04/10/2002 01:18 PM House JUD
| Audio | Topic |
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 10, 2002
1:18 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative Jeannette James
Representative John Coghill
Representative Kevin Meyer
Representative Ethan Berkowitz
Representative Albert Kookesh
MEMBERS ABSENT
Representative Scott Ogan, Vice Chair
COMMITTEE CALENDAR
HOUSE BILL NO. 197
"An Act relating to directives for personal health care services
and for medical treatment."
- MOVED CSHB 197(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 37(FIN)
"An Act relating to collective negotiation by competing
physicians with health benefit plans, to health benefit plan
contracts, to the application of antitrust laws to agreements
involving providers and groups of providers affected by
collective negotiations, and to the effect of the collective
negotiation provisions on health care providers."
- HEARD AND HELD
HOUSE BILL NO. 472
"An Act relating to persons who buy and sell secondhand articles
and to certain persons who lend money on secondhand articles."
- HEARD AND HELD
HOUSE BILL NO. 319
"An Act relating to civil liability for commercial recreational
activities; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 197
SHORT TITLE:HEALTH CARE SERVICES DIRECTIVES
SPONSOR(S): REPRESENTATIVE(S)HUDSON
Jrn-Date Jrn-Page Action
03/19/01 0649 (H) READ THE FIRST TIME -
REFERRALS
03/19/01 0649 (H) HES, JUD
03/28/01 0762 (H) COSPONSOR(S): KERTTULA
04/10/01 (H) HES AT 3:00 PM CAPITOL 106
04/10/01 (H) <Bill Postponed to 4/17>
04/17/01 (H) HES AT 3:00 PM CAPITOL 106
04/17/01 (H) Heard & Held
04/17/01 (H) MINUTE(HES)
04/19/01 (H) HES AT 3:00 PM CAPITOL 106
04/19/01 (H) Heard & Held
04/19/01 (H) MINUTE(HES)
04/19/01 (H) MINUTE(HES)
04/24/01 (H) HES AT 3:00 PM CAPITOL 106
04/24/01 (H) Moved CSHB 197(HES) Out of
Committee
04/24/01 (H) MINUTE(HES)
04/25/01 1196 (H) HES RPT CS(HES) NT 3DP 2NR
1AM
04/25/01 1197 (H) DP: JOULE, CISSNA, DYSON; NR:
COGHILL,
04/25/01 1197 (H) STEVENS; AM: KOHRING
04/25/01 1197 (H) FN1: ZERO(H.HES/HSS)
01/28/02 2086 (H) COSPONSOR(S): CRAWFORD,
LANCASTER
03/20/02 (H) JUD AT 1:00 PM CAPITOL 120
03/20/02 (H) Heard & Held
MINUTE(JUD)
04/10/02 (H) JUD AT 1:00 PM CAPITOL 120
BILL: SB 37
SHORT TITLE:PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE
SPONSOR(S): SENATOR(S) KELLY
Jrn-Date Jrn-Page Action
01/12/01 0073 (S) READ THE FIRST TIME -
REFERRALS
01/12/01 0073 (S) JUD, FIN
01/22/01 0137 (S) L&C REFERRAL ADDED AFTER JUD
01/22/01 (S) JUD AT 1:30 PM BELTZ 211
01/22/01 (S) Heard & Held
01/22/01 (S) MINUTE(JUD)
02/21/01 (S) JUD AT 1:30 PM BELTZ 211
02/21/01 (S) Moved CS(JUD) Out of
Committee
02/21/01 (S) MINUTE(JUD)
02/22/01 0467 (S) JUD RPT CS 2DNP 3NR NEW TITLE
02/22/01 0467 (S) NR: TAYLOR, COWDERY,
THERRIAULT;
02/22/01 0467 (S) DNP: ELLIS, DONLEY
02/22/01 0467 (S) FN1: (LAW)
02/22/01 0467 (S) FN2: (CED)
02/22/01 0467 (S) FN3: INDETERMINATE(ADM)
02/22/01 0467 (S) FN4: ZERO(HSS)
03/01/01 (S) L&C AT 1:30 PM BELTZ 211
03/01/01 (S) Heard & Held
03/01/01 (S) MINUTE(L&C)
03/08/01 (S) L&C AT 1:30 PM BELTZ 211
03/08/01 (S) Heard & Held
03/08/01 (S) MINUTE(L&C)
03/13/01 (S) L&C AT 1:30 PM BELTZ 211
03/13/01 (S) Moved CS(L&C) Out of
Committee
03/13/01 (S) MINUTE(L&C)
03/14/01 0653 (S) L&C RPT CS 2DP 3NR NEW TITLE
03/14/01 0653 (S) NR: PHILLIPS, DAVIS,
TORGERSON;
03/14/01 0653 (S) DP: AUSTERMAN, LEMAN
03/14/01 0653 (S) FN1: (LAW)
03/14/01 0653 (S) FN2: (CED)
03/14/01 0653 (S) FN3: INDETERMINATE(ADM)
03/14/01 0653 (S) FN4: ZERO(HSS)
03/28/01 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/28/01 (S) Heard & Held
03/28/01 (S) MINUTE(FIN)
03/28/01 (S) FIN AT 6:00 PM SENATE FINANCE
532
03/28/01 (S) Moved CS(FIN) Out of
Committee
03/28/01 (S) MINUTE(FIN)
03/29/01 0853 (S) FIN RPT CS 3DP 1DNP 4NR NEW
TITLE
03/29/01 0853 (S) DP: KELLY, WILKEN, LEMAN;
03/29/01 0853 (S) NR: DONLEY, AUSTERMAN, OLSON,
GREEN;
03/29/01 0853 (S) DNP: HOFFMAN
03/29/01 0853 (S) FN1: (LAW)
03/29/01 0854 (S) FN2: (CED)
03/29/01 0854 (S) FN4: ZERO(HSS)
03/29/01 0854 (S) FN5: ZERO(S.FIN/ADM)
04/04/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/04/01 (S) MINUTE(RLS)
04/04/01 0932 (S) RULES TO CALENDAR 1OR 4/4/01
04/04/01 0933 (S) READ THE SECOND TIME
04/04/01 0933 (S) FIN CS ADOPTED UNAN CONSENT
04/04/01 0933 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/04/01 0933 (S) READ THE THIRD TIME CSSB
37(FIN)
04/04/01 0933 (S) PASSED Y13 N6 E1
04/04/01 0934 (S) ELLIS NOTICE OF
RECONSIDERATION
