   
          the Department of Health & Social Services.                                                                           
                                                                                                                                
CS FOR SENATE BILL NO. 319(FIN)                                                                                               
                                                                                                                                
     An Act relating to shallow natural gas; and providing                                                                      
     for an effective date.                                                                                                     
                                                                                                                                
Co-Chair Mulder  MOVED to report HCS  CS SB 319 (RES)  out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS CS SB 319 (RES) was reported  out of Committee with a "do                                                                   
pass"  recommendation   and  with  fiscal  note   #1  by  the                                                                   
Department of Natural Resources.                                                                                                
                                                                                                                                
#SB37                                                                                                                         
CS FOR SENATE BILL NO. 37(FIN)                                                                                                
                                                                                                                                
     An Act  relating to collective negotiation  by competing                                                                   
     physicians with health benefit  plans, to health benefit                                                                   
     plan contracts, to the application  of antitrust laws to                                                                   
     agreements involving  providers and groups  of providers                                                                   
     affected by  collective negotiations, and  to the effect                                                                   
     of the collective negotiation  provisions on health care                                                                   
     providers.                                                                                                                 
                                                                                                                                
SENATOR PETE  KELLY stated that  SB 37 attempts to  level the                                                                   
playing field  for Alaska's patients  and the  physicians who                                                                   
care for them.                                                                                                                  
                                                                                                                                
Over the  past eight years,  the health insurance  market has                                                                   
continued to  consolidate at a  rapid pace.  There  were once                                                                   
18 national health insurance companies  that physicians could                                                                   
choose to contract  with.  Those companies have  since merged                                                                   
into 6.   It is even more  severe for Alaskan  physicians who                                                                   
have  only  2 choices  of  insurers.   Physicians  are  given                                                                   
little  opportunity to  advocate  for the  best  care of  the                                                                   
patients.                                                                                                                       
                                                                                                                                
Senator  Kelly pointed  out that  independent physicians  are                                                                   
prevented from  collective action  by federal antitrust  laws                                                                   
and are subject to aggressive  antitrust enforcement actions.                                                                   
Large corporations,  however, can adopt  a "take it  or leave                                                                   
it"  position  without  any  antitrust  ramifications,  which                                                                   
creates  a  damaging  imbalance  in bargaining  power.    The                                                                   
inequity between  health insurers and medical  care providers                                                                   
dictates physician contracts.   The resulting contracts favor                                                                   
the insurance  companies over  the health care  that patients                                                                   
receive and can result in such  policies where physicians are                                                                   
required  to use  a low  cost  treatment when  a higher  cost                                                                   
treatment might be medically necessary.                                                                                         
                                                                                                                                
Senator  Kelly stated  that SB 37  would enable  independent,                                                                   
competing physicians to become  effective advocates for their                                                                   
patients   through   collective  negotiations   with   health                                                                   
insurers.   The negotiations would  fall into a  narrow scope                                                                   
of topics with regard to the provisions  of physician service                                                                   
contracts and would  be under the scrutiny of  the Department                                                                   
of  Law.    SB 37  would  prohibit  a  group  of  independent                                                                   
competing physicians  from striking or otherwise  engaging in                                                                   
activities that could result in a boycott.                                                                                      
                                                                                                                                
Representative Davies  asked about the "voluntary"  aspect of                                                                   
the legislation.   He understood that concerns  regarding the                                                                   
legislation  were  that  the process  would  begin  and  then                                                                   
communication would close.                                                                                                      
                                                                                                                                
Senator Kelly did not know if  that was true.  He thought the                                                                   
issue addressed  the need  to have  that type of  discussion,                                                                   
since the nature  of the health care industry  has changed so                                                                   
much.   Communication  would have  the best  interest of  the                                                                   
patients in  mind.   That type of  dialogue in the  contracts                                                                   
would   help  physicians   protect   their   patients.     He                                                                   
acknowledged that concerns regarding  the "price" were a more                                                                   
valid argument,  noting the condition of payment  and quality                                                                   
of care.                                                                                                                        
                                                                                                                                
Vice-Chair Bunde  thought that the logic of  allowing doctors                                                                   
to discuss  patient  care and  working for  what is best  for                                                                   
them was obvious; however, he  pointed out that the committee                                                                   
substitute  does  not allow  that  type of  communication  to                                                                   
happen among other health practioners.                                                                                          
                                                                                                                                
Senator Kelly  interjected that  nurse practioners  wanted to                                                                   
be exempt from the bill.                                                                                                        
                                                                                                                                
Vice-Chair Bunde noted that was not his impression.                                                                             
                                                                                                                                
