Legislature(1993 - 1994)

05/06/1994 08:35 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                           May 6, 1994                                         
                            8:35 a.m.                                          
                                                                               
  TAPE HFC 94-161, Side 2, #000 - end.                                         
  TAPE HFC 94-162, Side 1, #000 - end.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called the House Finance Committee to order                  
  at 8:35 a.m.                                                                 
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson     Representative Hoffman                                   
  Co-Chair MacLean    Representative Martin                                    
  Vice-Chair Hanley   Representative Navarre                                   
  Representative Brown     Representative Parnell                              
  Representative Foster    Representative Therriault                           
  Representative Grussendorf                                                   
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Paul Fuhs, Commissioner, Department of Commerce and Economic                 
  Development; Ken Sykes, Marketing Analyst, Division of                       
  Insurance; Department of Commerce and Economic Development;                  
  Gary Brewer, Alaska Regional Hospital; Sharon Anderson,                      
  Alaska Regional Hospital; Jerry Rheinwald, Lobbyist, Blue                    
  Cross Insurance Company; Sherrie Goll, Alaska Association of                 
  Martial and Family Therapists; John Walsh, Special                           
  Assistance, Department of Community and Regional Affairs.                    
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 441 "An Act reducing certain appropriations for fiscal                    
  year 1994;            and providing for an effective date."                  
                                                                               
          CSHB 441 (FIN) was reported out of Committee with                    
  "no                 recommendation".                                         
                                                                               
  HB 455 "An Act making and amending operating and capital                     
  appropriations         and ratifying certain state                           
  expenditures; and providing for an         effective date."                  
                                                                               
          CSHB 455 (FIN) was reported out of Committee with                    
  "no                   recommendation"                                        
                                                                               
  HB 534 "An Act relating to insurance, to the licensing,                      
  accreditation,         examination, regulation, and solvency                 
  of persons engaged in the         insurance business,                        
  including insurers, nonadmitted insurers,                                    
                                                                               
                                                                               
  purchasing groups, risk retention groups, and United States                  
             branches of alien insurers; relating to the                       
  management of and           the filing of reports by persons                 
  licensed or otherwise doing            business under the                    
  insurance code; amending Alaska Rule of              Civil                   
  Procedure 45; and providing for an effective date."                          
                                                                               
          CSHB 534 (FIN) was reported out of Committee with                    
  individual            recommendations and with a zero fiscal                 
  note by the Department           of Commerce and Economic                    
  Development, 4/8/94.                                                         
                                                                               
  HOUSE BILL NO. 441                                                           
                                                                               
  "An Act reducing certain appropriations for fiscal year                      
  1994; and providing for an effective date."                                  
                                                                               
  Co-Chair MacLean provided members with proposed committee                    
  substitute, work draft #8-LS1628\E, 5/5/94 (copy on file).                   
  She explained that the proposed committee substitute would                   
  remove the reappropriation projects from HB 455 and place                    
  them in HB 441.                                                              
                                                                               
  Co-Chair MacLean MOVED to ADOPT work draft #8-LS1628\E,                      
  5/5/94. There being NO OBJECTION, it was so ordered.                         
                                                                               
  Co-Chair MacLean provided members with AMENDMENT 1 (copy on                  
  file). She explained that amendment 1 was submitted at the                   
  request of the Office of Budget and Management, Department                   
  of Community and Regional Affairs. Co-Chair MacLean MOVED to                 
  RESCIND the Committee's action in failing to adopt AMENDMENT                 
  1 during the House Finance Committee's meeting on May 5,                     
  1994. There being NO OBJECTION, it was so ordered.                           
                                                                               
  JOHN WALSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY AND                 
  REGIONAL AFFAIRS explained that the amendment would extend                   
  the lapse date on funding to the Department of Community and                 
  Regional Affairs. He stressed that funds will be used to                     
  reduce demand on the Power Cost Equalization Program.                        
                                                                               
  In response to a question by Representative Parnell, Mr.                     
  Walsh emphasized that due to transitions in the department,                  
  field travel was limited.                                                    
                                                                               
  Co-Chair MacLean observed that the Alaska Energy Authority                   
  was moved into the Department of Community and Regional                      
  Affairs during the past legislative session. She maintained                  
  that the department needs the carry forward.                                 
                                                                               
  Co-Chair MacLean MOVED to ADOPT AMENDMENT 1. Representative                  
  Hanley OBJECTED. A roll call vote was taken on the MOTION.                   
                                                                               
  IN FAVOR: Brown, Grussendorf, Navarre, Foster, MacLean,                      
                                                                               
                                                                               
  Larson                                                                       
  OPPOSED: Therriault, Hanley, Parnell                                         
                                                                               
  Representative Hoffman was not present for the vote.                         
                                                                               
  The MOTION PASSED (7-3).                                                     
                                                                               
  Co-Chair MacLean provided members with AMENDMENT 2 (copy on                  
  file). Amendment 2 would amend Section 21, Chapter 79, SLA                   
  1993, page 71, lines 11-12 to read "Bristol Bay Campus                       
  Building Addition."                                                          
                                                                               