04/05/01 0961 (S) RECONSIDERATION NOT TAKEN UP
04/05/01 0962 (S) TRANSMITTED TO (H)
04/05/01 0962 (S) VERSION: CSSB 37(FIN)
04/06/01 0875 (H) READ THE FIRST TIME -
REFERRALS
04/06/01 0875 (H) L&C, JUD, FIN
04/23/01 (H) L&C AT 3:15 PM CAPITOL 17
04/23/01 (H) Heard & Held
04/23/01 (H) MINUTE(L&C)
03/22/02 (H) L&C AT 3:15 PM CAPITOL 17
03/22/02 (H) Moved HCS CSSB 37(L&C) Out of
Committee
MINUTE(L&C)
03/26/02 2682 (H) L&C RPT HCS(L&C) 1DNP 5NR
03/26/02 2682 (H) DNP: CRAWFORD; NR: ROKEBERG,
MEYER,
03/26/02 2682 (H) HAYES, HALCRO, MURKOWSKI
03/26/02 2683 (H) FN6: ZERO(ADM)
03/26/02 2683 (H) FN7: (CED)
03/26/02 2683 (H) FN8: (LAW)
03/26/02 2683 (H) REFERRED TO JUDICIARY
04/10/02 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 472
SHORT TITLE:PAWNBROKERS/SECONDHAND DEALERS
SPONSOR(S): REPRESENTATIVE(S)GREEN
Jrn-Date Jrn-Page Action
02/19/02 2315 (H) READ THE FIRST TIME -
REFERRALS
02/19/02 2315 (H) L&C, JUD
03/04/02 (H) L&C AT 3:15 PM CAPITOL 17
03/04/02 (H) Heard & Held
MINUTE(L&C)
04/01/02 (H) L&C AT 3:15 PM CAPITOL 17
04/01/02 (H) Moved CSHB 472(L&C) Out of
Committee
MINUTE(L&C)
04/02/02 2752 (H) L&C RPT CS(L&C) NT 5NR 1AM
04/02/02 2752 (H) NR: MEYER, HAYES, KOTT,
HALCRO,
04/02/02 2752 (H) MURKOWSKI; AM: ROKEBERG
04/02/02 2753 (H) FN1: ZERO(DPS)
04/02/02 2753 (H) REFERRED TO JUDICIARY
04/03/02 2788 (H) COSPONSOR(S): MCGUIRE
04/05/02 (H) JUD AT 1:00 PM CAPITOL 120
04/05/02 (H) Scheduled But Not Heard
04/08/02 2840 (H) COSPONSOR(S): MEYER
04/10/02 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
MELANIE LESH, Staff
to Representative Bill Hudson
Alaska State Legislature
Capitol Building, Room 502
Juneau, Alaska 99801
POSITION STATEMENT: Presented Version P of HB 197 and Amendment
1 on behalf of the sponsor, Representative Hudson, and responded
to questions.
SHELLY K. OWENS, Community Health & Emergency Medical Services
Division of Public Health
Department of Health & Social Services (DHSS)
PO Box 110616
Juneau, Alaska 99811-0616
POSITION STATEMENT: During discussion of HB 197 responded to
questions.
SENATOR PETE KELLY
Alaska State Legislature
Capitol Building, Room 518
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of SB 37.
MIKE D. WIGGINS; Vice President
National Accounts
Aetna, Inc.
600 University Street, Suite 1400
Seattle, Washington 98101
POSITION STATEMENT: Testified in opposition to SB 37.
PATRICIA SENNER, M.S., R.N., A.N.P.; President
Alaska Nurses Association (AaNA)
2207 East Tudor Road, Suite 34
Anchorage, Alaska 99507-1069
POSITION STATEMENT: Testified in opposition to SB 37.
CATHY GIESSEL, M.S.N., R.N., F.N.P.-C.S.
Legislative Representative
Alaska Nurse Practitioner Association (ANPA)
12701 Ridgewood Road
Anchorage, Alaska 99516
POSITION STATEMENT: Testified in opposition to SB 37.
CYNTHIA EBELACKER
10251 Stewart Drive
Eagle River, Alaska 99577
POSITION STATEMENT: Testified in opposition to SB 37.
CAMILLE SOLEIL, J.D.; Executive Director
Alaska Nurses Association (AaNA)
2207 East Tudor Road, Suite 34
Anchorage, Alaska 99507
POSITION STATEMENT: Testified in opposition to SB 37.
BARBARA E. NORTON, C.N.M.
3730 Rhone Circle, Suite 101
Anchorage, Alaska 99508
POSITION STATEMENT: Testified in opposition to SB 37.
KAREN DECKER-BROWN
2200 Shore Drive
Anchorage, Alaska 99515
POSITION STATEMENT: Testified in opposition to SB 37.
STEVE CONN, Executive Director
Alaska Public Interest Research Group (AkPIRG)
PO Box 10-1093
Anchorage, Alaska 99510
POSITION STATEMENT: Testified in opposition to SB 37.
KATHLEEN T. MELICAN
3600 Minnesota Drive
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in opposition to SB 37.
LEONARD SORRIN, Assistant General Counsel
Blue Cross Blue Shield of Alaska
(No address provided)
POSITION STATEMENT: Testified in opposition to SB 37 and
responded to questions.
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General
Fair Business Practices Section
Civil Division (Anchorage)
Department of Law (DOL)
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Provided comments indicating opposition to
SB 37, and responded to questions.
BOB LOHR, Director
Division of Insurance
Department of Community & Economic Development (DCED)
3601 C Street, Suite 1324
Anchorage, Alaska 99503-5948
POSITION STATEMENT: Testified in opposition to SB 37, and
responded to questions.
BECKY DEDURA (ph), Director
FTC Resource Center on State Legislation (ph)
American Medical Association (AMA)
(No address provided)
POSITION STATEMENT: Testified in support of SB 37.
