Legislature(2013 - 2014)HOUSE FINANCE 519

04/09/2014 08:30 AM FINANCE


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08:35:25 AM Start
08:36:33 AM Confirmation Hearing: Alaska Mental Health Trust Authority - John Mcclellan
08:49:02 AM HB379
08:54:54 AM HB316
09:59:29 AM HB308
10:26:22 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearing: TELECONFERENCED
- Alaska Mental Health Trust Authority Board of
Trustees
+ HB 316 WORKERS' COMPENSATION MEDICAL FEES TELECONFERENCED
Heard & Held
+ HB 308 ALASKA SECURITIES ACT EXEMPTIONS TELECONFERENCED
Moved Out of Committee
+ HB 214 MENTAL HEALTH PATIENT RIGHTS & GRIEVANCES TELECONFERENCED
Scheduled But Not Heard
+ SB 191 GENERAL OBLIGATION BOND FUND TRANSFER TELECONFERENCED
<Bill Hearing Postponed to 6:00 p.m. Meeting>
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 379 OIL & GAS PROPERTY TAX TELECONFERENCED
Moved CSHB 379(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 9, 2014                                                                                            
                         8:35 a.m.                                                                                              
                                                                                                                                
8:35:25 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 8:35 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Benjamin Nageak,  Sponsor; Jacob Adams, Chief                                                                    
Administrative Officer, North  Slope Borough, Barrow; Angela                                                                    
Rodell,  Commissioner, Department  of Revenue;  Anna Latham,                                                                    
Staff,  Representative Kurt  Olson;  Barbara Huff  Tuckness,                                                                    
Director, Governmental  and Legislative  Affairs, Teamsters;                                                                    
Ward Hurlburt, Chief Medical  Officer and Director, Division                                                                    
of Public Health, Department of  Health and Social Services;                                                                    
Don Etheridge,  Alaska AFL-CIO, Juneau;  Representative Pete                                                                    
Higgins; Representative Andy Josephson.                                                                                         
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
John  McClellan,  Alaska   Mental  Health  Trust  Authority,                                                                    
Anchorage; Matt  Fonder, Director, Tax  Division, Department                                                                    
of  Revenue,   Anchorage;  Leeanne   Carrothers,  President,                                                                    
Alaska  Physical  Therapy  Association,  Anchorage;  Juliana                                                                    
Ament,  Alaska  Physical   Therapy  Association,  Fairbanks;                                                                    
Karen Purdue,  President and CEO, Alaska  State Hospital and                                                                    
Nursing   Home   Association,   Fairbanks;   Rachel   Petro,                                                                    
President and  CEO, Alaska  Chamber of  Commerce, Anchorage;                                                                    
Kevin Anselm, Director, Division  of Banking and Securities,                                                                    
Department of Commerce,  Community and Economic Development,                                                                    
Anchorage; Allan  Johnston, Regional Manager,  Team Network,                                                                    
Inc., Anchorage.                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 214    MENTAL HEALTH PATIENT RIGHTS & GRIEVANCES                                                                             
                                                                                                                                
          HB 214 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 308    ALASKA SECURITIES ACT EXEMPTIONS                                                                                      
                                                                                                                                
          HB 308 was REPORTED out of committee with a "do                                                                       
          pass" recommendation and with one previously                                                                          
         published fiscal impact note: FN1 (CED).                                                                               
                                                                                                                                
HB 316    WORKERS' COMPENSATION MEDICAL FEES                                                                                    
                                                                                                                                
          HB 316 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 379    OIL & GAS PROPERTY TAX                                                                                                
                                                                                                                                
          CSHB 379(FIN)  was REPORTED out of  committee with                                                                    
          a  "do  pass"  recommendation  and  with  one  new                                                                    
          indeterminate fiscal  note from the  Department of                                                                    
          Revenue.                                                                                                              
                                                                                                                                
CONFIRMATION HEARING:  ALASKA MENTAL HEALTH  TRUST AUTHORITY                                                                    
- JOHN MCCLELLAN                                                                                                                
                                                                                                                                
8:36:33 AM                                                                                                                    
                                                                                                                                
^CONFIRMATION HEARING: ALASKA  MENTAL HEALTH TRUST AUTHORITY                                                                  
- JOHN MCCLELLAN                                                                                                              
                                                                                                                                
JOHN  MCCLELLAN,  ALASKA   MENTAL  HEALTH  TRUST  AUTHORITY,                                                                    
ANCHORAGE (via  teleconference), discussed  his professional                                                                    
background. He  had started  three engineering  companies in                                                                    
Alaska. Additionally, he had run  several companies for NANA                                                                    
and other.  He did not  have experience with  mental health;                                                                    
however,  he   did  have  experience  in   finance.  He  was                                                                    
interested in  resource development  growth and  the finance                                                                    
portion of the trust.                                                                                                           
                                                                                                                                
Co-Chair Stoltze  surmised that Mr. McClellan's  role was in                                                                    
making money  for the trustees  instead of spending  it. Mr.                                                                    
McClellan replied in the affirmative.                                                                                           
                                                                                                                                
Representative Gara asked  if the board of  trustees did any                                                                    
mental health work. Mr. McClellan  replied that the trustees                                                                    
reviewed and  approved the mental  health programs  based on                                                                    
staff recommendations.                                                                                                          
                                                                                                                                
