Legislature(1999 - 2000)

04/06/2000 02:37 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         HOUSE JUDICIARY STANDING COMMITTEE                                                                                     
                   April 6, 2000                                                                                                
                     2:37 p.m.                                                                                                  
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Pete Kott, Chairman                                                                                              
Representative Joe Green                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Lisa Murkowski                                                                                                   
Representative Eric Croft                                                                                                       
Representative Beth Kerttula                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Representative Jeannette James                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 292                                                                                                              
"An Act adopting the National Crime Prevention and Privacy Compact;                                                             
making criminal justice information available to interested persons                                                             
and criminal history record information available to the public;                                                                
making certain conforming amendments; and providing for an                                                                      
effective date."                                                                                                                
                                                                                                                                
     - RESCINDED ACTION OF 3/29/00; MOVED NEW CSHB 292(JUD) OUT OF                                                              
       COMMITTEE                                                                                                                
                                                                                                                                
HOUSE BILL NO. 211                                                                                                              
"An Act relating to liability for providing managed care services,                                                              
to regulation of managed care insurance plans, and to patient                                                                   
rights and prohibited practices under health insurance; and                                                                     
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSHB 211(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HB 292                                                                                                                    
SHORT TITLE: DISCLOSURE OF CRIMINAL HISTORY RECORDS                                                                             
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 1/21/00      1954     (H)  READ THE FIRST TIME - REFERRALS                                                                     
 1/21/00      1954     (H)  STA, JUD                                                                                            
 1/21/00      1955     (H)  ZERO FISCAL NOTE (DPS)                                                                              
 1/21/00      1955     (H)  GOVERNOR'S TRANSMITTAL LETTER                                                                       
 2/22/00               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 2/22/00               (H)  Scheduled But Not Heard                                                                             
 2/29/00               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 2/29/00               (H)  Scheduled But Not Heard                                                                             
 3/02/00               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/02/00               (H)  Scheduled But Not Heard                                                                             
 3/07/00               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/07/00               (H)  Heard & Held                                                                                        
 3/07/00               (H)  MINUTE(STA)                                                                                         
 3/09/00               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/09/00               (H)  Heard & Held                                                                                        
 3/09/00               (H)  MINUTE(STA)                                                                                         
 3/16/00               (H)  STA AT  8:00 AM CAPITOL 102                                                                         
 3/16/00               (H)  Moved Out of Committee                                                                              
 3/16/00               (H)  MINUTE(STA)                                                                                         
 3/16/00      2566     (H)  STA RPT 1DP 4NR                                                                                     
 3/16/00      2566     (H)  DP: JAMES; NR: SMALLEY, KERTTULA,                                                                   
 3/16/00      2566     (H)  HUDSON, WHITAKER                                                                                    
 3/16/00      2566     (H)  ZERO FISCAL NOTE (DPS) 1/21/00                                                                      
 3/29/00               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
 3/29/00               (H)  Moved CSHB 292(JUD) Out of Committee                                                                
 3/29/00               (H)  MINUTE(JUD)                                                                                         
 4/06/00               (H)  JUD AT  2:00 PM CAPITOL 120                                                                         
                                                                                                                                
BILL: HB 211                                                                                                                    
SHORT TITLE: HEALTH CARE INSURANCE                                                                                              
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 4/22/99       914     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/22/99       914     (H)  L&C, JUD, FIN                                                                                       
 5/10/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 5/10/99               (H)  HEARD AND HELD                                                                                      
 5/10/99               (H)  MINUTE(L&C)                                                                                         
10/22/99               (H)  L&C AT 10:00 AM ANCHORAGE LIO                                                                       
10/22/99               (H)  MINUTE(L&C)                                                                                         
 2/04/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 2/04/00               (H)  -- Meeting Canceled --                                                                              
 2/16/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 2/16/00               (H)  Heard & Held                                                                                        
 2/16/00               (H)  MINUTE(L&C)                                                                                         
 2/16/00               (H)  MINUTE(L&C)                                                                                         
 3/03/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/03/00               (H)  Moved CSHB 211(L&C) Out of Committee                                                                
 3/03/00               (H)  MINUTE(L&C)                                                                                         
 3/08/00      2446     (H)  L&C RPT  CS(L&C) NT 1DP 2DNP 3NR                                                                    
 3/08/00      2446     (H)  DP: ROKEBERG; DNP: CISSNA, BRICE;                                                                   
 3/08/00      2446     (H)  NR: MURKOWSKI, HARRIS, HALCRO                                                                       
 3/08/00      2446     (H)  ZERO FISCAL NOTE (DCED)                                                                             
 3/24/00               (H)  JUD AT  1:00 PM CAPITOL 120                                                                         
 3/24/00               (H)  Heard & Held                                                                                        
 3/24/00               (H)  MINUTE(JUD)                                                                                         
 3/31/00               (H)  JUD AT  1:15 PM CAPITOL 120                                                                         
 3/31/00               (H)  Heard & Held                                                                                        
 4/06/00               (H)  JUD AT  2:00 PM CAPITOL 120                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
GORDON EVANS, Lobbyist                                                                                                          
    for the Health Insurance Association of America                                                                             
211 4th Street, Suite 305                                                                                                       
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Answered question relating to HB 211.                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-50, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee                                                                
meeting to order at 2:37 p.m.  Members present at the call to order                                                             
were Representatives Kott, Green, Rokeberg, Murkowski and Kerttula.                                                             
Representative Croft arrived as the meeting was in progress.                                                                    
                                                                                                                                