  Co-Chair Larson MOVED to ADOPT AMENDMENT 2 on behalf of                      
  Representative Hoffman. There being NO OBJECTION, it was so                  
  ordered.                                                                     
                                                                               
  Co-Chair Larson MOVED to report CSHB 441 (FIN) out of                        
  Committee with individual recommendations. There being NO                    
  OBJECTION, it was so ordered.                                                
                                                                               
  CSHB 441 (FIN) was reported out of Committee with "no                        
  recommendation".                                                             
                                                                               
  HOUSE BILL NO. 455                                                           
                                                                               
  "An Act making and amending operating and capital                            
  appropriations and ratifying certain state expenditures; and                 
  providing for an effective date."                                            
                                                                               
  Representative Martin MOVED to report CSHB 455 (FIN) out of                  
  Committee with individual recommendations.                                   
                                                                               
  CSHB 455 (FIN) was reported out of Committee with "no                        
  recommendation"                                                              
                                                                               
  Co-Chair Larson discussed a request to waive legislation                     
  from Committee.                                                              
                                                                               
  HOUSE BILL NO. 534                                                           
                                                                               
  "An Act relating to insurance, to the licensing,                             
  accreditation, examination, regulation, and solvency of                      
  persons engaged in the insurance business, including                         
  insurers, nonadmitted insurers, purchasing groups, risk                      
  retention groups, and United States branches of alien                        
  insurers; relating to the management of and the filing of                    
  reports by persons licensed or otherwise doing business                      
  under the insurance code; amending Alaska Rule of Civil                      
  Procedure 45; and providing for an effective date."                          
                                                                               
  Co-Chair Larson provided members with a proposed committee                   
  substitute, work draft # 8-LS1766\J, 5/5/94 (copy on file).                  
                                                                               
                                                                               
  He noted that new language was added on page 60, line 3                      
  through page 61, line 27.                                                    
                                                                               
  JERRY RHEINWALD, LOBBYIST, BLUE CROSS testified in                           
  opposition against the proposed committee substitute. He                     
  asserted that the new section is targeted at Blue Cross. He                  
  maintained that the issue is complex and complicated. He                     
  suggested that more time is needed to look at the issue.                     
                                                                               
  Representative Martin noted that new language was also added                 
  in section 87 on page 58.                                                    
                                                                               
  SHARON ANDERSON, ALASKA REGIONAL HOSPITAL testified in                       
  support of the proposed committee substitute. She explained                  
  that the proposed committee substitute provides for patient                  
  access to hospitals and physicians of their choice. She                      
  asserted that other insurance companies are already subject                  
  to the provisions contained in the proposed committee                        
  substitute.                                                                  
                                                                               
  Ms. Anderson clarified that the state of Alaska has utilized                 
  preferred arrangements as the result of negotiations between                 
  two parties without an open bid.                                             
                                                                               
  Representative Hanley noted that a "provider or hospital                     
  willing to meet the terms and conditions of the preferred                    
  provider may not be excluded."                                               
                                                                               
  Ms. Anderson described a "preferred provider arrangement".                   
                                                                               
  Representative Therriault observed that there is a trade off                 
  between price and volume.                                                    
                                                                               
  GARY BREWER, CHIEF EXECUTIVE OFFICER, ALASKA REGIONAL                        
  HOSPITAL stressed that the Alaska Regional Hospital has not                  
  been allowed to participate as a bidder on contracts.                        
                                                                               
  Ms. Anderson noted that Aetna has a preferred provider                       
  arrangement with Providence Hospital. Aetna pays the                         
  negotiated price for patients that choose to come to the                     
  Alaska Regional Hospital. She noted that they wish to allow                  
  medical service corporations to participate. She maintained                  
  that the proposed committee substitute would help curb                       
  costs. Mr. Brewer noted that health care inflation is at 4.9                 
  percent.                                                                     
                                                                               
  Representative Navarre express concern with the cost of                      
  health care inflation.                                                       
                                                                               
  Representative Martin recommended that section 87 be removed                 
  from the proposed committee substitute.                                      
                                                                               
  Representative Martin MOVED to ADOPT CSHB 534 (L&C).                         
                                                                               
                                                                               
  (Tape Change, HFC 94-162, Side 1)                                            
                                                                               
  Co-Chair MacLean OBJECTED. A roll call vote was taken on the                 
  MOTION.                                                                      
                                                                               
  IN FAVOR: Navarre, Hanley, Martin, Parnell, Therriault                       
  OPPOSED: Brown, Foster, Hoffman, Grussendorf, MacLean,                       
  Larson                                                                       
                                                                               
  The MOTION FAILED (5-6).                                                     
                                                                               
  Co-Chair MacLean MOVED to ADOPT work draft # 8-LSl766\J,                     
  5/5/94. Representative Martin OBJECTED. Representative                       
  Martin WITHDREW his OBJECTION. There being NO OBJECTION, it                  
  was so ordered.                                                              
                                                                               
  PAUL FUHS, COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC                 
  DEVELOPMENT provided members with AMENDMENT 1 (copy on                       
  file). He expressed concern that the legislation not become                  
  the vehicle for workmen cGmpensation amendments.                             
                                                                               