MICHAEL  HAUGEN,  EXECUTIVE  DIRECTOR,  ALASKA  PHYSICIANS  &                                                                   
SURGEONS,  INC.,  ANCHORAGE,  commented  that  the  bill  was                                                                   
tailored for  physicians only.   He noted that  legal counsel                                                                   
for the American  Medical Association (AMA),  under the State                                                                   
action doctrine, advised that  each particular provider group                                                                   
does need to petition the State  for their own version of the                                                                   
bill.                                                                                                                           
                                                                                                                                
Vice-Chair Bunde  did not  understand the difference  between                                                                   
having two separate bills or two  groups included in the same                                                                   
one.  He asked  if that was a good medical  practice, why did                                                                   
it not include all medical practioners.                                                                                         
                                                                                                                                
Mr.  Haugen claimed  that the  AMA had  approached the  nurse                                                                   
practioners with an offer, noting  that they could borrow the                                                                   
language of the  proposed bill verbatim.  Mr.  Haugen pointed                                                                   
out that the AMA received no answer at that time.                                                                               
                                                                                                                                
Representative  Croft asked  if under  current Federal  Trade                                                                   
Commission  (FTC) rules,  do the  doctors  negotiate for  the                                                                   
medical necessity  term insurance coverage.   He asked  if by                                                                   
excluding the  price provision, could "medical  necessity" be                                                                   
negotiated within the bill.                                                                                                     
                                                                                                                                
Mr. Haugen  explained that  without the  bill, one  could not                                                                   
unless  a statutory  definition  of "necessity"  was  passed.                                                                   
Through  the   legislation,  one   issue  could   be  medical                                                                   
necessity  and then defining  in the  contract what  that is.                                                                   
It is  very common  in the  provider contracts  to include  a                                                                   
definition of  medical necessity.   Physicians are  currently                                                                   
given no input on what the conditions are.                                                                                      
                                                                                                                                
Representative  Croft  commented   on  the  "idea"  of  State                                                                   
action, and understood that something  more would be required                                                                   
to get a  State exemption in  federal law.  He  realized that                                                                   
the State  would need to be  actively involved.  He  asked if                                                                   
the bid could fall under the State action exception.                                                                            
                                                                                                                                
Mr. Haugen replied  that it would.  The  current requirements                                                                   
are clearly  articulated and include active  State oversight.                                                                   
The attorney general would be  involved in every stage of the                                                                   
process.   The  Department of  Law  has veto  power over  the                                                                   
contract and  if it  was found  that it would  not be  in the                                                                   
best interest  of Alaskan  citizens, the  office could  "pull                                                                   
the plug".  The bill would be  entirely voluntary on the part                                                                   
of the carriers, physicians and the State.                                                                                      
                                                                                                                                
Mr. Haugen  noted that  it has come  to AMA's attention  that                                                                   
the  Alaska  Nurses  Association   (ANA),  the  Alaska  Nurse                                                                   
Practitioners Association  (ANPA), and nurse  midwives oppose                                                                   
SB 37.   Mr.  Haugen stated  that it  is important to  refute                                                                   
some of the claims made in their letters:                                                                                       
                                                                                                                                
     ·    The nurses claim that the bill would authorize                                                                        
          price fixing  by physicians.  Mr.  Haugen clarified                                                                   
          that  the fact  is that price  fixing would  remain                                                                   
          illegal even if the  bill were law.  Nothing in the                                                                   
          bill authorizes price fixing.                                                                                         
     ·    The nurses claim the bill would allow physicians                                                                      
          and  insurers  to discriminatorily  exclude  nurses                                                                   
          from contracts.  Mr.  Haugen commented that passage                                                                   
          of the  bill would in no way protect  physicians or                                                                   
          insurers from  State or federal anti-trust  laws if                                                                   
          either  party  conspired to  shut  out a  different                                                                   
          provider  group from a  contract.  In  addition, at                                                                   
          the   nurse's   request,  the   bill   incorporates                                                                   
          specific   language    in   Section   23.50.020(p),                                                                   
          reiterating  the  points  that  the bill  does  not                                                                   
          protect physicians from exclusionary conduct.                                                                         
     ·    The nurses claim that the bill would increase                                                                         
          costs and  reduce services, when in  fact, the bill                                                                   
          requires  final approval  of a contract,  including                                                                   
         the fee schedule by the Attorney General.                                                                              
                                                                                                                                
Mr. Haugen  commented that  one of the  purposes of  the bill                                                                   
was  to  foster open  communication  between  physicians  and                                                                   
payers so to  address known inefficiencies in  the healthcare                                                                   
delivery system,  thus potentially lowering the  overall cost                                                                   
of healthcare while increasing the level of service.                                                                            
                                                                                                                                