HB 292 - DISCLOSURE OF CRIMINAL HISTORY RECORDS                                                                                 
                                                                                                                                
Number 0019                                                                                                                     
                                                                                                                                
CHAIRMAN PETE KOTT announced that the first order of business would                                                             
be HOUSE BILL NO. 292, "An Act adopting the National Crime                                                                      
Prevention and Privacy Compact; making criminal justice information                                                             
available to interested persons and criminal history record                                                                     
information available to the public; making certain conforming                                                                  
amendments; and providing for an effective date."                                                                               
                                                                                                                                
CHAIRMAN KOTT informed members that the committee's previous action                                                             
in passing out a committee substitute (CS) on March 29, 2000,                                                                   
needed to be rescinded.  Legislative drafters do not normally                                                                   
review legislation provided by the governor, he noted.  However, in                                                             
reviewing the CS required after the March 29 hearing, legislative                                                               
counsel had discovered a couple of items that needed to be                                                                      
corrected.  Chairman Kott said he and Anne Carpeneti of the                                                                     
Department of Law concur with Gerald Luckhaupt, legislative                                                                     
counsel, that there has been an oversight.                                                                                      
                                                                                                                                
Number 0094                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG made a motion to rescind the committee's                                                                
action in passing out HB 292, as amended in the House Judiciary                                                                 
Standing Committee, with individual recommendations and attached                                                                
fiscal note(s).  There being no objection, it was so ordered and                                                                
the bill was again before the committee.                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG made a motion to adopt as a new proposed CS                                                             
version 1-GH2014\D [which had been provided by Mr. Luckhaupt as an                                                              
attachment to his memorandum of March 31, 2000, regarding the                                                                   
oversight].  There being no objection, it was so ordered and                                                                    
Version D was before the committee.                                                                                             
                                                                                                                                
Number 0205                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA made a motion to move HB 292 [Version D]                                                                
out of committee with individual recommendations and the                                                                        
accompanying zero fiscal note.  There being no objection, the new                                                               
CSHB 292(JUD) was moved out of the House Judiciary Standing                                                                     
Committee.                                                                                                                      
                                                                                                                                
HB 211 - HEALTH CARE INSURANCE                                                                                                  
                                                                                                                                
Number 0273                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT announced the next item of business would be a                                                                    
continuation of the hearing on HOUSE BILL NO. 211, "An Act relating                                                             
to liability for providing managed care services, to regulation of                                                              
managed care insurance plans, and to patient rights and prohibited                                                              
practices under health insurance; and providing for an effective                                                                
date."  Chairman Kott noted that Bob Lohr of the Division of                                                                    
Insurance was online to answer questions.  He then requested a                                                                  
subcommittee report on Version N [adopted as a work draft 3/31/00].                                                             
                                                                                                                                
Number 0305                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN offered a subcommittee report.  He informed                                                                
the committee that legislative staff members Janet Seitz and Kevin                                                              
Jardell had "allowed the legislators to go about their business"                                                                
while they met with members of both the doctors' group and the                                                                  
insurance group.  As a result, they had ironed out all differences                                                              
with the exception of the medical necessity and liability                                                                       
provisions.  There is now a revised draft, Version S [1-LS0472\S,                                                               
Ford, 4/5/00], upon which changes from Version N have been                                                                      
highlighted for committee members.  Representative Green offered to                                                             
quickly review the changes, then concluded by saying he sees                                                                    
nothing that adversely affects the state.                                                                                       
                                                                                                                                
Number 0428                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI added that Version S has no reference to                                                               
medical necessity or liability provisions.  Those have not been                                                                 
incorporated anywhere in the draft, he concluded.                                                                               
                                                                                                                                
Number 0450                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT summarized, saying all of the issues have been                                                                    
resolved with the exception of the two on which consensus could not                                                             
be reached, and that the bill had been brought back before the                                                                  
committee to address those policy issues.                                                                                       
                                                                                                                                
REPRESENTATIVE GREEN explained that when the subcommittee had                                                                   
reconvened and gone through the other changes, there was further                                                                
debate on those two unresolved issues.  "We did not see any                                                                     
movement," he said.  "They both have good reasons for why they feel                                                             
the way they do."  The subcommittee finally had decided to simply                                                               
leave the two contentious issues out of the draft, he concluded.                                                                
                                                                                                                                
Number 0520                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA brought attention to a letter that the                                                                  
committee had received via fax from Mr. Burgan expressing concern                                                               
about not having been heard.  She wondered if the two contentious                                                               
issues are mostly the ones about which Mr. Burgan is concerned.                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that he was planning to bring that up                                                             
after the committee had adopted the work draft.                                                                                 
                                                                                                                                
CHAIRMAN KOTT thanked the subcommittee for its work and suggested                                                               
adopting the work draft generated by the subcommittee.                                                                          
                                                                                                                                
Number 0574                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN made a motion to adopt Version S [1-LS0472\S,                                                              
Ford, 4/5/00] as the working document before the committee.  There                                                              
being no objection, it was so ordered.                                                                                          
                                                                                                                                