8:40:41 AM                                                                                                                    
                                                                                                                                
Representative   Gara   wondered   if  Mr.   McClellan   had                                                                    
experience  related to  alcohol  abuse  treatment and  other                                                                    
areas that  the trust addressed. Mr.  McClellan replied that                                                                    
he  did not  have  professional experience.  He believed  it                                                                    
would be easier for him to  earn a quick education on mental                                                                    
health  programs  than  it  would be  for  a  mental  health                                                                    
professional to gain 40 years' experience in finance.                                                                           
                                                                                                                                
Representative  Gara asked  if the  board had  the power  to                                                                    
review  and  reject projects  presented  by  the staff.  Mr.                                                                    
McClellan  replied  that  the board  had  the  authority  to                                                                    
reject staff recommendations.                                                                                                   
                                                                                                                                
Representative Holmes thanked Mr.  McClellan for putting his                                                                    
name in. She  wondered if he had thoughts of  a direction of                                                                    
the trust.  Mr. McClellan answered that  he was semi-retired                                                                    
and that  acting as a board  member would keep him  fresh in                                                                    
the field.  He would  like to see  an outreach  program, and                                                                    
other new and innovative programs within the trust.                                                                             
                                                                                                                                
Co-Chair Stoltze  thanked Mr. McClellan for  his service. He                                                                    
spoke about his  experience on boards. He was  happy to have                                                                    
members   with  finance   experience   on   the  board.   He                                                                    
appreciated members  who were  interested in  sustaining the                                                                    
trust for beneficiaries.                                                                                                        
                                                                                                                                
Co-Chair Stoltze  asked if there were  any objections toward                                                                    
the advancement of Mr. McClellan's  name. He noted he wanted                                                                    
to remove language  in the report related  to the reflection                                                                    
of the intent of the members.  He stressed that it was known                                                                    
that  individual votes  were personal,  so the  language was                                                                    
unnecessary. There being NO OBJECTION, it was so ordered.                                                                       
                                                                                                                                
8:47:08 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
8:48:50 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 379                                                                                                            
                                                                                                                                
     "An Act relating to the limitation on the value of                                                                         
     property taxable by a municipality; and providing for                                                                      
     an effective date."                                                                                                        
                                                                                                                                
8:49:02 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  stated that  an amendment  from Department                                                                    
of Administration  (DOA) had been incorporated  into the new                                                                    
committee substitute.                                                                                                           
                                                                                                                                
Vice-Chair  Neuman MOVED  to  ADOPT  the proposed  committee                                                                    
substitute    for   HB    379,   Work    Draft   28-LS1633\U                                                                    
(Bullard/Bullock, 4/8/14).                                                                                                      
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
REPRESENTATIVE  BENJAMIN   NAGEAK,  SPONSOR,   approved  the                                                                    
changes in the committee substitute.                                                                                            
                                                                                                                                
JACOB  ADAMS,  CHIEF  ADMINISTRATIVE  OFFICER,  NORTH  SLOPE                                                                    
BOROUGH,  BARROW,  agreed  with  changes  in  the  committee                                                                    
substitute.                                                                                                                     
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Representative   Costello  discussed   the  fiscal   note  -                                                                    
indeterminate from Department of Revenue.                                                                                       
                                                                                                                                
MATT FONDER, DIRECTOR, TAX  DIVISION, DEPARTMENT OF REVENUE,                                                                    
ANCHORAGE  (via  teleconference),  relayed that  the  change                                                                    
made  to the  bill  would not  impact  revenues. The  change                                                                    
would only  help the department  administer changes  made in                                                                    
the bill.                                                                                                                       
                                                                                                                                
ANGELA   RODELL,   COMMISSIONER,  DEPARTMENT   OF   REVENUE,                                                                    
appreciated the  addition of  the clarifying  language added                                                                    
in the amendment.                                                                                                               
                                                                                                                                
Co-Chair Stoltze asked if there were any amendments.                                                                            
                                                                                                                                
Vice-Chair  Neuman  MOVED to  REPORT  CSHB  379(FIN) out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB 379(FIN) was REPORTED out of committee with a "do                                                                          
pass" recommendation and with one new indeterminate fiscal                                                                      
note from the Department of Revenue.                                                                                            
                                                                                                                                
8:53:29 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
8:54:48 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 316                                                                                                            
                                                                                                                                
     "An  Act relating  to  workers'  compensation fees  for                                                                    
     medical  treatment and  services; relating  to workers'                                                                    
     compensation   regulations;   and  providing   for   an                                                                    
     effective date."                                                                                                           
                                                                                                                                
8:54:54 AM                                                                                                                    
                                                                                                                                
ANNA LATHAM, STAFF, REPRESENTATIVE KURT OLSON, discussed                                                                        
the bill and the Sectional Analysis (copy on file):                                                                             
                                                                                                                                
     Section  1.   Amends  the  physician,   outpatient  and                                                                    
     ambulatory surgical center,  and inpatient hospital fee                                                                    
     schedules  to  be  based on  the  federal  Centers  for                                                                    
     Medicare and Medicaid Services fees.                                                                                       
                                                                                                                                