CATHY GIESSEL,  ALASKA NURSE PRACTIONERS  ASSOCIATION (ANPA),                                                                   
ANCHORAGE,  stated   that  nurse  practioners   and  midwifes                                                                   
ardently oppose SB  37.  The original bill  provided only for                                                                   
physicians  and  ignored  the fact  that  nurse  practioners,                                                                   
midwives  and  physical  therapists exist  and  are  valuable                                                                   
health care  providers.  Those  providers were  excluded from                                                                   
the competitive  market  place.  Specifically  of concern  is                                                                   
the  exclusion  from  reimbursement.   The  House  Labor  and                                                                   
Commerce Committee heard that  concern and removed the "cost"                                                                   
piece from  the bill.   The bill  would jeopardize  the nurse                                                                   
practioner's practice.   The House Judiciary  Committee heard                                                                   
that concern and  placed protective language on  Page 2, Line                                                                   
13.                                                                                                                             
                                                                                                                                
Ms. Giessel stressed  that the ANP fundamentally  dislikes SB
37 because it lays the foundation  for future amendments that                                                                   
could  be  detrimental  to  all   providers  outside  of  the                                                                   
physicians.   She reiterated  that the  ANP strongly  opposes                                                                   
the  legislation   and  that   it  would  negatively   impact                                                                   
healthcare in Alaska.                                                                                                           
                                                                                                                                
Vice-Chair Bunde  interjected that  statement did  not "mesh"                                                                   
with previous  testimony claiming that nurse  practioners had                                                                   
been consulted and declined to be included.                                                                                     
                                                                                                                                
Ms. Giessel  responded  that their lobbyist  had never  heard                                                                   
that they had  been approached regarding the issue  or on the                                                                   
bill.                                                                                                                           
                                                                                                                                
Vice-Chair Bunde  asked if they  were aware of  federal level                                                                   
problems if more than one health  care provider was contained                                                                   
within a single bill.                                                                                                           
                                                                                                                                
Ms. Giessel  was not  aware that  had been  considered.   She                                                                   
noted  that   would  not  address  the   fundamental  concern                                                                   
regarding  a  non-competitive  workplace.    She  added  that                                                                   
including  more  providers might  be  able to  address  those                                                                   
concerns and admitted that she had not explored that idea.                                                                      
                                                                                                                                
Representative Whitaker inquired  how nurse practioners would                                                                   
be  excluded  from  the competitive  market  place  with  the                                                                   
passage of SB 37.                                                                                                               
                                                                                                                                
Ms.  Giessel  explained  that  the bill  as  amended  in  its                                                                   
current  form,  they  would not  be  excluded;  however,  the                                                                   
original bill read quite differently.   There have been long-                                                                   
term contentions between the medical  community and the nurse                                                                   
practioners as  health care needs are addressed  with quality                                                                   
of  care.   Physicians have  the potential  to exclude  nurse                                                                   
practioners from reimbursement.                                                                                                 
                                                                                                                                
Representative  Whitaker  asked  if  nurse  practioners  were                                                                   
still concerned with that eventual evolvement.                                                                                  
                                                                                                                                
Ms. Giessel remarked  that there still remains  a possibility                                                                   
with amendments pending.                                                                                                        
                                                                                                                                
ED  SNIFFEN,   (TESTIFIED   VIA  TELECONFERENCE),   ASSISTANT                                                                   
ATTORNEY  GENERAL, DEPARTMENT  OF  LAW,  ANCHORAGE, spoke  in                                                                   
opposition to the proposed legislation.   The primary concern                                                                   
rests with  the State action doctrine  and whether or  not it                                                                   
rises  to the standard  to provide  any kind  of immunity  to                                                                   
doctors  that  could take  advantage  of the  legislation  to                                                                   
engage  in  those  negotiations.   In  the  House  Labor  and                                                                   
Commerce Committee,  the federal  trade commission  testified                                                                   
that  the body  of  the bill  does not  rise  to that  level.                                                                   
Granted, without the price provisions  in the bill, the anti-                                                                   
competitive concerns have been  somewhat alleviated; however,                                                                   
if the doctors  engage in any activity that  they think might                                                                   
cross the  line between quality  of care and price,  and rely                                                                   
on the provisions  of the bill to protect them  from that, it                                                                   
would be  a mistake.   The FTC  has made  it clear  that they                                                                   
would retain jurisdiction  to take action if  necessary.  Mr.                                                                   
Sniffen suggested  that the bill would not  provide the level                                                                   
of protection that the doctors think it will.                                                                                   
                                                                                                                                
Mr. Sniffen  added that SB  37 does  not rise to  provide the                                                                   
level of  protection that the  FTC contemplates.   He pointed                                                                   
out   the  January   18,  2002   letter  from   the  FTC   to                                                                   
Representative  Lisa   Murkowski  in  the  House   Labor  and                                                                   
Commerce   Committee,  which   addresses  the  State   action                                                                   
doctrine aspects of the bill.                                                                                                   
                                                                                                                                