Number 0620                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG directed attention to page 5, lines 18-23,                                                              
of Version S.  He noted that there had been discussion in the                                                                   
subcommittee relating to whether the Director of Insurance has                                                                  
authority under AS 21.390.20(b)(2) relating to the "non-                                                                        
hospital/medical service corporations," which are required to file                                                              
their rates with the commissioner.  Other health insurance                                                                      
companies are not required to file, he noted.  The statute he had                                                               
cited allows the commissioner to "come in and review things as                                                                  
necessary."  At the subcommittee's request, he indicated, the                                                                   
Office of the Attorney General had provided a letter dated April 6,                                                             
2000; it says that while there is possibly the ability, there is no                                                             
express authority to routinely review those rates.  In light of                                                                 
that, Representative Rokeberg suggested returning to the old                                                                    
language that said the Director of Insurance, at the director's                                                                 
request, could require the managed care entity to provide actuarial                                                             
demonstration of the increased cost.                                                                                            
                                                                                                                                
Number 0753                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG thanked subcommittee members for their                                                                  
"Herculean job."  He expressed pleasure with the resulting product,                                                             
whatever its limitations.  He said it is a matter of reality and                                                                
what can be achieved.  He also thanked members of the insurance                                                                 
industry, the medical association and other groups including                                                                    
organized labor that had participated in or observed the process                                                                
over the past two weeks.  Representative Rokeberg again pointed out                                                             
that the subcommittee had left open the two primary issues,                                                                     
regarding medical necessity and liability.  He said he is open to                                                               
whatever the committee wishes to do on these issues, but isn't too                                                              
optimistic that they can come to grips with them in a manner that                                                               
would satisfy everybody.                                                                                                        
                                                                                                                                
Number 0847                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG returned to the issue Representative                                                                    
Kerttula had raised, two letters from Brady & Company, dated April                                                              
3 and April 6, signed by Mr. Ed Burgan.  Of the two, he believes                                                                
the one dated April 3 is the more important; it indicates Mr.                                                                   
Burgan had been available to testify before the committee on                                                                    
Friday, March 31, but was not given a chance to testify.                                                                        
Representative Rokeberg said Mr. Burgan has been fighting this bill                                                             
and has been unresponsive to requests for information from the                                                                  
outset.  He himself takes exception to Mr. Burgan's statements and                                                              
to language used in the subsequent letter regarding the committee.                                                              
However, he believes that points in the April 3 letter are                                                                      
appropriate to bring to the committee's attention.                                                                              
                                                                                                                                
CHAIRMAN KOTT announced a brief at-ease at 2:51 a.m.  After copies                                                              
of the letters were distributed, he called the meeting back to                                                                  
order at 2:57 p.m.                                                                                                              
                                                                                                                                
Number 1010                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG, at Chairman Kott's request, commented on                                                               
Mr. Burgan's first letter.  Apparently, the committee had closed                                                                
testimony and sent the bill to a subcommittee without being aware                                                               
that Mr. Burgan was available to testify.  Representative Rokeberg                                                              
then presented the salient points in Mr. Burgan's first letter.                                                                 
The first relates to mitigating conflicts with the Employee                                                                     
Retirement Income Security Act (ERISA), with the suggestion of                                                                  
incorporating language that this [HB 211] would not supersede                                                                   
provisions of ERISA.  Representative Rokeberg commented that these                                                              
people complaining about the bill are not covered by the bill                                                                   
because they "are ERISA," unless there is federal law or state case                                                             
law that says that the qualitative elements of any health care                                                                  
legislation can be applied to them.  They want to make sure that                                                                
they are exempt by putting this in the bill, he concluded.  He                                                                  
added that he finds that incredible, on its face.                                                                               
                                                                                                                                
Number 1103                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked if it matters.                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG said it does.  He thinks it is appropriate,                                                             
on quality care issues, to hold everyone to the same standard.                                                                  
                                                                                                                                
REPRESENTATIVE CROFT observed, "We can't supersede ERISA if we                                                                  
wanted to.  And if we're ... in conflict with it, we'd be in                                                                    
conflict with it and superseded it.  So, 'infringe upon' is the                                                                 
only one that works here?"                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG responded that there is case law saying                                                                 
that the states are able to "stick their nose under the tent" on                                                                
qualitative issues, and there may be provisions in federal law that                                                             
specifically would allow the state to do that.  This is related to                                                              
the primacy of the state in regulating and selling insurance, which                                                             
is very important.  He agreed it could be called "encroaching on                                                                
ERISA," but said that is going to be a matter of case law, and                                                                  
nothing can be done legislatively to force that issue, to his                                                                   
belief.  However, those people are seeking protection against that.                                                             
                                                                                                                                