  KEN SYKES, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT                   
  noted that the provision for preferred providers was not                     
  included in the senate companion bill. He noted that                         
  amendment 1 contains technical changes to keep the                           
  department in line with the national accreditation force,                    
  National Association of Insurance Commissioners.                             
                                                                               
  Mr. Sykes discussed the appointment of independent counsel                   
  provision on page 60, line 3. He noted that an insured or                    
  policy holder has the right to hire independent counsel for                  
  defence under their insurance policy. This section attempts                  
  to clarify the standards of this practice.                                   
                                                                               
  Representative Navarre MOVED to ADOPT AMENDMENT 1.                           
  Representative Brown questioned the effect of the change on                  
  page 9, line 9. Mr. Sykes explained that any document                        
  received by the National Association of Insurance                            
  Commissioners is a public document. The National Association                 
  of Insurance Commissioners would be deleted by the amendment                 
  in order to allow discretion, by the Division of Insurance,                  
  of disclosure for market competition. Records can be                         
  subpoenaed directly from the company involved.                               
                                                                               
  There being NO OBJECTION, AMENDMENT 1 was adopted.                           
                                                                               
  Representative Martin MOVED to delete section 87 on page 58.                 
  Mr. Sykes noted that the Department of Commerce and Economic                 
  Development is neutral in regards to section 87. Co-Chair                    
  MacLean OBJECTED to the motion to delete sections 87.                        
  Representative Navarre noted that section 87 is                              
  controversial and has not had sufficient scrutiny.                           
  Representative Hanley expressed concern that section 87 is                   
  directed toward only Blue Cross.                                             
                                                                               
                                                                               
  Mr. Sykes explained that insurance companies are regulated                   
  under AS 09. Medical service providers and hospital                          
  organizations are different from insurance companies. He                     
  noted that patients are reimbursed 80 percent for services                   
  by a physician approved by the preferred provider. If the                    
  patient goes to a doctor outside of the preferred provider                   
  agreement they are reimbursed for only 75 percent of the                     
  cost.                                                                        
                                                                               
  Section 87 would remove the five percent gap. He clarified                   
  that the state's current health care contract would not be                   
  directly effected since the contract is with Aetna. However,                 
  VSP or eye care providers will have to comply with the                       
  provision.                                                                   
                                                                               
  Representative Parnell expressed concern that long term                      
  impacts of the provision contained in section 87 have not                    
  been considered.                                                             
                                                                               
  Representatives MacLean and Grussendorf spoke in support of                  
  retention of section 87.                                                     
                                                                               
  A roll call vote was taken on the MOTION to delete section                   
  87.                                                                          
                                                                               
  IN FAVOR: Navarre, Hanley, Martin, Parnell, Therriault                       
  OPPOSED: Brown, Foster, Hoffman, Grussendorf, MacLean,                       
  Larson                                                                       
                                                                               
  The MOTION FAILED (5-6).                                                     
                                                                               
  Representative Brown provided members with AMENDMENT CSHB
  545 (L&C) (copy on file). She explained that the legislation                 
  would prevent health insurance companies from discriminating                 
  against marital and family therapists.                                       
                                                                               
  SHERRIE GOLL, ALASKA ASSOCIATION OF MARITAL AND FAMILY                       
  THERAPISTS noted that the adoption of CSHB 545 (L&C) into                    
  CSHB 534 (FIN) would add marital and family therapists to                    
  the unfair discrimination statute.                                           
                                                                               
  Mr. Rheinwald spoke in opposition to the adoption of CSHB
  545 (L&C). Commissioner Fuhs spoke in opposition to the                      
  adoption of CSHB 545 (L&C).                                                  
                                                                               
  Representative Brown MOVED to ADOPT CSHB 545 (L&C) as a new                  
  section in CSHB 534 (FIN). Representative Martin OBJECTED. A                 
  roll call vote was taken on the MOTION.                                      
                                                                               
  IN FAVOR: Brown, Hoffman                                                     
  OPPOSED: Navarre, Grussendorf, Foster, Hanley, Martin,                       
  Parnell, Therriault, MacLean, Larson                                         
                                                                               
                                                                               
  The MOTION FAILED (2-9).                                                     
                                                                               
  Co-Chair MacLean MOVED to report CSHB 534 (FIN) out of                       
  Committee with individual recommendations and with the                       
  accompanying fiscal notes. Representative Navarre OBJECTED.                  
  A roll call vote was taken on the MOTION.                                    
                                                                               
  IN FAVOR: Grussendorf, Brown, Hoffman, Foster, Hanley,                       
  Martin, Therriault, MacLean, Larson                                          
                                                                               
  OPPOSED: Navarre, Parnell                                                    
                                                                               
  The MOTION PASSED (9-2).                                                     
                                                                               
  CSHB 534 (FIN) was reported out of Committee with                            
  "individual recommendations" and with a zero fiscal note by                  
  the Department of Commerce and Economic Development, 4/8/94.                 
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjoured at 10:00 a.m.                                           

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