     Section 2. Requires  the Workers' Compensation Advisory                                                                    
     Board  to annually  review and  adjust  fees set  under                                                                    
     Section 1.  Requires the board to  request and consider                                                                    
     recommendations  from   the  Medical   Services  Review                                                                    
     Committee on  setting the conversion factors  and rates                                                                    
     specified   in   Section   1.  Provides   for   maximum                                                                    
     reimbursement  for  fees  rendered  in  another  state.                                                                    
     Requires the  board to set  the rate for  air ambulance                                                                    
     service.  Requires the  board  to set  the markup,  and                                                                    
     reimbursement  limits  for durable  medical  equipment.                                                                    
     Requires the  board to set the  markup, dispensing fee,                                                                    
     and  reimbursement   limits  for   prescription  drugs.                                                                    
     Requires a  prescription drug dispensed by  a physician                                                                    
     to include  in an  invoice the  original manufacturer's                                                                    
     code from  the National  Drug Code  Directory published                                                                    
     by the  USFDA. Exempts  critical access  hospitals from                                                                    
     the fee schedules established in  Section 1. Allows the                                                                    
     board to  apply a  geographic adjustment factor  to fee                                                                    
     schedules in Section 1.                                                                                                    
                                                                                                                                
     Section  3. Lists  reference  materials the  department                                                                    
     may  incorporate,  including future  amended  versions,                                                                    
     into regulations.                                                                                                          
                                                                                                                                
     Section  4.   Section  1   and  Section   3(j)-(0)  are                                                                    
     effective on July 1, 2015.                                                                                                 
                                                                                                                                
     Section 5. Excluding Sections 6  and 7 of the Act, this                                                                    
     Act is effective on July 1, 2014.                                                                                          
                                                                                                                                
8:58:42 AM                                                                                                                    
                                                                                                                                
Ms. Latham  relayed that the  method was established  in the                                                                    
late  1980s,   by  a  team   of  researchers   from  Harvard                                                                    
University  which  included statisticians,  physicians,  and                                                                    
economists.  The  relative  value  unit  accounted  for  the                                                                    
physician's   work,  practice   expenses,  and   malpractice                                                                    
insurance  to   provide  medical  service.  The   value  was                                                                    
multiplied by a fixed conversion  factor set by the state to                                                                    
determine  the amount  of payment,  and  the relative  value                                                                    
unit was  adjusted by the  geographic region to  reflect the                                                                    
variation  and provide  the costs.  The methodology  was the                                                                    
basis for  Medicare and Medicaid payments  schedules, and 32                                                                    
states' workers  compensation systems. The  American Medical                                                                    
Association owned  and updated the system  periodically. She                                                                    
stated   that  the   legislation  outlined   three  separate                                                                    
conversion factors:  one for a  physician fee  schedule; one                                                                    
for an outpatient and ambulatory  fee schedules; and one for                                                                    
an inpatient  fee schedule.  The Workers  Compensation Board                                                                    
would be responsible for renewing  and adjusting fees on the                                                                    
fee  schedules  under  advisement of  the  Medical  Services                                                                    
Review Committee.  The reason that committee  is the advisor                                                                    
was because  they have  the medical  expertise that  the 18-                                                                    
person  Workers  Compensation  Board had.  She  stated  that                                                                    
there  was  an exemption  in  the  legislation for  critical                                                                    
access hospitals,  which were small  hospitals in  the state                                                                    
that generally  had less  than 25 beds,  an average  stay of                                                                    
less than  96 hours, and  they were federally  designated so                                                                    
they had a different billing system.                                                                                            
                                                                                                                                
Co-Chair  Stoltze asked  if it  was a  rural exemption.  Ms.                                                                    
Latham replied in the affirmative.                                                                                              
                                                                                                                                
Ms.  Latham  stated that  examples  of  the critical  access                                                                    
hospitals included  Kodiak, Valdez, Ketchikan,  and Cordova.                                                                    
The legislation would be effective  on July 1, 2014, and the                                                                    
new fee schedules would be effective one year later.                                                                            
                                                                                                                                
Co-Chair Stoltze  stated that  the medical  community needed                                                                    
to  determine whether  the legislation  was related  to cost                                                                    
control or  market control. He  stated that  market controls                                                                    
mostly led to shortages of access and providers.                                                                                
                                                                                                                                
Vice-Chair Neuman noted  that Alaska had one  of the highest                                                                    
instances  of workers  compensation, because  of the  mining                                                                    
and fishing  and dangerous industries. He  looked at Section                                                                    
2, and queried  the average anticipated cost  changes in the                                                                    
different fee schedules.                                                                                                        
                                                                                                                                
Ms.  Latham  replied  with the  document,  "Top  25  Surgery                                                                    
Procedure Codes Ranked by Paid  Amounts for Alaska" (copy on                                                                    
file). She stated that the  intent of the legislation was to                                                                    
align the fee  schedules with the group health.  There was a                                                                    
desire for  reasonable and fair  rates that were  charged by                                                                    
the doctors.  She remarked  that the  chart showed  what the                                                                    
Alaska  Workers  Compensation  fee schedule  currently  paid                                                                    
compared  to Washington,  Oregon,  and  Idaho. She  stressed                                                                    
that  she  did not  have  data  on  exactly  how much  of  a                                                                    
decrease would occur if the legislation were passed.                                                                            
                                                                                                                                
Vice-Chair Neuman  announced that  he was familiar  with the                                                                    
cost  comparisons  between  Alaska   and  other  states.  He                                                                    
stressed that  it was difficult  to analyze a  bill, without                                                                    
the outlined estimates.                                                                                                         
                                                                                                                                
9:04:49 AM                                                                                                                    
                                                                                                                                
Representative  Holmes agreed  that the  current rates  were                                                                    
not working. She  wanted to ensure that  the physicians were                                                                    
adequately and people  could get proper care.  She asked for                                                                    
more details  regarding the legislation. Ms.  Latham replied                                                                    
that  the baseline  would be  the centers  for Medicare  and                                                                    
Medicaid.  She  remarked  that 32  states  had  adopted  the                                                                    
methodology.   The  Workers   Comp  Board   would  set   the                                                                    
conversion factors for the three fee schedules.                                                                                 
                                                                                                                                