Number 1187                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that Mr. Burgan's second point was                                                                
objection to the "three levels of appeal" in the internal and                                                                   
external utilization review.  He said he isn't sure that Mr. Burgan                                                             
entirely understands that.  As it is structured, there are two                                                                  
internal reviews and one external review.  The first internal                                                                   
review is the first phone call; the second level is the actual "72-                                                             
hour and/or ... 18-day appeal"; and the next one is external                                                                    
review.  Perhaps there should be a "shorthand" method put in place                                                              
there, Representative Rokeberg added, but he doesn't think so.                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG turned attention to Mr. Burgan's third                                                                  
point, which speaks to medical necessity.  He told members he tends                                                             
to agree with what Mr. Burgan has to say:  there needs to be a                                                                  
definition of medical necessity, but not in statute.  It needs to                                                               
be in the plan, to guide the plan about what is included and what                                                               
is excluded from the benefits in each particular plan, and each                                                                 
plan is going to vary.  Representative Rokeberg noted that this is                                                              
at odds with what the medical association says.  However, there has                                                             
been discussion in the subcommittee about allowing medical                                                                      
necessity but putting some kind of fence around it, to have a cost-                                                             
containment measure in there.  In his own opinion, the AMA                                                                      
[American Medical Association] definition is "any willing                                                                       
provider," which is totally unlimited; although language indicates                                                              
cost alternatives or containment in scope, it isn't entirely                                                                    
required.                                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG reported that Mr. Burgan's fourth point is                                                              
disagreement with who is included in the definition of a managed                                                                
care entity.  Representative Rokeberg said that is a central                                                                    
definition in the bill; Mr. Burgan's objections relate to the                                                                   
definitions of what an employer and employee health care                                                                        
organization is.  He surmised that Mr. Burgan does not want the                                                                 
definition to include the organizations he represents, and                                                                      
Representative Rokeberg suggested that, indeed, the definition does                                                             
include them.  "On the other hand, he does have the ERISA fence                                                                 
around [them]," Representative Rokeberg added.  "But if there was                                                               
a non-ERISA group, which is ...."  He asked Gordon Evans the                                                                    
definition of an ERISA group.                                                                                                   
                                                                                                                                
Number 1396                                                                                                                     
                                                                                                                                
GORDON EVANS, Lobbyist for the Health Insurance Association of                                                                  
America, suggested it is simply a group that is self-insured.                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that the fifth point in Mr. Burgan's                                                              
letter questions Representative Rokeberg's reasons for taking up                                                                
the bill.  He pointed out that the two letters from Mr. Burgan                                                                  
maintain a negative position on the bill because the suggestions                                                                
provided had been ignored.  Representative Rokeberg suggested it is                                                             
important that the committee consider those letters.                                                                            
                                                                                                                                
Number 1458                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT asked if any of the issues raised in the two letters                                                              
were addressed in Version K of the bill [which had passed out of                                                                
the House Labor & Commerce Committee as CSHB 211(L&C)].                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG answered that the external review had been                                                              
an ongoing drafting project for more than a year, and the issue of                                                              
medical necessity is "on everybody's radar scope."  He said he                                                                  
thought he had explained the ERISA matter.  Regarding the managed                                                               
care entity, he assumes that they [Mr. Burgan and associates] would                                                             
like to have the words "employer" and "employer health care                                                                     
organization" removed from the bill so it would not include them.                                                               
                                                                                                                                
Number 1515                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said he thinks the medical necessity                                                                    
argument has merit in terms of its substance.  "It's how we get                                                                 
there that's the issue," he added.                                                                                              
                                                                                                                                
Number 1524                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT expressed a desire to discuss the substantive                                                              
issues that remain:  whether medical necessity and liability will                                                               
be in the statute or out.  The insurance plan determines what                                                                   
conditions are covered, he noted, but the question with which the                                                               
committee has to struggle is whether the treatment for that covered                                                             
condition can be determined by the insurance company or by the                                                                  
doctors.                                                                                                                        
                                                                                                                                
Number 1630                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT thanked Representative Croft and said that is exactly                                                             
what he intends to do.  However, because of concern about whether                                                               
Mr. Burgan had had an opportunity to testify, he thought the                                                                    
committee had needed to hear the points Mr. Burgan had forwarded to                                                             
the committee in his first letter.  Chairman Kott agreed that the                                                               
committee needs to determine what direction to take with two major                                                              
issues. He asked whether it was the will of the committee to leave                                                              
"medical necessity" undefined or to define it using the language                                                                
provided in the AMA version, Version K [CSHB 211(L&C)].  He offered                                                             
his opinion that the AMA definition is unconstrained, too broad.                                                                
Two other definitions had been provided to the committee from other                                                             
states, he noted.                                                                                                               
                                                                                                                                
Number 1706                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI explained that the subcommittee had not                                                                
focused much attention on the second issue, liability, because they                                                             
had reached an impasse on medical necessity; rather than spend a                                                                
lot of time reaching an impasse on liability also, they didn't hear                                                             
much from either side on it.  However, one point raised by the                                                                  
insurance companies was that a liability provision may come out of                                                              
federal legislation in progress now; it might be prudent to hold                                                                
off on adopting a liability provision now and revisit the issue                                                                 
next year, Representative Murkowski suggested.                                                                                  
                                                                                                                                
Number 1773                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that subcommittee discussion had                                                                  
included the observation that under common law, if a cause of                                                                   
action arises against a provider, a person is not restricted in                                                                 
filing a lawsuit.  What the liability language in Version K does is                                                             
create a new cause of action.  He thinks it is easier to define the                                                             
cause of action if there is a failure to provide, he said, the                                                                  
theory being that the plan itself should be held responsible if it                                                              
[its administrators] make the medical decisions.  If the patient                                                                
were denied coverage and there were an issue about that, that would                                                             
give rise to a cause of action.  There may be some difficulty under                                                             
tort law drafting that pleading without a statutory cause of                                                                    
action, Representative Rokeberg said, adding, "I don't think that                                                               
any patient is necessarily going to be deprived of their right to                                                               
sue by not having a liability section [in HB 211]."  He suggested                                                               
the liability section just makes it easier to sue.                                                                              
                                                                                                                                