MIKE HAUGEN, J.D., M.B.A.; Executive Director
Alaska Physicians & Surgeons, Inc. (APS)
4120 Laurel Street, Suite 206
Anchorage, Alaska 99508
POSITION STATEMENT: Testified in support of SB 37.
LAURA ACHEE, Staff
to Representative Joe Green
Alaska State Legislature
Capitol Building, Room 403
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 472 on behalf of the sponsor,
Representative Green.
DAVID HUDSON, Captain
Administrative Services Unit
Central Office
Division of Alaska State Troopers (AST)
Department of Public Safety (DPS)
5700 East Tudor Road
Anchorage, Alaska 99507-1225
POSITION STATEMENT: Provided comments in support of HB 472 and
responded to questions.
DAVE ADAMS
(No address provided)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 472.
JERRY CLEWORTH
907 Park Drive
Fairbanks, Alaska 99709
POSITION STATEMENT: Testified in opposition to HB 472.
MARGE THOMPSON, Co-owner
Alaskan Photographic Repair Service
PO Box 71127
Fairbanks, Alaska 99707
POSITION STATEMENT: Testified in opposition to HB 472.
BEN CARPENTER, Owner
Ben's Super Store
1402 Gilliam Way
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in opposition to HB 472.
DAN HOFFMAN, Lieutenant
Fairbanks Police Department (FPD)
City of Fairbanks
656 7th Avenue
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in support of the intent of HB
472.
NORM BLAKELEY
PO Box 537
Soldotna, Alaska 99669
POSITION STATEMENT: Provided comments during discussion of HB
472.
CYNTHIA BRIDGES, Detective
Anchorage Police Department (APD)
Municipality of Anchorage (MOA)
4501 South Bragaw Street
Anchorage, Alaska 99507
POSITION STATEMENT: Provided comments during discussion of HB
472.
ACTION NARRATIVE
TAPE 02-46, SIDE A
Number 0001
CHAIR NORMAN ROKEBERG called the House Judiciary Standing
Committee meeting to order at 1:18 p.m. Representatives
Rokeberg, James, Coghill, Meyer, and Berkowitz were present at
the call to order. Representative Kookesh arrived as the
meeting was in progress.
HB 197 - HEALTH CARE SERVICES DIRECTIVES
Number 0056
CHAIR ROKEBERG announced that the first order of business would
be HOUSE BILL NO. 197, "An Act relating to directives for
personal health care services and for medical treatment."
[Before the committee was committee substitute (CS) for HB 197,
version 22-LS0712\O, Bannister, 2/26/02, which was adopted as a
work draft and amended on 3/20/02.]
Number 0103
REPRESENTATIVE JAMES moved to adopt committee substitute (CS)
for HB 197, version 22-LS0712\P, Bannister, 3/20/02, as a work
draft. There being no objection, Version P was before the
committee.
Number 0124
MELANIE LESH, Staff to Representative Bill Hudson, Alaska State
Legislature, sponsor, speaking on behalf of the sponsor, noted
that Version P allows for the reenactment of the current statute
regarding the protocol for responding to the "Comfort One Do-
Not-Resuscitate (DNR) program." She also noted that a proposed
amendment would provide the final touch, with one exception, for
that provision. When HB 197 was first created, she explained,
the intent was to take all of the current provisions related to
end-of-life healthcare decisions and place them in one chapter.
These provisions include the Organ Donation program, the Living
Will [program], the Comfort One Do-Not-Resuscitate (DNR)
program, and an "expanded healthcare durable power of attorney."
However, during the drafting process, the repeal and reenactment
of the Comfort One Do-Not-Resuscitate (DNR) program did not
occur as planned. Version P reenacts that program in full,
although it still needs revision via [Amendment 1]
Number 0293
CHAIR ROKEBERG said that he would entertain a motion to adopt
Amendment 1.
MS. LESH pointed out that Amendment 1 is also in need of
revision. On page 3, line 3, of Amendment 1, the Department of
Health & Social Services (DHSS) recommends changing the language
so that it will read: "(c) An individual who is a qualified
patient, including an individual for whom a physician".
Number 0391
CHAIR ROKEBERG made a motion to adopt the aforementioned
language as an amendment to Amendment 1.
REPRESENTATIVE BERKOWITZ objected for the purpose of discussion.
He opined that the amendment to Amendment 1 seems to "preclude
an individual from having this kind of conversation with a
doctor prior to becoming a qualified [patient]."
MS. LESH said that a qualified patient can only be determined by
a doctor, so there is only a very small window of opportunity in
which one [can become] that qualified patient; "You have to be
in a terminal condition, which has to substantiated by a
physician."
REPRESENTATIVE BERKOWITZ asked: "If I were to have a do-not-
resuscitate order now, and I'm in relatively good health, that
wouldn't seem to be permitted under this amendment [to Amendment
1], is that correct?"
Number 0487
SHELLY K. OWENS, Community Health & Emergency Medical Services,
Division of Public Health, Department of Health & Social
Services (DHSS), clarified that if one has a do-not-resuscitate
order it is because he/she has already been determined by a
physician to be terminally ill. She said that [the DHSS's]
concern with Amendment 2 as it is currently written is that it
might provide an individual who is not terminally ill and does
not have a DNR order to refuse lifesaving treatment; for
example, if someone attempted suicide and failed, that person
could refuse help.
REPRESENTATIVE BERKOWITZ asked whether he could [have a
physician] make that determination now, if, for example, he were
concerned about the possibility of getting in an accident that
degrades his quality of life.
MS. OWENS pointed out that under current law, a physician could
not prepare a DNR order for someone who is not terminally ill,
and the same restrictions would apply under [version P].
CHAIR ROKEBERG asked why the language about a qualified patient
should be added to Amendment 1 if it is already assumed that a
physician only prepares a DNR order for someone who is already
qualified.
MS. OWENS explained that the additional language is necessary
because the inclusion of the clause offset by commas in the
current language of Amendment 1 might leave that section to be
interpreted to mean "an individual has the right to make a
decision regarding the use of" life-sustaining procedures. She
said that such an interpretation might allow a person to refuse
life-sustaining treatment regardless of whether he/she is
terminally ill.