Mr.  Sniffen noted  the  Department  of Law's  $114  thousand                                                                   
dollar fiscal  note.  He asked  if the State wanted  to spend                                                                   
that  amount  of  money  to oversee  a  process  that  should                                                                   
require no oversight.                                                                                                           
                                                                                                                                
Mr. Sniffen mentioned that this  is a voluntary act, however,                                                                   
it  is "voluntary"  only on  the  part of  the providers  and                                                                   
health care.   The Department would  not be able to  "cut the                                                                   
process" when  determined needed.  He referenced  language on                                                                   
Page 5, Line  14 of the legislation, which  outlines what the                                                                   
Attorney  General  must  do  as a  result  of  reviewing  the                                                                   
negotiations.     He   stated  that   the  language   is  not                                                                   
discretionary  and  that  it   would  be  difficult  for  the                                                                   
Attorney General to stop the process.                                                                                           
                                                                                                                                
Representative  Croft  asked if  physicians  could  negotiate                                                                   
medical necessity under SB 37.                                                                                                  
                                                                                                                                
Mr. Sniffen  replied that  if they can  discuss it  now under                                                                   
FTC  guidelines,  then they  would  continue  to be  able  to                                                                   
whether SB 37 was passed or not.                                                                                                
                                                                                                                                
Representative  Davies asked what  structure the  State would                                                                   
need to have in place to provide for that.                                                                                      
                                                                                                                                
Mr. Sniffen  responded  that the structure,  which meets  the                                                                   
immunity,   would   look  something   like   the   Regulatory                                                                   
Commission  of  Alaska  (RCA),   an  agency  responsible  for                                                                   
handling  and reviewing  those matters.   He  added that  the                                                                   
process would  be subject  to an appeal  by the court  system                                                                   
and  would  provide  a  good level  of  protection.    SB  37                                                                   
requires  a third party  negotiator to  provide documents  to                                                                   
the  attorney general  for review.    Previous Supreme  Court                                                                   
decisions have made  it clear that the act  of supervision is                                                                   
very  rigorous to  insure  that anti-competitive  conduct  is                                                                   
shielded from antitrust liability.                                                                                              
                                                                                                                                
PAT  SENNER,   (TESTIFIED  VIA  TELECONFERENCE),   PRESIDENT,                                                                   
ALASKA NURSES  ASSOCIATION (ANA), ANCHORAGE,  echoed comments                                                                   
made  by Ms.  Giessel.    She added  that  ANA  had not  been                                                                   
approached  about being  included  in the  legislation.   She                                                                   
listed concerns regarding the bill:                                                                                             
                                                                                                                                
     ·    The impact on the cost of health care in Alaska.                                                                      
          The economy  cannot sustain the  dramatic increases                                                                   
          in  health care  costs.   The committee  substitute                                                                   
          that  moved out  of the  House Judiciary  Committee                                                                   
          includes  price and  adds  protective language  for                                                                   
          the  non-physicians  health  care providers.    She                                                                   
          urged  that those  provisions remain  in the  bill.                                                                   
          Ms.  Senner voiced  concern that  the version  that                                                                   
          passed  from the Senate  last year includes  price.                                                                   
          She  recommended that  the Committee be  "vigilant"                                                                   
          with the final version of the bill.                                                                                   
                                                                                                                                
BOB LOHR, (TESTIFIED VIA TELECONFERENCE),  DIRECTOR, DIVISION                                                                   
OF   INSURANCE,   DEPARTMENT    OF   COMMUNITY   &   ECONOMIC                                                                   
DEVELOPMENT,   ANCHORAGE,   offered   to   answer   questions                                                                   
regarding the cost of care and/or the effect of SB 37.                                                                          
                                                                                                                                
Representative Davies  asked if the  bill were enacted  if it                                                                   
would  impact the  number of people  in Alaska  that are  not                                                                   
insured.                                                                                                                        
                                                                                                                                
Mr. Lohr responded that the bill  would not have as much of a                                                                   
devastating effect  that it previously had without  the price                                                                   
provisions.  He added, it is extremely  difficult to separate                                                                   
price and  non-price from  quality of care  issues.   The FTC                                                                   
has observed  that they  have never  seen a negotiation  with                                                                   
all the  non-priced items at  the heart of  it.  It  is clear                                                                   
that a  bill that does focus  on non-price elements  would be                                                                   
far less harmful than a bill focused  on the other.  Mr. Lohr                                                                   
emphasized that  the bill could  impact the person's  ability                                                                   
to receive coverage.                                                                                                            
                                                                                                                                