Number 1850                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT announced that because the committee had been                                                                     
discussing liability, they would proceed with that topic.  He noted                                                             
that the relevant language is contained in Section 2 of Version K.                                                              
                                                                                                                                
REPRESENTATIVE CROFT read in part from Section 2 of Version K,                                                                  
which stated:                                                                                                                   
                                                                                                                                
     (b)  A managed care entity is civilly liable for damages                                                                   
     for harm to a covered person (1) proximately caused by                                                                     
     its failure to exercise ordinary care; or a health                                                                         
     treatment decision that constitutes a failure to exercise                                                                  
     ordinary care ....                                                                                                         
                                                                                                                                
REPRESENTATIVE CROFT said that is codifying the standard under                                                                  
which everyone operates in everything.  One has to use reasonable                                                               
care toward people to whom one owes a duty, and one clearly owes a                                                              
duty to the people for whom one is caring under a managed care                                                                  
plan.  Although Representative Rokeberg had said it does not change                                                             
anything, Representative Croft said he thinks it clarifies that                                                                 
managed care providers have a duty to act with ordinary care toward                                                             
these people.                                                                                                                   
                                                                                                                                
Number 1964                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT made a motion to adopt Amendment 1, to                                                                     
incorporate Section 2 from Version K into Version S wherever                                                                    
appropriate.                                                                                                                    
                                                                                                                                
Number 1974                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG objected.  He explained that he would                                                                   
prefer not to include the liability language because it is a "cost                                                              
driver" and establishes a new cause of action.  He stated:                                                                      
                                                                                                                                
     What we get down to eventually, what the judge would do,                                                                   
     would get back to the same thing we are discussing here.                                                                   
     The ordinary care standard would be placed beside medical                                                                  
     necessity to determine whether ordinary care had been                                                                      
     provided, and they're all wrapped together.  A judge                                                                       
     could not say that the provider was or was not providing                                                                   
     the ordinary standard of care without being able to                                                                        
     define what medical necessity was, because that would be                                                                   
     the argument.                                                                                                              
                                                                                                                                
Number 2060                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked if anyone could give her an example                                                               
of how liability would be approached now.                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG answered that if somebody had suffered                                                                  
damages as a consequence of being denied something like an                                                                      
experimental drug, there could be a cause of action saying that                                                                 
someone should have done something or should not have.  He added,                                                               
"I think you can do that now and . . . there's no statutory medical                                                             
necessity."                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked if including liability language would                                                             
be just a codification of what the law is now.                                                                                  
                                                                                                                                
Number 2098                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI responded that it has to result from the                                                               
failure to provide care or treatment covered by the health care                                                                 
plan.  "So if your experimental drug is not covered by the health                                                               
care plan, you're not there," she concluded.                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG suggested that was a bad example.                                                                       
                                                                                                                                
Number 2110                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether this is the standard now, as                                                              
understood from common law and case law.                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG said that is the issue:  Does one allow the                                                             
plan the right to define "medical necessary" or to list exclusions                                                              
in the plan?  "This is the debate that's been going on for                                                                      
decades," he observed.                                                                                                          
                                                                                                                                
Number 2132                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked:  If the committee left out a                                                                     
definition of "medical necessity" and looked only at the duty to                                                                
exercise ordinary care, "isn't that what we would have without                                                                  
codifying it?"                                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG suggested that the two are so intertwined                                                               
that they cannot be separated.                                                                                                  
                                                                                                                                
Number 2148                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT observed that non-ERISA plans now are covered                                                              
by the ordinary standard of care.  The question is whether ERISA                                                                
plans are or are not covered by that same standard.  "Normally," he                                                             
said, "we can't substantively touch ERISA plans, but by this                                                                    
provision, . . . we can sneak under.  That's how it can be both a                                                               
do-nothing - besides codify the general standard that everyone                                                                  
lives under - and a cost driver."  It is not clear now whether                                                                  
ERISA plans are covered, he indicated.  This would be saying that                                                               
even ERISA plans must meet the same standard.  He said the question                                                             
becomes whether this is the appropriate standard.  It ties it back                                                              
to a covered care or treatment, and it establishes for ERISA the                                                                
same liability that applies to everybody in the non-ERISA world.                                                                
                                                                                                                                
Number 2241                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said he thought that made sense.  He wasn't                                                             
certain, but he thought Representative Croft was correct about the                                                              
distinction between the ERISA and non-ERISA.                                                                                    
                                                                                                                                
Number 2256                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG cautioned that including a reference to                                                                 
liability would definitely upset the "Brady Company crew" as well                                                               
as the insurers.                                                                                                                
                                                                                                                                
REPRESENTATIVE CROFT protested that line of thinking.                                                                           
                                                                                                                                
Number 2277                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT invited further discussion of Amendment 1.                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG maintained his objection.  He added that                                                                
his vote on this matter would have nothing to do with the merits of                                                             
the measure, but that he wanted to see a bill he was sponsoring                                                                 
pass this session.                                                                                                              
                                                                                                                                