REPRESENTATIVE BERKOWITZ said he could envision circumstances
for which he would like to have a do-not-resuscitate order, even
though he is currently in relatively good health. He asked
whether there is any procedure by which that could happen.
MS. OWENS said no; if a physician were to write a do-not-
resuscitate order for someone who is not terminally ill, it
would be in contravention of exiting law and the proposed
legislation. She pointed out that the purpose of the healthcare
directive is to address the type of concerns posed by
Representative Berkowitz. A person's wishes, in the event of a
serious accident, could be provided for via the healthcare
directive, but only a patient who is terminally ill can obtain a
do-not-resuscitate order.
Number 0692
REPRESENTATIVE BERKOWITZ withdrew his objection to the amendment
to Amendment 1. He added, however, that since passing
legislation is an iterative process, he would hope that the next
iteration of HB 197 would go further in addressing his concerns.
MS. LESH said that it is the sponsor's intent to allow people to
broadly state their wishes regarding [end-of-life] treatment,
but in the situation of a severe accident, for example, the
Emergency Medical technicians' lifesaving protocol would take
precedence. She noted that [Version P and Amendment 1] are
merely reenacting current protocol.
Number 0800
CHAIR ROKEBERG, noting that there were no further objections,
stated that the amendment to Amendment 1 was adopted.
Number 0813
CHAIR ROKEBERG asked whether there were any objections to
adopting Amendment 1, as amended. There being no objection,
Amendment 1, as amended, was adopted.
Number 0850
REPRESENTATIVE MEYERS moved to report committee substitute (CS)
for HB 197, version 22-LS0712\P, Bannister, 3/20/02, as amended,
out of committee with individual recommendations and the
accompanying zero fiscal note. There being no objection, CSHB
197(JUD) was reported from the House Judiciary Standing
Committee.
SB 37 - PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE
Number 0858
CHAIR ROKEBERG announced that the next order of business would
be CS FOR SENATE BILL NO. 37(FIN), "An Act relating to
collective negotiation by competing physicians with health
benefit plans, to health benefit plan contracts, to the
application of antitrust laws to agreements involving providers
and groups of providers affected by collective negotiations, and
to the effect of the collective negotiation provisions on health
care providers."
Number 0889
SENATOR PETE KELLY, Alaska State Legislature, sponsor, said that
SB 37 is offered as a response to the changing nature of the
health care industry in the United States. In the past ten
years, the number of insurance companies has decreased from
eighteen - nationwide - down to about six, and that number will
probably continue to decrease, he suggested. He opined that the
number is not decreasing because insurance companies are going
out of business; rather, it is because companies are merging,
and are consequently gaining more and more power in the market
place. The problem with this phenomenon, he remarked, is that
it leaves some of those who do business with [those insurance
companies] in the unenviable position of being "an unprotected
David against a Goliath that has federal protections as its
armor."
SENATOR KELLY said that the federal antitrust provisions work to
protect "these large [insurance] companies against these smaller
doctors that do business with them." What SB 37 proposes is
that under the watchful eye of the Department of Law (DOL), a
"state action doctrine" can be put in place that will allow
physicians to come together and discuss terms related to the
health provider contracts that they have with these large
insurance companies. Currently, he noted, physicians are in a
"take it or leave it" position, adding that "it is arguable that
the patient is the one who is suffering as a result of this."
SENATOR KELLY, to address concerns that had been raised as SB 37
went through the legislative process, said that the bill
specifically prohibits boycotting or price-fixing by physicians,
and that "it is completely voluntary" in that the attorney
general can end negotiations or contracts at any time and
neither physicians nor insurance companies are required to
negotiate. He reiterated that SB 37 allows individual
physicians to come together to discuss "these things as they
face these huge companies," without getting in trouble with the
Federal Trade Commission (FTC).
SENATOR KELLY noted that there had been a concern regarding
nurses, but "the nurses have been removed." He also noted that
he's heard that there is a proposed amendment [regarding
nurses], and he's been told that it would not adversely affect
SB 37 and would give [nurses] more protection. He surmised,
however, that although he did not object to the adoption of this
proposed amendment, rather than giving [nurses] more protection,
it simply gives them "extra language," which, he opined, they
didn't need. He mentioned that there is also a proposed
amendment regarding multiple employer welfare arrangements
(MEWAs), which he did not object to either.
Number 1110
REPRESENTATIVE JAMES said that it seems to her as though the
effects of SB 37 would be analogous to having a group of
neighbors get together and tell a fire insurance company, from
whom they all buy fire insurance, what to pay on any forthcoming
claims. She asked for a description of what physicians are
going to be negotiating.
SENATOR KELLY said:
Well, for one thing, they can't come together and
discuss any terms of the contract they may have with
... [an insurance company]. For instance, you might
have a provision in the [contract] ... where the
insurance company might say, "We've paid this, but
we've decided not to after retrospective review," and
then the physician would have to pay back the money to
the insurance company. That isn't necessarily a thing
that -- that may or may not be a bad thing, I don't
know, the point is, they can't even discuss that among
themselves without the FTC coming down on them,
saying, "No, you're violating the antitrust
provisions." The supreme court said that ... if we're
going to have these blanket antitrust provisions out
there, there are going to be cases where ..., through
normal business practice, some people need protection
that maybe goes a little bit in the other direction.
The FTC is there to protect the people [that] are in
business competing with each other, but the customers
of those businesses aren't necessarily protected.
And the supreme court said that you can create a state
action doctrine where you have the Davids of the world
who are trying to do business with the Goliaths, which
would be these large insurance companies, and it would
give them some protection that they don't have to
follow quite to the absolute letter of the law the
antitrust provisions that might apply to a General
Motors [Corporation] or an Exxon [Mobil Corporation]
or somebody like that. To put the physicians in that
same situation doesn't always make sense, and the
supreme court says there's times when it's not going
to make sense, so they allow for this state action
doctrine, where you can create an oversight of these
negotiations by a state agency - the Department of
Law, in this case - and they can allow the physicians
to come together to discuss these things, like I had
just mentioned to you, without being in violation of
Federal Trade Commission rules.