MARYBETH  GARDNER,  (TESTIFIED  VIA  TELECONFERENCE),  FAMILY                                                                   
NURSE PRACTIONER,  MIDWIFE,  TOK, spoke  in opposition  to SB
37.  The bill  could limit practice for nurse  practioners in                                                                   
rural  Alaska.   She stressed  that  SB 37  was a  cumbersome                                                                   
piece of legislation and would limit choices for Alaskans.                                                                      
                                                                                                                                
MARIE DARLIN,  ALASKA ASSOCIATION OF RETIRED  PERSONS (AARP),                                                                   
JUNEAU, spoke in opposition of the legislation.                                                                                 
                                                                                                                                
Ms. Darlin  agreed that some  of the  worst aspects of  SB 37                                                                   
had been  amended.  The bill  remains a piece  of legislation                                                                   
that will not  help any Alaskans, except for  the physicians.                                                                   
The  Department  of  Law  and   the  Division  of  Insurance,                                                                   
Department  of Community  & Economic  Development, have  both                                                                   
spoke  against the  bill.   Additionally,  the Federal  Trade                                                                   
Commission   (FTC)   has   indicated   that   the   bill   is                                                                   
inappropriate.                                                                                                                  
                                                                                                                                
Ms.  Darlin stated  that  AARP  considers itself  a  consumer                                                                   
organization.  As  consumers, AARP is well aware  of the cost                                                                   
of  medical services.    SB 37  would  increase  the cost  of                                                                   
health care to everyone who pays  for it, including the State                                                                   
of  Alaska, employees  with  health benefits,  retirees,  the                                                                   
self-employed, and the growing number of uninsured.                                                                             
                                                                                                                                
Ms. Darlin pointed out that AARP  members live throughout the                                                                   
State.   AARP believes that SB  37 would be harmful  to rural                                                                   
members  who rely on  nurse practitioners  for their  primary                                                                   
care.  Alaska currently  has a Patient's Bill of  Rights.  If                                                                   
the quality of  care issues needs to be addressed,  it should                                                                   
be  determined what  is already  included  in that  Patient's                                                                   
Bill of  Rights and if additional  measures were  needed that                                                                   
would be  an appropriate venue.   At present time,  AARP does                                                                   
not  identify any  issues  included  in SB  37  that are  not                                                                   
already in law.                                                                                                                 
                                                                                                                                
AARP members,  possibly more  than any  other segment  of the                                                                   
population,  are  consumers of  health  care.   Members  have                                                                   
indicated  that  fewer  physicians   are  willing  to  accept                                                                   
Medicare,  fewer  physicians  are  willing  to  see  Medicare                                                                   
patients, and  more and more  physicians are telling  64 year                                                                   
olds that  they will not see them  once they turn 65  and are                                                                   
eligible for Medicare.  AARP would  prefer to see legislation                                                                   
that addresses improved care rather  than improved "profits".                                                                   
SB  37  does   not  offer  opportunity  for   consumer  input                                                                   
regarding this concern.   AARP believes that SB  37 will have                                                                   
to increase  health care  costs without  any increase  in the                                                                   
quality of care.                                                                                                                
                                                                                                                                
JIM  JORDAN,   (TESTIFIED   VIA  TELECONFERENCE),   EXECUTIVE                                                                   
DIRECTOR, ALASKA STATE MEDICAL  ASSOCIATION, ANCHORAGE, spoke                                                                   
in  support for  the legislation.    He asked  to respond  to                                                                   
comments of previous speakers.                                                                                                  
                                                                                                                                
He addressed  the circumstances  regarding nurse  practioners                                                                   
and  that the  bill would  restrain trade  to the  healthcare                                                                   
market place.   AMA believes that legal counsel  has reviewed                                                                   
the bill and that such activities  would currently be illegal                                                                   
and  would continue  to  be if  the bill  were  adopted.   He                                                                   
referenced  comments  made  that a  recommendation  had  been                                                                   
attempted with  physicians to the nurse practioners  and that                                                                   
                                                th                                                                              
a work session had been organized  on December 5,  2001, with                                                                   
Representative  Murkowski.    He  claimed  that  the  nurse's                                                                   
lobbyist  was there  as  well as  a representative  from  the                                                                   
insurance company.                                                                                                              
                                                                                                                                
Mr.  Jordan addressed  the State  oversight  of the  program.                                                                   
The AMA  has testified in  previous committees that  there is                                                                   
sufficient oversight.   He added  that the bill  does provide                                                                   
an  outline for  the  elements  that the  Attorney  General's                                                                   
office must take into consideration.   He added that the bill                                                                   
provides  that  the  attorney   general's  office  can  adopt                                                                   
regulations.                                                                                                                    
                                                                                                                                