LEEANNE  CARROTHERS,  PRESIDENT,   ALASKA  PHYSICAL  THERAPY                                                                    
ASSOCIATION,  ANCHORAGE   (via  teleconference),   spoke  to                                                                    
concerns  related  to  the bill.  The  legislation  had  the                                                                    
potential to  affect many health care  providers, especially                                                                    
those  who own  small  independent  practices. She  remarked                                                                    
that  physical  therapists  were highly  educated,  licensed                                                                    
health care  professionals who  helped patients  reduce pain                                                                    
and  improve  or  restore   mobility  after  injury  without                                                                    
expensive   surgery   and   often  reducing   the   use   of                                                                    
prescription medications. In the  case of workers comp, this                                                                    
translates into  an earlier return to  work. Furthermore, an                                                                    
18-month  study  of  32,000  patients  with  low  back  pain                                                                    
revealed  that physical  therapy started  within 14  days of                                                                    
the initial patient physician  encounter was associated with                                                                    
reduced  risk of  subsequent surgery,  injections, physician                                                                    
visits, opioid use, along with  a corresponding reduction in                                                                    
overall  love back  pain related  medical costs  relative to                                                                    
delayed  treatment by  a  physical  therapist. Total  health                                                                    
care  costs  for  patients  receiving   early  care  from  a                                                                    
physical therapist  were an average of  $2736 lower. Because                                                                    
of the  vital role  of the physical  therapist in  the early                                                                    
management  and recovery  of individuals  with work  related                                                                    
injuries,  she  believed  that physical  therapy  should  be                                                                    
included  in  the  process  of  determining  the  conversion                                                                    
factors  and  rates that  would  be  used to  determine  the                                                                    
payment for physical therapy uses.                                                                                              
                                                                                                                                
Co-Chair   Stoltze  handed   the  gavel   to  Representative                                                                    
Costello.                                                                                                                       
                                                                                                                                
9:10:11 AM                                                                                                                    
                                                                                                                                
JULIANA   AMENT,   ALASKA  PHYSICAL   THERAPY   ASSOCIATION,                                                                    
FAIRBANKS (via  teleconference), spoke  against the  bill in                                                                    
its  current   form.  She  spoke   to  the  high   costs  of                                                                    
recruitment and retention of  medical providers. Cutting pay                                                                    
to providers to  may not  be the answer. The proposed system                                                                    
proposed was used by Medicare and  paid for 65 percent of an                                                                    
office visit. She spoke to  an exodus of providers who would                                                                    
simply treat patients with private insurance.                                                                                   
                                                                                                                                
KAREN PURDUE,  PRESIDENT AND CEO, ALASKA  STATE HOSPITAL AND                                                                    
NURSING  HOME ASSOCIATION,  FAIRBANKS (via  teleconference),                                                                    
agreed that reform  was needed; however, there  was one area                                                                    
of the bill  the association was concerned  about related to                                                                    
the conversion  factor. He stressed that  Alaska's hospitals                                                                    
and  nursing  homes  had a  double-interest  in  the  issue,                                                                    
because they  not only  provided care,  but were  also large                                                                    
employers. She  stressed that health  care also  had workers                                                                    
compensation costs.  She felt that  the idea of  setting the                                                                    
conversion factor  to commercial rates was  the intention of                                                                    
the sponsor,  but remarked that the  Medical Services Review                                                                    
Committee did not have a  standard in statute to set against                                                                    
the  conversion factor.  She stated  that  the low  Medicaid                                                                    
payment  in Alaska  provided  discomfort  for providers,  in                                                                    
terms of what the committee would decide upon.                                                                                  
                                                                                                                                
Representative Gara looked  at page 2 of  the legislation, a                                                                    
noted  the language  related to  the schedule  based on  the                                                                    
Federal  Centers for  Medicare and  Medicaid. He  understood                                                                    
that Medicare  did not pay  family practice physicians  at a                                                                    
reasonable  rate, as  well as  other areas.  He wondered  if                                                                    
there  was a  fear that  the  rates from  the federal  level                                                                    
would  be  initiated. Ms.  Purdue  responded  she had  those                                                                    
concerns. She stated  that the sponsor had  relayed that the                                                                    
conversion factor  was the beginning,  but there would  be a                                                                    
multiplier  to  the  factor,  however  that  multiplier  was                                                                    
unknown. The  process was such  the Medical  Services Review                                                                    
Committee   would    make   the   recommendation    to   the                                                                    
commissioner. She  felt that the sponsor's  intent should be                                                                    
codified to group health or commercial rates.                                                                                   
                                                                                                                                
Representative Gara wondered if  the multiplier was outlined                                                                    
in  the bill.  Ms. Purdue  replied in  the affirmative,  but                                                                    
deferred to the sponsor for confirmation.                                                                                       
                                                                                                                                