Number 1248
REPRESENTATIVE MEYER asked how SB 37 is going to benefit
constituents: "Can we expect better health care; can we expect
lower rates; what can we expect if this passes?"
SENATOR KELLY said:
The best example I can think of, and it's probably
what motivates me on this bill the most: if you have
an insurance company [that] comes in and ..., because
they're so big they're going to have contracts with a
major portion of the doctors in an area, they can
require, on a "take it or leave it" basis, that the
doctors can't even discuss with their patients higher-
cost alternatives. So if someone comes in and they
have a broken leg and it's handled by an x-ray, that
would be pretty normal, but in some cases, maybe it
needs an MRI [magnetic resonance imaging] or something
-- believe me, I'm out of my league here as far as
medical examples, but I'm just trying to give an
example.
The insurance companies can say, "No, you can't even
discuss that with the patient because we're only going
to pay for that lower level," and the health care
provider has to then choose between the terms of that
contract, where they can't discuss these kinds of very
important details with their patients without losing
the contract. And because there are becoming so few
of these insurance companies and because they're
becoming so powerful, ... there again, they're on a
"take it or leave it" basis; the physician's going to
find himself in a bad situation between having to
choose between business and maybe what's in the best
interest of his client. They can also go as far as to
have a gag rule; not only that they won't provide it,
but, as I said, they could even require that there is
a gag rule on them, where they can't even discuss
these kinds of options with the patients.
Number 1334
SENATOR KELLY continued:
That [the bill] allows the physicians to come together
and say, "Look, there's a group of us here and ... we
want to do business with you, but we want to be able
to discuss whether those kinds of things should be in
the contract or not." The FTC would slam them, before
that, but what they do is they pick them off
individually: you have all these physicians out there
and they're saying ... to this guy, "We're one of the
biggest corporations in the world; we're going to
offer this contract; take it or leave it; here are the
terms." It gives them some kind of market power -
albeit voluntary because the insurance companies don't
have to negotiate with them if they don't want to. It
gives them at least the opportunity to enter into
these discussions with each other, and as a group with
the insurance company, to act in the best interest of
their client. ...
You've asked me [for] an example. The example is,
under current rules, the insurance companies come in
and they say, "Take it or leave it, here's the
contract, you can't even discuss higher-level
alternatives - higher-cost alternatives - with your
patients." You're one physician against ... one of
the largest corporations in the world, and they have
such market power in your area that you pretty much
got to play ball by their rules. This allows the
physicians to at least come together and say, "We as a
group want to talk to you about this provision, this
higher cost alternative not being allowed, or even a
gag rule where you can't even discuss it not being
allowed." And they can talk, then, between
themselves; the physicians can say, "This is what I
was offered, and I want to know what you were
offered," and they can discuss that amongst themselves
and then discuss it with the insurance companies.
SENATOR KELLY said:
Under current Federal Trade Commission rules, they're
going to get a letter from the FTC and possibly get a
fine for doing that. The Supreme Court said, "In
those cases, we're going to allow states to create
this state action doctrine that allows the doctors to
at least come together to discuss these things without
getting slapped by the FTC." Ultimately, because of
the way the bill is written, no one is forced to do
anything. The insurance companies, if they say, "I
don't want to deal with you," that's fine; or if the
Department of Law says, "No, ... we don't like the way
the negotiations are going," then it comes to an end;
or the doctors can end it as well.
Number 1455
REPRESENTATIVE JAMES recounted an experience she had with her
insurance company, Aetna Inc., and a dentist: "My husband had
his teeth worked on and they were supposed to pay 50 percent.
And of course they didn't pay 50 percent; they paid 50 percent
of what was their recognized charge." When she questioned the
insurance company about where that number came from, she was
told, "Well, because this is the rate that everyone else is
charging in this district - 99501." She noted that since she
lives in the Fairbanks area, not the Anchorage area, she
objected to this reasoning. "I didn't get anywhere at all," she
explained, "and I'm the one that didn't get paid; it wasn't the
... dentist, it was me." "So, ... what's this do for our
constituents?" she asked, "What's it do for me, as a patient, to
allow the doctors to do this?"
SENATOR KELLY said he thought he had answered those questions.
REPRESENTATIVE JAMES said she did not believe the assertion that
doctors are not allowed to recommend appropriate treatment to
their patients.
SENATOR KELLY mentioned that such a case happened in Fairbanks,
and that the physicians involved were threatened with a pretty
serious fine.
CHAIR ROKEBERG asked for confirmation that "the fee or economic
discussions have been removed" in the HCS CSSB 37(L&C) version.
SENATOR KELLY indicated that such had been removed.
CHAIR ROKEBERG said, "So, what we're talking about is other
conditions rather than the fees themselves, is that right?" He
also noted that the sponsor has asserted that the situation in
Alaska is acute because there are only two insurance companies.
He pointed out, however, that there are three insurance
companies that do business in the state that are present to
testify or that have submitted comments on SB 37. In addition,
Chair Rokeberg remarked, there are 160 insurance companies that
are registered to do business in the state. He also mentioned
that he did not agree with the sponsor's assertion that there
were 18 insurance companies, nationwide, that have since merged
into 6 companies. He suggested that before the bill progresses,
the sponsor ought to review his statistical assertions.
Number 1615
MIKE D. WIGGINS; Vice President; National Accounts; Aetna, Inc.;
said:
In various capacities, I have been involved in the
health insurance market in Alaska for the past 15
years, and have worked for Blue Cross, New York Life
[Insurance Company], and, more recently, Aetna. Aetna
has opposed [SB 37] and remains opposed to the latest
draft of the bill. While the bill has been
significantly narrowed from its original version, we
still feel that it will neither benefit consumers nor
competition in Alaska for health insurance.
The major impact of the bill is to allow collective
negotiations [by] physicians [with] health insurers on
broad contractual terms, which are listed on page 2 of
the bill. Aetna and the Health Insurance Association
of America [HIAA], which represents most of the other
insurers in the Alaska market, agree with the Federal
Trade Commission that bargaining on contractual issues
will likely have a significant impact on the cost of
health care and therefore is likely to increase the
cost of insurance in Alaska. Since the bill only
applies to the privately insured market - mainly
individuals and small groups - it will have an adverse
effect on the part of the market that [already has]
higher costs, in the market where the [insured
members] are least able to afford increases. As you
are aware, there are two other bills pending before
the legislature this year which seek to find less
expensive ways to provide health insurance to this
sector of the market.