Upon a roll call vote, Representatives Croft and Kerttula voted in                                                              
favor of Amendment 1.  Representatives Rokeberg, Kott and Murkowski                                                             
voted against it.  [Representative Green was temporarily absent.]                                                               
Therefore,  Amendment 1 failed by a vote of 3-2.                                                                                
                                                                                                                                
Number 2354                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT turned attention to medical necessity, the second                                                                 
major topic.                                                                                                                    
                                                                                                                                
Number 2366                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG offered Amendment 2, which he said was the                                                              
AMA language with the proviso that the plan can set out a different                                                             
definition of "medical necessity."  He explained that this                                                                      
amendment would require that a plan define in its contract exactly                                                              
what it means by medical necessity or, by default, the AMA language                                                             
would apply.  Amendment 2 [originally an amendment to Version N,                                                                
labeled 1-LS0472\N.2, Ford, 3/31/00] read:                                                                                      
                                                                                                                                
     Page 3, following line 18:                                                                                                 
                                                                                                                                
          Insert a new paragraph to read:                                                                                       
                                                                                                                                
               "(1) a provision that defines "medical                                                                           
     necessity"; unless the plan sets out a different                                                                           
     definition, "medical necessity" shall be defined as                                                                        
     meaning those health care services or products that a                                                                      
     prudent physician would provide to a patient for the                                                                       
     purpose of preventing, diagnosing, or treating an                                                                          
     illness, injury, disease, or its symptoms in a manner                                                                      
     that is                                                                                                                    
                    (A) consistent with generally accepted                                                                      
     standards of medical practice;                                                                                             
                    (B) clinically appropriate in terms of                                                                      
     type, frequency, extent, site, and duration; and                                                                           
                    (C) not primarily for the convenience of                                                                    
     the patient, physician, or other health care provider;"                                                                    
                                                                                                                                
     Renumber the following paragraphs accordingly.                                                                             
                                                                                                                                
     Page 4, line 10:                                                                                                           
          Delete "(6)"                                                                                                          
          Insert "(7)"                                                                                                          
                                                                                                                                
Number 2432                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT responded:                                                                                                 
                                                                                                                                
     To say it means this unless you mean something different                                                                   
     avoids the central question that we have been trying to                                                                    
     get to a vote, which is if a plan covers a condition, but                                                                  
     they are trying to give you a treatment that your doctor                                                                   
     or you think is insufficient for that covered condition,                                                                   
     can you go beyond the scope of the contract to say, "This                                                                  
     is medically necessary"?  "You want to treat me with                                                                       
     drugs.  I say surgery is what I need.  You're telling me                                                                   
     no, and I think for this covered condition . . . it is                                                                     
     medically necessary get this form of treatment."                                                                           
                                                                                                                                
He said the subcommittee had worked hard to get agreement on the                                                                
technical issues, and people deserve some kind of clear decision in                                                             
this area.  However, [Amendment 2] is not a decision.  It is still                                                              
trying to "word smith it."                                                                                                      
                                                                                                                                
REPRESENTATIVE CROFT made a motion to amend Amendment 2 by deleting                                                             
the phrase "unless the plan sets out a different definition."                                                                   
                                                                                                                                
CHAIRMAN KOTT announced a brief at-ease at 3:31 p.m.                                                                            
                                                                                                                                
TAPE 00-50, SIDE B                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT called the meeting back to order at 3:33 p.m.                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that there had been testimony in the                                                              
subcommittee that concerned the external review process, which has                                                              
both mandatory and discretionary conditions.  He called attention                                                               
to page 9, line 2 [of Version S] as an example, and read, "The                                                                  
external appeal agency shall include among the evidence to be taken                                                             
into consideration ...."  He noted that it goes on to list                                                                      
subparagraphs (A) through (D).  Then on line 12, it says "the                                                                   
external appeal agency may also take into consideration the                                                                     
following evidence", followed by (A) through (I).                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG said these are basically what defines                                                                   
medical necessity.  However, there is a distinction made between                                                                
the mandated "shall" and the discretionary "may," depending on the                                                              
circumstances.  One problem in trying to come up with a statutory                                                               
definition of medical necessity is that each contract will be                                                                   
somewhat different because the pricing and underwriting will be                                                                 
different.  One would have to underwrite to the "plain vanilla"                                                                 
definition every time one made up a health care plan.  One couldn't                                                             
have a menu of services in the plan unless one redefined medical                                                                
necessity at every step.  That is what patient choice is all about.                                                             
That is also how to contain costs.  That is why this is an argument                                                             
between the insurance companies and doctors.  The patients are                                                                  
caught in the middle.  It is the legislature's responsibility to                                                                
protect the patients, but there is a dual goal of affordability and                                                             
quality care.                                                                                                                   
                                                                                                                                
Number 0122                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT referred to page 8 [beginning on line 19 of                                                                
Version S], which read in part:                                                                                                 
                                                                                                                                
     (d)  An external appeal process must include at least the                                                                  
     following:                                                                                                                 
          (1) a fair, de novo determination based on coverage                                                                   
     provided by the plan and by applying terms as defined in                                                                   
     the plan; however, nothing in this paragraph may be                                                                        
     construed as providing coverage of items and services for                                                                  
     which benefits are excluded under the plan or coverage;                                                                    
                                                                                                                                