Mr. Jordan  pointed out  that the  title insurance  companies                                                                   
had  filed  an  agreed  upon rate  for  several  states.    A                                                                   
separate  question  in that  case  was  whether there  was  a                                                                   
sufficient   oversight  provided   by  the  State   insurance                                                                   
department.    The  Supreme  Court decided  there  was.    In                                                                   
viewing that  case, there  would be no  surprises.   He noted                                                                   
that the  difference was that  the bill addresses a  group of                                                                   
independent insurance companies  coming together to arrive at                                                                   
a title insurance rate.  There  would be no other involvement                                                                   
in  that process.    The  result is  only  what  goes to  the                                                                   
attorney  general  for  extensive  oversight.    He  read  an                                                                   
excerpt from a letter from Mr. Charles James.                                                                                   
                                                                                                                                
MIKE WIGGEN, (TESTIFIED VIA TELECONFERENCE),  VICE PRESIDENT,                                                                   
NATIONAL ACCOUNTS,  AETNA, spoke in opposition to  SB 37.  He                                                                   
commented  that  the arguments  that  AETNA has  against  the                                                                   
legislation are  similar to those  voiced by the  Division of                                                                   
Insurance.                                                                                                                      
                                                                                                                                
He identified  untrue information that has been  made public.                                                                   
That information stipulates that:                                                                                               
                                                                                                                                
     ·    It would force Alaska into sub contractual terms                                                                      
          called "gag orders".   Mr. Wiggen stressed that was                                                                   
          not  true.    Those  issues  are  prohibited  under                                                                   
          current  statute including  the Patient  Protection                                                                   
          Act to deal with contractual protection.                                                                              
                                                                                                                                
                                                                                                                                
TAPE HFC 02 - 103, Side B                                                                                                     
                                                                                                                                
                                                                                                                                
Mr. Wiggen continued.                                                                                                           
                                                                                                                                
     ·    The quality of care issues.  The FTC currently                                                                        
          allows that to take place as issued guidelines.                                                                       
          According to the FTC, SB 37 is inconsistent with                                                                      
          the federal statutes and is attempting to expand                                                                      
          the circumstances under which it could take place.                                                                    
     ·    Physicians have no choice but to accept the terms                                                                     
          and conditions of the contract.  If that were                                                                         
          true, the cost of health care would be the highest                                                                    
          in the nation.                                                                                                        
                                                                                                                                
Mr. Wiggen  urged members to discuss  the market issues.   He                                                                   
stated that it  is ironic that the issues are  still alive in                                                                   
a state  where there  is no  health maintenance  organization                                                                   
(HMO).   Mr.  Wiggen's  offered to  answer  questions of  the                                                                   
Committee.                                                                                                                      
                                                                                                                                
Representative  Croft asked  if  the bill  would satisfy  the                                                                   
State  action  doctrine  and if  physicians  could  negotiate                                                                   
medical necessity now or under SB 37.                                                                                           
                                                                                                                                
Mr. Wiggen  replied that the bill  would not allow  people to                                                                   
address  the State  action doctrine.   He added,  there  is a                                                                   
misconception regarding medical  necessity.  People with non-                                                                   
medical knowledge cannot discuss  medical necessity.  Such an                                                                   
analysis  is   based  upon  medical  study   and  information                                                                   
regarding that  concern.  If  another physician  appeals that                                                                   
information,  then   another  doctor  would   scrutinize  the                                                                   
information.   Insurance companies will use  outside agencies                                                                   
to  determine the  medical necessity  in certain  cases.   As                                                                   
written, medical necessity is not encompassed in SB 37.                                                                         
                                                                                                                                
Representative  Croft  questioned if  a group  of  physicians                                                                   
could negotiate  their own definition of  "medical necessity"                                                                   
within the quality of care exception  to the FTC prohibition.                                                                   
                                                                                                                                
Mr. Wiggen did not know.                                                                                                        
                                                                                                                                
JACK  MCCRAE,  (TESTIFIED VIA  TELECONFERENCE),  SENIOR  VICE                                                                   
PRESIDENT,  BLUE CROSS,  BLUE SHIELD OF  ALASKA, stated  that                                                                   
his agency  does oppose the  legislation because of  the cost                                                                   
"driver".   There  could be  double digit  rate increases  in                                                                   
Alaska with the legislation enacted.   With the rate and fees                                                                   
removed,  the legislation  is not  necessary.   The FTC  does                                                                   
allow negotiation.   He  pointed out  that Director  Lohr had                                                                   
mentioned that it is difficult  to separate any rate and fees                                                                   
when considering negotiations.                                                                                                  
                                                                                                                                