During the 2000 legislative session, Aetna
participated extensively in the House Judiciary
[Standing] Committee proceedings on the Alaska patient
protection Act, which ultimately passed the
legislature in 2000. The main focus of that bill was
to address the same contractual terms for which
physicians are now seeking the right of collective
bargaining. [That] bill today provides safeguards in
Alaska law and prohibits many of the practices such as
"anti-gag clauses," ... that means talking to your
[doctor] about higher cost alternatives, that
physicians have testified should be dealt with through
the mechanism of SB 37.
Number 1725
MR. WIGGINS continued:
Further, the Federal Trade Commission testified that
physician groups are now permitted to bargain on
"quality of care" issues within the federal
constraints on antitrust. Passing a state law will
not change the FTC's ultimate authority for evaluating
and prosecuting. By adopting differing state and
federal statutes for antitrust actions, the situation
will become even more confusing, not less. With the
exception of Blue Cross, in a relatively small
geographical area of Alaska, we don't think that any
insurer can be reasonably considered to have market
power in the private insurance market within Alaska
under the normal - and under any number of -
definitions. If [SB 37] is intended to regulate Blue
Cross in some fashion, as a nonprofit corporation,
they are subject to different sections of the
insurance statutes than the profit insurers, and your
concerns can by addressed under their unique part of
the Alaska insurance statutes.
To address the previous testimony by physicians on
their inability to appeal claims that have been denied
for "medical necessity," I have provided a summary of
"State of Alaska - Aetna" information to the
committee, illustrating the small number of these type
of appeals and their disposition. Ultimately, within
the Aetna organization, it is an independent physician
and not a non-physician that decides the merits of
these appeals. Thank you for the opportunity to
[testify].
CHAIR ROKEBERG asked Mr. Wiggins to comment on Representative
James's experience.
MR. WIGGINS explained that Aetna's rate of payment for dental
claims is defined in its contract with the state, and that "they
define the data source." "So, as the administrator, we are
paying based upon the fee schedule [that] the state has set, and
there are three geographical 'R [Reasonable Charge] and UCR
[Usual, Customary, and Reasonable Fees]' areas in the state of
Alaska," he added.
CHAIR ROKEBERG asked: "Under the third-party appeal and the UR
- utilization review - procedures under the '[Alaska] Patients'
Bill of Rights,' would an economic short payment or something be
something that could be appealed?"
Number 1839
MR. WIGGINS said yes. He pointed out that one of the
misconceptions is that non-medical people make decisions on
medical appeals. He said that a handout he provided the
committee illustrates that his company has both a second level
and a third level of appeal; a second level appeal is reviewed
by a physician, as is a third level appeal, either by a
physician within Aetna with the same specialty, or by a
physician at an external review agency.
CHAIR ROKEBERG asked whether this is also the process for
appeals pertaining to the amount of reimbursement.
MR. WIGGINS said that it can be. Sometimes in Alaska, he noted,
there are some "billing inconsistencies from the Lower 48," and
there are some other things to take into consideration. He said
that although he did not have the turnover rates in front of
him, he could say that a significant number of [cases], once
they are appealed and additional information is received, are
ultimately resolved in favor of the person initiating the
appeal.
Number 1908
PATRICIA SENNER, M.S., R.N., A.N.P.; President, Alaska Nurses
Association (AaNA), said:
We would like to voice today our continued serious
concerns about [SB 37]. Our main concerns with this
bill are twofold. First, we are concerned that
allowing large groups of physicians to band together
to negotiate with insurance companies will lead to
exclusion of direct reimbursement by insurance
companies of non-physician health care providers such
as nurse practitioners and nurse midwives. Our second
major concern is that by effectively removing
constraints on the side of physician-network joint
ventures such as individual-practice associations - or
IPAs - the Alaska health care consumer will be faced
with seriously rising costs of care.
Health care in Alaska is provided by a diverse group
of professionals, including advanced nurse
practitioners, certified nurse-midwives, certified
direct-entry midwives, certified registered nurse
anesthetists, psychologists, social workers,
optometrists, podiatrists, physical therapists, to
name a few. These practitioners provide a broad
spectrum of affordable, accessible, high-quality
health care services to many thousands of Alaskans who
want to choose the provider that best meets their
needs. It is our concern that the physicians will
negotiate the exclusion of direct reimbursement of
these providers. If these health care providers
cannot receive direct reimbursements from insurance
companies, they will be put out of business, and
insured Alaskans will not be able to choose their
provider.
Current FTC regulations allow the formations of
physician-network joint ventures, with certain
safeguards. One of these is limiting the size of the
network in given geographic locations; the other is
that the network somehow has to lead to decreased
costs by some form of economy of scale. In exchange
for allowing physicians to negotiate together, the FTC
states that the public has to receive some financial
benefit. Senate Bill 37 would effectively remove
these constraints. [Proposed Sec. 23.50.020(c)(6)
states: "an authorized third party may not represent
more than 30 percent of the market of practicing
physicians for the provision of services in the
geographic service area or proposed geographic service
area, if the health benefit plan has less than a five
percent market share".]
Number 2021
MS. SENNER continued:
But [if] I'm reading this correctly, this means that
if a health benefit plan has more than a 5 percent
market share, there is no limit on the [size] of
physician networks. Furthermore, ... current FTC
guidelines state that joint ventures must ... share
substantial risk and constitute 20 percent, or less,
of the physicians in each physician specialty. Senate
Bill 37 removes any reference to specialty, allowing
all the physicians in a specialty to band together to
negotiate with the insurance entity. We have complete
sympathy with the physicians' desire to regain control
of their practice and not have health insurance
companies dictate how they practice - we deal with the
same difficulties in our practices - however, we feel
that [SB 37] tilts the balance too much in the favor
of physician networks and does not protect the
interests of health care consumers.