REPRESENTATIVE CROFT said that is clearly limited to the plan.  The                                                             
next section says, "An external appeal agency shall determine,"                                                                 
based on the medical needs.  That looks good, he said, but it says,                                                             
"and in accordance with the scope of the covered benefits in the                                                                
plan."   Medical necessity beyond the scope of the contract is                                                                  
"out," and he does not think that provision (H), which he                                                                       
paraphrased as "may take into consideration evidence of the                                                                     
community standard," provides authority to go beyond the scope of                                                               
the plan.  He thinks it can be a rational public policy choice for                                                              
Representative Rokeberg to make, to stay within the plan, but it is                                                             
important to be clear about the choice being made.                                                                              
                                                                                                                                
REPRESENTATIVE CROFT noted that Version S says, "Only those covered                                                             
by the plan and only those treatments covered by the plan."  Even                                                               
if there is a good argument that treatment which has been denied                                                                
was medically necessary for one's covered condition, someone would                                                              
not get it because it would say somewhere in there, "We don't do                                                                
tonsillectomies."  Representative Croft said he is not criticizing                                                              
Representative Rokeberg's policy decision, but he cautioned not to                                                              
mischaracterize what Version S does, which is to "limit to the                                                                  
plan."  [Amendment 2] is a decision about whether to provide for                                                                
medical necessity beyond the scope of the plan.                                                                                 
                                                                                                                                
Number 0216                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG responded that Representative Croft was                                                                 
making a good distinction about whether it is inside or outside of                                                              
the plan, and that is really the crux of the matter.  Setting the                                                               
scope of the plan sets the underwriting criteria for the plan.  He                                                              
said it only makes sense that one would be able "to have an                                                                     
underwriting fence around it in order to have an actuarially sound                                                              
basis for rating it."  If the external appeal agency could decide                                                               
to step outside the scope of the plan, there would have to have a                                                               
basis for it, in statute.  The discretionary items in the bill                                                                  
allow some "wiggle room," but he agrees that this bill says one                                                                 
must stay within the plan.  He characterized the AMA definition of                                                              
medical necessity as "we believe this is necessary and we don't                                                                 
care what it costs."  Representative Rokeberg said he thinks that                                                               
is the right attitude for a doctor to have in terms of what the                                                                 
best care for the patient is.  But, on the other hand, he thinks                                                                
one ought to take those costs into consideration, depending on what                                                             
type of malady it is.                                                                                                           
                                                                                                                                
Number 0299                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA summarized:  "The bottom line is that                                                                   
whatever we say is medical necessity is going to be the base line.                                                              
If we adopt that definition, that's the bottom.  Plans can add or                                                               
detract, whatever they want to do, but if we [define] medical                                                                   
necessity, that, at least, is going to be required."                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG interjected that it depends on the                                                                      
definition of medical necessity.  Under the AMA definition,                                                                     
anything goes.  There is no limit on what could be charged.                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA continued, "But if we define it, that's                                                                 
going to be the standard that is going to be used across the board                                                              
for everybody if we go outside the plan."                                                                                       
                                                                                                                                
Number 0334                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG concurred.  He added that some language in                                                              
the AMA definition speaks to certain levels but does not mandate;                                                               
it is almost entirely discretionary.  He said he could understand                                                               
that because doctors think of themselves as both scientists and                                                                 
artists.  "It's the art of the possible," he added.  "This is why                                                               
this thing hasn't been satisfactorily resolved in any jurisdiction                                                              
in this country."   He said he doesn't know if it is resolvable.                                                                
                                                                                                                                
Number 0405                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT specified that his amendment to Amendment 2 is                                                             
on lines 3 and 4, to delete: "a provision that defines 'medical                                                                 
necessity'; unless the plan sets out a different definition."  What                                                             
would be left would be a paragraph beginning, "'Medical necessity'                                                              
shall be defines as ...."                                                                                                       
                                                                                                                                
Number 0425                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT noted that it deletes language up to the word                                                                     
"definition" on line 4.                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG announced that he had to leave for a House                                                              
Finance Committee meeting.  He commented, "If you add anything to                                                               
it, the bill's dead, so I might as well go out and try to salvage                                                               
another one."  In reply to Chairman Kott's question as to whether                                                               
he objects to the amendment to Amendment 2, Representative Rokeberg                                                             
affirmed that.                                                                                                                  
                                                                                                                                
Upon a roll call vote, Representatives Murkowski, Croft, Kerttula,                                                              
Green and Kott voted in favor of the amendment to Amendment 2.                                                                  
Representative Rokeberg voted against it.  Therefore, the amendment                                                             
to Amendment 2 was adopted by a vote of 5-1.                                                                                    
                                                                                                                                
CHAIRMAN KOTT brought attention back to Amendment 2, as amended.                                                                
                                                                                                                                
Number 0504                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said Amendment 2 is essentially the AMA                                                                    
definition.  It still seems to him that the Washington language                                                                 
discussed in subcommittee "has more sideboards" and would be less                                                               
objectionable, and less likely to kill the bill, because it is                                                                  
something that Washington insurers are somewhat grudgingly living                                                               
under, and a lot of companies operate in both Washington and                                                                    
Alaska.  Although it is somewhat weaker, he would prefer the                                                                    
Washington language.                                                                                                            
                                                                                                                                