9:16:59 AM                                                                                                                    
                                                                                                                                
BARBARA   HUFF   TUCKNESS,    DIRECTOR,   GOVERNMENTAL   AND                                                                    
LEGISLATIVE  AFFAIRS, TEAMSTERS,  spoke  in  support of  the                                                                    
legislation.  She   relayed  that   one  year   earlier  the                                                                    
Teamsters had  implemented a medical  tourism plan  for over                                                                    
$30  million, one-third  was related  to prescription  drugs                                                                    
and the  remainder was  associated with  medical procedures.                                                                    
The group  was very  supportive of  the sponsor's  effort on                                                                    
the bill.  She felt comfortable  with the going  through the                                                                    
medical review  committee. She noted that  the committee was                                                                    
made up  of physicians and other.  The recommendations would                                                                    
be  presented to  the workers'  compensation board  and with                                                                    
oversight by  the commissioner.  She understood  the concern                                                                    
about the fees and the perception  of how it would work with                                                                    
the  medical review  committee.  The group  had worked  hard                                                                    
with  employers,  but  stressed  that  one  of  the  group's                                                                    
highest costs  was workers'  compensation. She  relayed that                                                                    
medical costs continued to rise.                                                                                                
                                                                                                                                
9:21:47 AM                                                                                                                    
                                                                                                                                
Representative Guttenberg  asked if the group  was concerned                                                                    
that  the  change would  result  in  fewer doctors  covering                                                                    
workers'  compensation cases.  Ms.  Huff Tuckness  responded                                                                    
that she was  more concerned that the option  that was given                                                                    
injured workers meant flying to  the Lower 48 for treatment.                                                                    
She did  not believe  it was  in the  best interest  for the                                                                    
state's  long-term medical  cost, and  she looking  at other                                                                    
alternatives if nothing was done.  She did not want benefits                                                                    
to be reduced.                                                                                                                  
                                                                                                                                
Representative Guttenberg wondered if  a study had been done                                                                    
on the actual cost of delivering service.                                                                                       
                                                                                                                                
Ms. Huff Tuckness  deferred the question to  the director of                                                                    
the Division of Workers' Compensation.                                                                                          
                                                                                                                                
Representative Gara  understood that  costs of  quality care                                                                    
in the state  were high. He was concerned  with the Medicare                                                                    
schedule,  and  pointed out  that  over  50 percent  of  the                                                                    
family  practice  centers  in  Anchorage  would  not  accept                                                                    
Medicare  because compensation  was  so  low. He  understood                                                                    
that there  was a multiplier  that was  not in the  bill; he                                                                    
was uncomfortable  with that.  Ms. Huff  Tuckness understood                                                                    
that there was  a multiplier that would average  it out. She                                                                    
provided an example related to a  hip injury. He did not see                                                                    
where the fee changed the Medicare and Medicaid rates.                                                                          
                                                                                                                                
9:28:03 AM                                                                                                                    
                                                                                                                                
WARD HURLBURT, CHIEF MEDICAL  OFFICER AND DIRECTOR, DIVISION                                                                    
OF PUBLIC HEALTH, DEPARTMENT OF  HEALTH AND SOCIAL SERVICES,                                                                    
relayed   that   the   bill    was   consistent   with   the                                                                    
recommendations from  the health care commission.  He stated                                                                    
that the  high costs were  a burden  to the state.  He noted                                                                    
that discussions  with Jeff Davis  with Premera  stated that                                                                    
sending  people outside  was  more  economical. He  remarked                                                                    
that  change  was  threatening,   and  the  90th  percentile                                                                    
requirement provided  market control. As a  steward of money                                                                    
from the employers, the industry mandates market control.                                                                       
                                                                                                                                
Representative Costello  handed the  gavel back  to Co-Chair                                                                    
Stoltze.                                                                                                                        
                                                                                                                                
9:32:43 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  wondered if Mr.  Hurlburt felt  that there                                                                    
was  a sort  of  Certificate of  Need  (CON) for  healthcare                                                                    
access.  Dr. Hurlburt  replied in  the  negative. He  stated                                                                    
that  the methodology  was common.  The Medicare  rates were                                                                    
low, and  established with  a multiplier  to pay.  The state                                                                    
paid higher  on Medicaid  than Medicare. Medicaid  paid less                                                                    
than worker's comp.  The payer would have more  of an impact                                                                    
on the actual payments.                                                                                                         
                                                                                                                                
Dr. Hurlburt  continued to  discuss evidence  based decision                                                                    
making. Medical  costs were lower than  Alaska in Wisconsin.                                                                    
He stressed  that recent science  was dictating  the therapy                                                                    
and  treatment.  Definition  of success  for  the  workman's                                                                    
compensation program.  Medical price inflation  increased by                                                                    
46 percent in Alaska compared to the rates nationwide.                                                                          
                                                                                                                                
9:36:13 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  wondered if it  was better for  the health                                                                    
care funding  to be  in workers  compensation or  the public                                                                    
health  arena.  Dr.  Hurlburt  felt  that  legislators  made                                                                    
mistakes when they become too  prescriptive if a minutia and                                                                    
the  details  of  the  coverage. He  felt  that  the  Alaska                                                                    
legislator  had  done a  proper  job  about recognizing  the                                                                    
risks. He stated that the  current prescription for the 90th                                                                    
percentile, which meant  that if one controls  11 percent of                                                                    
the marketplace,  one could  set its  own rates,  was fairly                                                                    
unusual in Alaska.  He remarked that the  board was composed                                                                    
of health care providers.                                                                                                       
                                                                                                                                