In order [to] restore this balance we recommend the
following changes to [SB 37]: Include language that
would prohibit physicians from negotiating the
exclusion of direct reimbursement by non-physician
health care providers, and ... [prohibit] them from
determining the settings other health care providers
deliver services in. And that ... has to do with the
nurse-midwives who want to be able to continue to
[have] births in birthing centers and in homes. And
the second [recommendation] is, maintain the exclusion
of price from the list of items large physician
networks can negotiate; by keeping this exclusion,
smaller physician networks can still negotiate price
under current FTC guidelines. We thank you for
considering our concerns; ... Alaskan nurses are
committed to providing quality, affordable health
care.
Number 2090
CATHY GIESSEL, M.S.N., R.N., F.N.P.-C.S.; Legislative
Representative, Alaska Nurse Practitioner Association (ANPA),
testified via teleconference. She said:
I know that most of [you] sought to serve in the
legislature of this great state in order to make a
difference, a positive difference, for the people who
live here. This legislation - SB 37 - will not make
circumstances better for Alaskans. It will have the
opposite effect for everyone who accesses health care.
The only people who will benefit are physicians, and
that will be to increase their income and control over
health care delivery. I'm sure you've already
reviewed opinions provided to you by the Federal Trade
Commission, as well as the two January, 2001, letters
from Attorney General Bruce Botelho. These documents
clearly articulate the legal improprieties of SB 37.
How will SB 37 harm Alaskans? Legal opinions and
experiential examples point to increased costs for all
consumers - whether privately insured or
Medicaid/Medicare - and limitations in the choice of
health care providers. [Senate Bill 37] places
physicians in a position to exclude the continued
free-trade practice of non-physician providers such as
nurse practitioners and certified nurse-midwives.
There are many locations in our great state where
health care is provided exclusively by nurse
practitioners. But even in urban Alaska areas, nurse
practitioners provide care for people who are declined
care by physicians.
A case in point is Medicare patients. Many physicians
decline to accept Medicare patients. My own father,
who lived in Fairbanks since 1948, was "fired" by his
physician of 25-plus years when my father became
eligible for Medicare. Why? The reimbursement from
Medicare was too low for physicians. Where should
Medicare patients go? To emergency rooms? Now you're
really talking high health care costs. Here in
Anchorage there is a physician-owned clinic and a
nurse practitioner-owned clinic located within one-
half mile of each other. The cost for a new patient
visit to the physician-owned clinic is twice the cost
of the same visit at the nurse practitioner-owned
clinic for the identical health needs.
CHAIR ROKEBERG interjected, saying that there were still
numerous people who wished to testify, and inviting Ms. Giessel
to fax any written testimony that she had to the committee.
MS. GIESSEL, to conclude, said:
What is more, the physician-owned clinic declines to
accept Medicare patients and sends them to the nurse
practitioner-owned clinic, who does accept Medicare.
In this example, who is demonstrating - by action - a
greater concern for health care sensibility, quality,
and need? And who is demonstrating more concern with
income and fee-related issues? Please make a
difference, a positive difference, for Alaskans by
rejecting SB 37. Thank you.
CHAIR ROKEBERG invited all the participants to fax written
testimony to the committee.
Number 2218
CYNTHIA EBELACKER testified via teleconference. She noted that
she is representing Alaska's 400-plus nurse practitioners that
work across the state - many in private practice - that she is
the immediate past president of the Alaska Nurse Practitioner
Association (ANPA), and that she owns a family-practice clinic
in Eagle River. She said:
At a time when your constituents are clamoring for
sound fiscal management and all Alaskans would welcome
more affordable health care, your committee is
spending time and money considering an unnecessary
bill that will do little to improve the so-called
quality of medical care, but which would eventually
raise the costs of such care. There is already an
antitrust law that permits physicians to negotiate
legitimate quality-of-care issues. It is a matter of
public [record] that the American Medical Association
[AMA] has equated quality of care with the elimination
of independent non-physician practitioners. Powerful
AMA lobbying and large AMA donations to government
officials pave the way for bills like this one that
come before you.
Make no mistake, this bill is not at all about
improved health care quality or lower costs. It is
about control by the powerful and the unfair
restriction of trade for a large group of highly
qualified, highly cost-effective, non-physician health
care providers, specifically, nurse practitioners and
nurse-midwives. The passage of this bill would allow
physicians and insurance companies to restrict third-
party reimbursement for independent nurse
practitioners. We are currently often reimbursed at a
lower rate than are physicians in private practice;
that cost savings would go away and insurance premiums
and deductibles will eventually increase to compensate
for that loss.
Number 2272
MS. EBELACKER concluded:
Many of our [businesses] will not survive, and tens of
thousands of Alaskans will lose their primary care
provider, especially ... in ... rural areas. Patients
will be forced to see more expensive providers, often
at a distance from where they live. Using the very
gentle wording of this bill, physicians could
negotiate contracts containing language about quality
or safety which can be used to limit or eliminate
consumers' ability to choose a non-physician health
care provider or keep the ones they already have. I
would ask that you don't become part of [the] current
health care crisis; we all need to work on real
solutions for improving access to health care and
decreasing the rising cost of care in this state.
This bill will not accomplish that. Vote no on this
bill. Thank you.
REPRESENTATIVE JAMES said:
The last two people have indicated that they feared
competition from the doctors charging more than nurse
practitioners or others, and somehow or other I can't
see that that wouldn't be already happening. ...
Knowing full well what they go through to be a doctor
- is not the same as a nurse practitioner - it seems
to me like they would, naturally, charge more; I don't
see that's where the competition is.
CHAIR ROKEBERG said: "Well, I think many times they're
reimbursed the same amount as doctors if they do the same
service. But maybe not; maybe that's what they fear."
MS. EBELACKER, in response, explained:
We are often reimbursed at about 15 percent less than
physicians. That's Medicaid's rate, and many
insurance companies follow that same rate. We're not
worried that we will be able to charge less. We are
worried that we will be put out of business. If
insurance companies are told that they cannot pay
nurse practitioners unless they work out of a
physician's practice, then independent practitioners
will receive no reimbursement. And 45 percent of my
population alone is Blue Cross or Aetna or other
insurance companies, and I would have to fold up.