Mr.  McCrae addressed  other concerns  with the  legislation.                                                                   
Pieces of  legislation like SB  37 will keep  competition out                                                                   
of the  State, which will increase  rates and that  would not                                                                   
be good  for the consumer.   In  2000, Blue Cross  negotiated                                                                   
with the medical  association, the Patient's  Bill of Rights.                                                                   
That  document  was  agreed  upon   and  was  signed  by  the                                                                   
Governor.                                                                                                                       
                                                                                                                                
Mr. McCrae commented that they  would be willing to negotiate                                                                   
with the  medical association  regarding  the concerns  of SB
37.  He  stressed that the bill  is not necessary.   There is                                                                   
concern  that rates  and fees  could be  reinserted into  the                                                                   
legislation  at the end  of session, which  would be  a large                                                                   
cost driver for Alaskans.                                                                                                       
                                                                                                                                
Vice-Chair Bunde commented that  the bill has been around for                                                                   
two or  three years.   He questioned  why there have  been no                                                                   
negotiations to date with the medical community.                                                                                
                                                                                                                                
Mr. McCrae responded  that he had spoke with the  head of the                                                                   
Alaska  Medical Association  last summer  in Anchorage.   The                                                                   
purpose of that  trip was to undertake negotiations  and that                                                                   
there had not been a response to those discussions.                                                                             
                                                                                                                                
Representative Foster MOVED to  report HCS CS SB 37 (FIN) out                                                                   
of Committee  with  individual recommendations  and with  the                                                                   
accompanying fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS CS SB 37  (JUD) was reported out of Committee  with a "do                                                                   
pass"  recommendation  and  with   fiscal  notes  #6  by  the                                                                   
Department  of Administration,  #8 by  the Department  of Law                                                                   
and   #9  by   the  Department   of   Community  &   Economic                                                                   
Development.                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 299(FIN)                                                                                               
                                                                                                                                
     An Act  relating to the  establishment of  an additional                                                                   
     south-central panel to the  Alaska Workers' Compensation                                                                   
     Board and  to appointments to that panel;  and providing                                                                   
     for an effective date.                                                                                                     
                                                                                                                                
DEBORAH GRUNDMANN, STAFF, SENATOR BEN STEVENS, stated that                                                                      
CSSB 299 (FIN)  would amend the Workers' Compensation  Act to                                                                   
provide  for an  additional  panel  for the  Alaska  Workers'                                                                   
Compensation   Board  in  the   South-central  venue.     She                                                                   
indicated that  was needed to  help provide more  hearings in                                                                   
the  area and  would  address  the need  to  reduce lag  time                                                                   
between when  a worker files a  claim and obtains  a hearing.                                                                   
The bill would relieve growing caseloads.                                                                                       
                                                                                                                                
                                                                                                                                
Ms.  Grundmann added  that the  Alaska Workers'  Compensation                                                                   
Act  requires  hearings to  be  conducted  by panels  of  the                                                                   
Workers' Compensation  Board.   A panel  consists of  a labor                                                                   
member  and  an  industry  member, with  a  designee  of  the                                                                   
commissioner  of  the  Department   of  Labor  and  Workforce                                                                   
Development.   The commissioner's designee is  an employee of                                                                   
the  State  of   Alaska;  the  other  two  members   are  lay                                                                   
volunteers who receive a $50 per day stipend.                                                                                   
                                                                                                                                
Ms. Grundmann pointed  out that the industry  seat members of                                                                   
the panels  usually work in  some management position,  while                                                                   
the  labor members  are  usually  officers of  labor  unions,                                                                   
which makes for a "good mix" in  deciding the types of cases.                                                                   
Panel  members  also  have  full time  jobs  outside  of  the                                                                   
division,  and  have  limited  time to  devote  to  hearings.                                                                   
Consequently,  there are only  so many  hearings that  can be                                                                   
conducted with the current component  of panel members.  With                                                                   
the  adoption  of  the committee  substitute  in  the  Senate                                                                   
Finance  Committee,  the  effective  date  of  the  bill  was                                                                   
changed  to January  1,  2003.   Enactment  of  SB 299  would                                                                   
provide  much  needed  relief to  the  Worker's  Compensation                                                                   
Board.                                                                                                                          
                                                                                                                                
Representative Foster MOVED to  report CS SB 299 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
attached fiscal  note.  There  being NO OBJECTION, it  was so                                                                   
ordered.                                                                                                                        
                                                                                                                                
CS SB  299 (FIN)  was reported  out of  Committee with  a "do                                                                   
pass" recommendation  and with  fiscal note #1  by Department                                                                   
of Law.                                                                                                                         
                                                                                                                                
#SB345                                                                                                                        
SENATE BILL NO. 345                                                                                                           
                                                                                                                                