Vice-Chair Neuman  spoke to the cost  of prescription drugs.                                                                    
He   was  concerned   that  DHSS   received   a  rebate   of                                                                    
approximately  $40 million  annually from  prescription drug                                                                    
rebates. He  wondered if part  of the high cost  was because                                                                    
the state charged so much  for pharmaceuticals. Dr. Hurlburt                                                                    
responded  that the  rebates  were a  tool  utilized by  the                                                                    
pharmaceutical  industry to  ensure  that all  of the  drugs                                                                    
were  sold.  He  stressed  that the  state  needed  to  take                                                                    
rebates  into consideration  in looking  at the  bottom line                                                                    
costs. When the Health  Care Commission examined the pricing                                                                    
Alaska,  hospital and  physician  pricing  was notably  much                                                                    
higher  than  the   comparable  states.  The  pharmaceutical                                                                    
pricing,  overall,  was  not  much  higher  than  comparable                                                                    
states, particularly relating to workers compensation.                                                                          
                                                                                                                                
9:41:42 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman pointed  to information  provided by  the                                                                    
Department  of Labor  and  Workforce  Development, and  some                                                                    
supplemental   information   about  procedural   codes.   He                                                                    
remarked that Alaska  was $2000 greater on  a $374 injection                                                                    
diagnostic for a therapeutic substance.                                                                                         
                                                                                                                                
Representative  Wilson  noted  that  the  bill  addressed  a                                                                    
larger  picture. She  wondered  if the  state  did not  take                                                                    
action  similar to  that proposed  in the  bill if  it would                                                                    
drive  everyone  out  of  the state,  and  pointed  out  the                                                                    
different  costs  of  doing  business   in  the  state.  Dr.                                                                    
Hurlburt agreed  that more business  would leave  the state,                                                                    
because of  the higher costs.  He stressed that  health care                                                                    
access should  stay in  Alaska, but the  high costs  put the                                                                    
system in jeopardy.                                                                                                             
                                                                                                                                
9:44:55 AM                                                                                                                    
                                                                                                                                
RACHEL  PETRO,   PRESIDENT  AND   CEO,  ALASKA   CHAMBER  OF                                                                    
COMMERCE,  ANCHORAGE  (via   teleconference),  spoke  to  an                                                                    
updated  letter   from  the  Chamber  dated   April  8.  The                                                                    
legislation was a  priority of the chamber.  She thanked the                                                                    
sponsor  for the  bill. She  acknowledged that  good changes                                                                    
had been made in the  bill. The chamber supported businesses                                                                    
and providers  being able  to pay bills  and make  a profit.                                                                    
There  were a  couple  of items  that  the chamber  believed                                                                    
should   be   added   including   evidence-based   treatment                                                                    
guidelines and  utilization review. She believed  the change                                                                    
would help  provide a  lasting change  to the  fee schedule.                                                                    
The chamber  also wanted  to ensure  that the  bill's intent                                                                    
was clear.                                                                                                                      
                                                                                                                                
9:49:20 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze asked Ms. Petro  to work on formalizing the                                                                    
changes suggested by the chamber.                                                                                               
                                                                                                                                
Representative Gara  spoke to the concept  of evidence-based                                                                    
coverage. He wondered if the  definition could be defined in                                                                    
a way  that would allow a  patient to do what  was best. Ms.                                                                    
Petro  replied   that  the  chamber  was   supportive  of  a                                                                    
comprehensive  change  to  the  worker's  compensation.  She                                                                    
believed that when  a program was developed the  goal was to                                                                    
get workers healthy in a timely  way. She did not profess to                                                                    
be an  expert in  the area of  care. She  deferred questions                                                                    
Dr. Hurlburt.                                                                                                                   
                                                                                                                                
9:52:16 AM                                                                                                                    
                                                                                                                                
DON ETHERIDGE,  ALASKA AFL-CIO, JUNEAU, pointed  to a letter                                                                    
of support  in members'  packets from the  organization. The                                                                    
group  was  active in  safety  training  and was  decreasing                                                                    
injuries. He stressed that safety  came first. The group was                                                                    
concerned  that  the  fee   schedule  included  the  correct                                                                    
numbers, but it had faith  that the medical review board and                                                                    
could  determine the  right detail.  The group  continued to                                                                    
work with the sponsor on some of the issues.                                                                                    
                                                                                                                                
REPRESENTATIVE PETE HIGGINS,  spoke to the bill.  He saw the                                                                    
issue from two sides. He owned  a couple of mines and agreed                                                                    
that  workers'  compensation  was  high  in  the  state.  He                                                                    
relayed that  fees in  the dental field  were higher  in the                                                                    
state,  but they  were not  three or  four times  higher. He                                                                    
spoke in  support of the  legislation. He stressed  that the                                                                    
state had to  bring down workers' compensation  fees. He was                                                                    
in the healthcare field, believed  the bill was going in the                                                                    
right  direction. He  spoke to  Medicare fees,  and remarked                                                                    
that fee schedules were negotiated.                                                                                             
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
HB  316  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:59:25 AM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 308                                                                                                            
                                                                                                                                
     "An Act relating to the exemptions under the Alaska                                                                        
     Securities Act and to securities issued by Native                                                                          
    corporations; and providing for an effective date."                                                                         
                                                                                                                                