REPRESENTATIVE CROFT explained that he'd had to amend                                                                           
Representative Rokeberg's amendment because he did not want it                                                                  
standing.  He suggested that the committee table Amendment 2 and                                                                
move the Washington language.  He emphasized that he thinks there                                                               
has to be some definition of "medical necessity" outside of the                                                                 
contract to make sure that medically necessary care is provided.                                                                
He restated his preference for the Washington language.  In                                                                     
response to Representative Green's question about how much of the                                                               
Washington language he wanted, he said he wanted the whole thing.                                                               
"If you delete that last sentence, I think you just took out the                                                                
heart of the matter again," he added.                                                                                           
                                                                                                                                
Number 0552                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT made a motion to table Amendment 2.  There                                                                 
being no objection, it was so ordered.                                                                                          
                                                                                                                                
Number 0568                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT made a motion to adopt Amendment 3, the so-                                                                
called Washington language, as follows:                                                                                         
                                                                                                                                
     The medical reviewers from a certified independent review                                                                  
     organization will make determinations regarding the                                                                        
     medical necessity or appropriateness of, and the                                                                           
     application of health plan coverage provisions to, health                                                                  
     care services for an enrollee.  The medical reviewers'                                                                     
     determinations must be based upon their expert medical                                                                     
     judgment, after consideration of relevant medical,                                                                         
     scientific, and cost-effectiveness evidence, and medical                                                                   
     standards of practice in the state of Alaska.  Except as                                                                   
     provided in this subsection, the certified independent                                                                     
     review organization must ensure that determinations are                                                                    
     consistent with the scope of covered benefits as outlined                                                                  
     in the medical coverage agreement.  Medical reviewers may                                                                  
     override the health plan's medical necessity or                                                                            
     appropriateness standards if the standards are determined                                                                  
     upon review to be unreasonable or inconsistent with                                                                        
     sound, evidence-based medical practice.                                                                                    
                                                                                                                                
     REPRESENTATIVE CROFT pointed out that amendments may be needed to                                                          
make the language conform to HB 211.  He said what he likes about                                                               
the Washington language over the AMA language is the last sentence                                                              
of the former.  He added, "You almost start with the provision                                                                  
language and then give the ability to break outside of it, but the                                                              
burden of proof is on you that it is unreasonable and you need to                                                               
step out."                                                                                                                      
                                                                                                                                
Number 0611                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN wondered whether that might help soothe the                                                                
"opening wound" with Representative Rokeberg.  He commented, "Part                                                              
of the objection he made, that last sentence kind of helps it back                                                              
in."                                                                                                                            
                                                                                                                                
REPRESENTATIVE CROFT agreed.  "It is language that is an at least                                                               
another jurisdiction," he observed, "and it is language that does                                                               
seem to have you say you start with the plan, and you have the                                                                  
burden of proving why you need to go outside of it, rather than you                                                             
start with the plan plus a statutorily defined medical necessity."                                                              
                                                                                                                                
Number 0657                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT restated Amendment 3.                                                                                             
                                                                                                                                
REPRESENTATIVE MURKOWSKI objected for purposes of discussion.  She                                                              
said she felt she had to take up Representative Rokeberg's banner                                                               
[in his absence], albeit reluctantly.  Her concern focused on the                                                               
last sentence and the ability to override.  She thinks that just                                                                
puts one back in that position without the cap or the sideboards,                                                               
"because you have a review process that's out there, and looking at                                                             
the standards on an unreasonable or inconsistent with sound                                                                     
evidence-based medical practice, you could probably argue those                                                                 
terms all day."  Representative Murkowski said she likes this                                                                   
language better than the AMA definition, and one reason is that it                                                              
talks about the cost effectiveness evidence. "It's better, but it                                                               
still does not give me the degree of comfort that I would like,"                                                                
she concluded.  "I just haven't seen anything that is better than                                                               
this."                                                                                                                          
                                                                                                                                
Number 0755                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT declared a brief at-ease, beginning at 3:50 p.m.  The                                                             
meeting was called back to order at 4:08 p.m.                                                                                   
                                                                                                                                
REPRESENTATIVE MURKOWSKI clarified that she had not withdrawn her                                                               
objection to Amendment 3.                                                                                                       
                                                                                                                                
Number 0791                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA stated that this is an incredibly difficult                                                             
issue, and "it is hard to figure out how to drive any kind of path                                                              
here."                                                                                                                          
                                                                                                                                
Upon a roll call vote, Representatives Croft, Green, Kott and                                                                   
Kerttula voted in favor of Amendment 3.  Representative Murkowski                                                               
voted against it.  Therefore, Amendment 3 was adopted by a vote of                                                              
4-1.                                                                                                                            
                                                                                                                                
Number 0862                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT made a motion to move CSHB 211 [Version S], as                                                             
amended, from committee with individual recommendations and                                                                     
attached zero fiscal note.  There being no objection, CSHB 211(JUD)                                                             
was moved from the House Judiciary Standing Committee.                                                                          
                                                                                                                                
Number 0875                                                                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
Judiciary Standing Committee meeting was adjourned at 4:10 p.m.                                                                 
                                                                                                                                

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