     An    Act   relating   to    medical   assistance    for                                                                   
     rehabilitative   services  for  certain   children  with                                                                   
     disabilities;  relating  to  agreements to  pay  medical                                                                   
     assistance  for covered services  paid for or  furnished                                                                   
     to  eligible  children  with disabilities  by  a  school                                                                   
     district; and providing for an effective date.                                                                             
                                                                                                                                
JERRY  BURNETT, STAFF,  SENATOR  LYDA GREEN,  commented  that                                                                   
under  the  federal Individuals  Disabilities  Education  Act                                                                   
(IDEA),   school   districts    are   required   to   provide                                                                   
rehabilitative services  to qualifying students.   Currently,                                                                   
the federal  government  pays approximately  16% of the  cost                                                                   
for services  required by IDEA.   The balance is paid  out of                                                                   
the  foundation  formula  with  a  mix  of  State  and  local                                                                   
funding.    To  the extent  that  the  students  qualify  for                                                                   
Medicaid, federal  law allows for  schools to bill  the State                                                                   
Medicaid program  for many of the services.   However, Alaska                                                                   
State law does not authorize school  districts to be Medicaid                                                                   
providers.                                                                                                                      
                                                                                                                                
Senate Bill  345 authorizes the  Alaska Department  of Health                                                                   
and Social Services  to promulgate the  necessary regulations                                                                   
and  to  contract  with school  districts  to  reimburse  for                                                                   
rehabilitative  services for students  who qualify  under the                                                                   
Medicaid  program.   Currently, forty-two  other states  fund                                                                   
school-based services through the Medicaid program.                                                                             
                                                                                                                                
Mr. Burnett stated  that under the provisions of  SB 345, the                                                                   
school district  would pay the  State match for  the Medicaid                                                                   
services it  receives.  The only  State cost under  the bill,                                                                   
would be  the cost of promulgating  the regulations  and some                                                                   
small administrative costs.                                                                                                     
                                                                                                                                
Mr.  Burnett added  that school  districts  would benefit  by                                                                   
receiving  federal   matching  dollars  under   the  Medicaid                                                                   
program for  services that they  must provide,  regardless of                                                                   
how  they  are  funded.   For  each  school  district  dollar                                                                   
expended for the services, the  school district would receive                                                                   
approximately  $1.50  in  additional federal  dollars.    Mr.                                                                   
Burnett claimed  that money  could help  defray the  costs of                                                                   
providing special education services.                                                                                           
                                                                                                                                
JON SHERWOOD,  DIVISION OF MEDICAL ASSISTANCE,  DEPARTEMNT OF                                                                   
HEALTH  AND  SOCIAL  SERVICES,   noted  that  the  Department                                                                   
supports  the bill.   He  stated  that it  was a  cooperative                                                                   
effort  between Department  of Health  & Social Services  and                                                                   
Department of  Education & Early  Development.   Mr. Sherwood                                                                   
offered to answer questions of the Committee.                                                                                   
                                                                                                                                
Mr. Sherwood  pointed out  that there  are two fiscal  notes.                                                                   
One of the  notes is for  Medicaid services.  The  bill would                                                                   
enable  the school districts  to bill  Medicaid for  services                                                                   
provided to  Medicaid-eligible children in  special education                                                                   
programs.    Districts  would  reimburse  the  Department  of                                                                   
Health  &  Social  Services for  the  State  match  required.                                                                   
There would  be no net increase  in State general  fund match                                                                   
for Medicaid.                                                                                                                   
                                                                                                                                
The other  fiscal note would  cover the small  administrative                                                                   
fees for expenses associated with  making the claim payments.                                                                   
Claim payments for the new service  and a small amount of on-                                                                   
going staff support would be needed to policy development.                                                                      
                                                                                                                                
Vice-Chair Bunde  asked if  the Medicaid reimbursement  would                                                                   
be "trading dollars".                                                                                                           
                                                                                                                                
Mr.  Sherwood  acknowledged  that was  correct,  noting  that                                                                   
currently, the  federal government pays  60% of the  cost for                                                                   
Medicaid services.                                                                                                              
                                                                                                                                
Vice-Chair  Bunde pointed  out  that schools  claim that  the                                                                   
State would be responsible for  paying for a portion of those                                                                   
costs.                                                                                                                          
                                                                                                                                
Mr.  Sherwood  agreed that  was  correct, noting  that  those                                                                   
State dollars would already have been spent.                                                                                    
                                                                                                                                
Representative  Foster   MOVED  to  report  SB   345  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SB 345 was reported out of Committee with a "no                                                                                 
recommendation" and with fiscal note #1 and #2 by the                                                                           
Department of Health & Social Services.                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:05 P.M.                                                                                          

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