9:59:29 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LINDSEY  HOLMES, SPONSOR, spoke to  the bill.                                                                    
She relayed that  many changes in the  bill were conforming.                                                                    
The  bill did  three substantive  things: 1)  eliminated fee                                                                    
and  filing  requirements  for  small  or  limited  offering                                                                    
exemptions from  registrations, specifically to 25  or fewer                                                                    
investors or to existing  security holders; 2) increased the                                                                    
division's time to  review and offer to  repay or rescission                                                                    
offer;  and  3)  clarified  that securities  issued  by  the                                                                    
Alaska Native  Claims Settlement Corporation,  in compliance                                                                    
with  federal  law,  were exempt  from  registration.  While                                                                    
removing   the  reporting   requirements,  the   bill  still                                                                    
required  the business  issuing  the  securities to  provide                                                                    
required  information to  investors in  compliance with  the                                                                    
Securities  Act   so  that  they  could   make  an  informed                                                                    
investing  decision.  The  bill   kept  the  Act's  consumer                                                                    
protection language intact and  did not inhibit the Division                                                                    
of Banking  and Securities from investigating  violations or                                                                    
the investor  seeking damages through  the court  system The                                                                    
bill further sought  to clarify that stock  issued by Alaska                                                                    
Native Claims Settlement Act  (ANCSA) corporations to Alaska                                                                    
Natives born  after December  18, 1971  or issued  after the                                                                    
original stock offering in compliance  with federal law were                                                                    
exempt from registering under AS 45.55.070.                                                                                     
                                                                                                                                
Vice-Chair  Neuman  assumed  that   the  issuance  of  stock                                                                    
related to corporate law for  corporations within the state.                                                                    
Representative  Holmes  replied   in  the  affirmative,  but                                                                    
furthered that  it could  also be  a limited  liability. She                                                                    
stressed  that it  had to  be  an Alaska  entity and  Alaska                                                                    
investors.                                                                                                                      
                                                                                                                                
Vice-Chair  Neuman  wondered  why  the  state  required  the                                                                    
additional information.  Representative Holmes  deferred the                                                                    
question to the department for further detail.                                                                                  
                                                                                                                                
10:07:22 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze spoke  about  the issue  of the  exemption                                                                    
from  the   record  request.   He  understood   that  native                                                                    
corporations had a different set  of laws, but stressed that                                                                    
there were some large corporations  that were favored by the                                                                    
existing  law.   He  wondered   if  the   legislation  would                                                                    
disenfranchise  the   shareholders  from  the   process.  He                                                                    
initially felt  that the legislation was  fairly simple, but                                                                    
felt that  there was brevity  to the analysis in  the fiscal                                                                    
note. Representative  Holmes agreed  that the  Alaska Native                                                                    
Claims  Settlement   Act  (ANCSA)  corporations   held  some                                                                    
issues, but  felt that  the concerns  were unrelated  to the                                                                    
legislation. She stressed  that the bill was  about filing a                                                                    
form with  the state, but  did not change any  practice. The                                                                    
issue was  related to  where the  information was  filed, so                                                                    
because there was  a requirement to comply  with federal law                                                                    
one could  only apply  within that requirement.  She pointed                                                                    
out  that there  was never  a realization  that those  files                                                                    
should also be filed with  the state. The general accounting                                                                    
office  noticed that  the filing  requirement  needed to  be                                                                    
detailed in state law.                                                                                                          
                                                                                                                                
Co-Chair  Stoltze  asked  if the  requirement  was  onerous.                                                                    
Representative  Holmes replied  that  the  onerous part  was                                                                    
less  affiliated   with  ANCSA  corporations,  but   it  was                                                                    
redundant.                                                                                                                      
                                                                                                                                
Co-Chair Stoltze  pointed to the sponsor  statement. He felt                                                                    
that  the  information was  available  subject  to a  public                                                                    
records request  and served no  interest of  the department.                                                                    
He did  not want unintentional  consequences. Representative                                                                    
Holmes replied that  the bill did not change  any laws about                                                                    
information  to be  provided to  investors. She  agreed that                                                                    
she did not want unintended consequences.                                                                                       
                                                                                                                                
10:12:49 AM                                                                                                                   
                                                                                                                                
KEVIN ANSELM, DIRECTOR, DIVISION  OF BANKING AND SECURITIES,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
ANCHORAGE (via  teleconference), referred  committee members                                                                    
to  a   document  titled  "HB  308   Alaska  Securities  Act                                                                    
Exemptions" dated March 31, 2014  (copy on file). She stated                                                                    
that, generally,  most securities must either  be registered                                                                    
or exempt from  registration. The bill did  not change those                                                                    
requirements, but  eliminated some of the  paperwork and fee                                                                    
filing  with  the  division  for  the  small  offerings  and                                                                    
offerings  to existing  security  holders.  She shared  that                                                                    
there were three substantive changes:  1) eliminated fee and                                                                    
filing   requirements   for   small  or   limited   offering                                                                    
exemptions from  registrations, specifically to 25  or fewer                                                                    
investors or to existing  security holders; 2) increased the                                                                    
division's time to  review and offer to  repay or rescission                                                                    
offer;  and  3)  clarified  that securities  issued  by  the                                                                    
Alaska Native  Claims Settlement Corporation,  in compliance                                                                    
with federal  law, were exempt from  registration. The small                                                                    
offering exemptions were  noted on page 2, line  21 and page                                                                    
3,  line   30  of   the  legislation.  The   small  offering                                                                    
exemptions were  usually referred to as  "friends and family                                                                    
exemptions."  Those  transactions occurred  because  someone                                                                    
has a  business and invites  friends or family to  invest in                                                                    
that business,  and sales  commissions were  often involved.                                                                    
The   small  offering   exemptions   were   driven  by   the                                                                    
entrepreneur,  with no  public solicitation  or advertising.                                                                    
Most states  had small offering  exemptions, and  the filing                                                                    
was  required  because filings  were  more  prolific in  the                                                                    
original filing  act. She noted  that there were  legends on                                                                    
the  securities   that  explain   the  limitations   on  the                                                                    
securities  resale; information  was required,  so investors                                                                    
could  make the  appropriate  decisions based  on their  own                                                                    
needs;  and   the  more  investors  there   were,  the  more                                                                    
prescriptive the  requirements. She  stressed that  the only                                                                    
change to the provisions was the  filing of the form and fee                                                                    
payment. She noted one other  effected exemption in the bill                                                                    
on page 4, line 19.  The exemption was for securities issued                                                                    
to existing shareholders, and only  applied if there were no                                                                    
commissions  paid beyond  a standby  commission for  the new                                                                    
security issuance.  Typically, the  exemptions were  used by                                                                    
an existing business that were  advancing. She stressed that                                                                    
the  division currently  seldom receiving  filings for  this                                                                    
particular  exemption,  but  those   that  were  filed  were                                                                    
usually unnecessary,  because there  was no  commission paid                                                                    
in the transaction.                                                                                                             
                                                                                                                                
10:20:47 AM                                                                                                                   
                                                                                                                                
ALLAN  JOHNSTON,  REGIONAL   MANAGER,  TEAM  NETWORK,  INC.,                                                                    
ANCHORAGE  (via teleconference),  spoke  about his  business                                                                    
and angel investing networks. He  felt that it was difficult                                                                    
to navigate  the technicalities of  the laws related  to the                                                                    
legislation. He  expressed respect  for Ms. Anselm  with her                                                                    
work  within the  municipality to  educate  the people  that                                                                    
were  attempting  to  create   some  of  the  programs.  The                                                                    
attorney  fees in  the private  sector  was unnecessary,  so                                                                    
there was friction and  expensive that was counterproductive                                                                    
on  both sides.  He pointed  out that  Alaska had  the third                                                                    
highest  median  family income  in  the  United States,  and                                                                    
fiftieth in local risk capital.                                                                                                 
                                                                                                                                
Co-Chair Stoltze  appreciated the testimony. He  stated that                                                                    
any time  an ANCSA corporation  was mentioned, there  was an                                                                    
assurance that the committee would be fully informed.                                                                           
                                                                                                                                
Co-Chair Stoltze CLOSED public  testimony. He asked if there                                                                    
were any amendments.                                                                                                            
                                                                                                                                
Representative Costello  addressed the fiscal note  from the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
Representative  Costello  MOVED  to  REPORT HB  308  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HB 308 was REPORTED out of committee with a "do pass"                                                                           
recommendation and with one previously published fiscal                                                                         
impact note: FN1 (CED).                                                                                                         
                                                                                                                                
HOUSE BILL NO. 214                                                                                                            
                                                                                                                                
     "An Act relating to mental health patient rights,                                                                          
     notifications, and grievance procedures."                                                                                  
                                                                                                                                
HB 214 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
Co-Chair Stoltze discussed the future meetings.                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:26:22 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:26 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB 316 DOLWD Top 25 Surgery Procedure Codes.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 316 Explanation of Changes.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 316 Letters in Opposition.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 316 Letters in Support.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 316 Sectional Analysis.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 316 Sponsor Statement.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 316 WC Board Resolution 13-01.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB316 Supporting Documents-Resolution City of Soldotna 2-26-2014.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB316 Supporting Documents-Resolution FNSB 02-13-2014.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
SB 2
sectional analysis sb 191.updated march 3.pdf HFIN 4/9/2014 8:30:00 AM
SB 191
sponsor statement sb 191.updated march 3.pdf HFIN 4/9/2014 8:30:00 AM
SB 191
HB 316 Letter in Support-Teamsters 4-07-2014.PDF HFIN 4/9/2014 8:30:00 AM
HB 316
Letter of Support - HB 316.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
Letter of Support - HB 316.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 308 Letter of Support 1.pdf HFIN 4/9/2014 8:30:00 AM
HB 308
HB 308 Letter of Support 2.pdf HFIN 4/9/2014 8:30:00 AM
HB 308
HB 308 Letter of Support.pdf HFIN 4/9/2014 8:30:00 AM
HB 308
HB 308 Presentation by the Division of Banking and Securities.pdf HFIN 4/9/2014 8:30:00 AM
HB 308
HB 308 Sponsor Statement.pdf HFIN 4/9/2014 8:30:00 AM
HB 308
CS HB 214 Explanation of changes verR.pdf HFIN 4/9/2014 8:30:00 AM
HB 214
CSHB 214_R Section Analysis.pdf HFIN 4/9/2014 8:30:00 AM
HB 214
HB 214 Letter Opposition.pdf HFIN 4/9/2014 8:30:00 AM
HB 214
HB 214 Sponsors Statement a.pdf HFIN 4/9/2014 8:30:00 AM
HB 214
AK Chamber CS HB 316 2014-08-04.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 308 securities form.pdf HFIN 4/9/2014 8:30:00 AM
HB 308
HB 214 Letter Nelson.pdf HFIN 4/9/2014 8:30:00 AM
HB 214
HB 316 APTA Testimony House finance 4-9-14.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 214 Support Letter.docx HFIN 4/9/2014 8:30:00 AM
HB 214
Olson Letter Workers Comp HB 316 April 9.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 214 Support Nelson.docx HFIN 4/9/2014 8:30:00 AM
HB 214
HB 316 Testimony Ackerman.pdf HFIN 4/9/2014 8:30:00 AM
HB 316
HB 214 AMHB ABADA Letter.pdf HFIN 4/9/2014 8:30:00 AM
HB 214
HB 316 Elite Rehab Letter.pdf HFIN 4/9/2014 8:30:00 AM
HB 316