Number 2351
CAMILLE SOLEIL, J.D.; Executive Director, Alaska Nurses
Association (AaNA), testified via teleconference and said that
as Senator Kelly stated, SB 37 was created to address the
instances where negotiations between physicians and [providers
of] health care benefit plans were not equal. She remarked,
however, that given the FTC concerns and the concerns of non-
physician providers in Alaska, [the AaNA] was prompted to look
at other alternatives to SB 37 that would benefit all health
care providers - not just physicians - in their negotiations
with health care benefit plans; would continue a competitive
market, which benefits consumers; and would not add an
additional layer of bureaucracy.
TAPE 02-46, SIDE B
Number 2376
MS. SOLEIL pointed out that AS 21.07.010, titled "Patient and
health care provider protection", states what provisions can and
can't be included in a contract between a health care provider
and a managed care entity. One of the things that is protected,
she explained, is the ability of a health care provider to
openly communicate with patients about all appropriate treatment
options. She suggested that it would be possible to expand this
section of current statute to include language ensuring an
equalized negotiation process between the provider and the
managed care entity. Such an alternative to SB 37, she opined,
would address concerns regarding inequitable bargaining power.
She urged members to support modification of [AS 21.07.010],
rather than adopting SB 37. If the committee does move SB 37
forward, however, she asked that it be modified significantly in
order to eliminate the FTC's concerns and ensure protection of
consumers and non-physician providers.
Number 2339
BARBARA E. NORTON, C.N.M.; testified via teleconference. She
explained that she is a certified nurse-midwife with a private
practice in Anchorage. She noted that she'd just recently
negotiated a contract with both Blue Cross and Aetna to operate
a preferred-provider birthing center; during those contract
negotiations, contrary to the sponsor's assertions, she was able
to negotiate every part of that contract, including price. She
relayed that her practice has collaborative relationships with
physicians, but none of those physicians supervise her practice.
She explained that her main reason for opposing SB 37 is that
physicians would be able to restrict her practice under the
guise of "quality issues"; for example, physicians could demand
that a physician be present at every birth, that every birth
take place in a hospital, and that only midwives who are
employed by a physician and bill through a physician's office
can bill the insurance company.
MS. NORTON relayed that about six years ago, when [Providence
Alaska Medical Center ("Providence")] changed its employees'
health insurance coverage, it restricted Ms. Norton's practice
for about a year by stating that employees seeking midwifery
services could only use midwives who were employed by doctors.
She added that because of this policy, her business lost a
significant number of clients. Thus, she indicated, the fear
that physicians will attempt to place restrictions on the way
insurance companies treat non-physicians is justified: "it will
happen, it has happened." With regard to what else physicians
would be allowed to do under SB 37, Ms. Norton said:
They can also address style-of-practice issues: they
could say that only continuous monitoring has to take
place. There are things that would definitely make it
difficult for midwives to practice midwifery. The
AMA, as [Ms. Ebelacker has] said, is actively trying
to restrict the scope of practice of non-physicians;
70 percent of my clients are insurance clients, and I
would definitely have to close my doors if [I] were
not able to be paid by insurance companies. My
clients, and your constituents, have a right to choose
their care provider, and I strongly oppose this bill.
Thank you.
Number 2260
KAREN DECKER-BROWN testified via teleconference. She indicated
that she is enrolled in a "family nurse practitioner course of
study," and said that there were three points which she wished
to address. For the first point, she noted that Senator Kelly
spoke only of how physicians would be aided by SB 37;
physicians, however, are not the only health care providers in
Alaska. For the second point, because Senator Kelly's wife
works in a doctor's office, Ms. Decker-Brown said she questions
what his motives are in sponsoring SB 37. "I think SB 37 is a
bill that's a wolf in sheep's clothing," she said, adding that
according to her understanding, the group of physicians that
brought this idea forward to Senator Kelly are the same
physicians that employ his wife; thus he would be indirectly
benefiting from passage of SB 37.
SENATOR KELLY pointed out that his wife is merely a receptionist
at a clinic; "it's not like she's ... pulling in huge bucks -
... we do it mostly for the health care opportunities."
MS. DECKER-BROWN continued. For the third point, she explained
that as a student, a group of physicians at a local Anchorage
clinic [acted as her preceptors], and that at the time, "they"
had in place an exclusive contract with a union. She said that
one of the things that she noted while working at that clinic
was that patients would express concerns about the fact that
before that exclusive contract took effect, they were able to
see a variety of health care providers such as nurse
practitioners. She added that that clinic only employs
physicians; has specifically stated that it will not employ any
nurse practitioners; and, at the time that she was there, only
employed male physicians. Such exclusionary practices, she
noted, limit Alaskans in their choice of health care providers.
Number 2132
STEVE CONN, Executive Director, Alaska Public Interest Research
Group (AkPIRG), testified via teleconference. He said that on
behalf of consumers throughout the state, he was testifying in
opposition to SB 37. He continued:
I'd like to use my two minutes, however, to relay to
you an event that [occurred] last month. I was
attending Consumer Federation of America [CFA], and
they had invited the head of the FTC. In the course
of his various listings of concrete acts, he pointed
out that he had sent a letter related to this bill to
Alaska, and he had sent one to the state of Washington
[which] hadn't responded to it concretely and
positively. We would be deluding ourselves to think
that passage of this bill will not result in a Federal
Trade Commission action.
So, in essence, the Department of Law, during this
period of fiscal crisis, will not only be called upon
to monitor the activities as laid out in the Act, but,
of course, will also have to prepare major litigation,
on behalf of the physicians, against the FTC. And I
suggest you change the [fiscal] note so that the other
members of the legislature have a sense of exactly how
much this bill is going to cost initially. We see no
cost advantage whatsoever to consumers, and we
certainly see a shrinkage of available practitioners,
both professional and lay, and we would ask you to
oppose this bill. Thank you very much.
Number 2084
KATHLEEN T. MELICAN testified via teleconference. She noted
that she owns and operates "a nurse practitioner group" that
runs a family practice walk-in clinic in the Spenard area of
Anchorage. She said:
I have grave concerns regarding how the passage of SB
37 would affect both the quality of health care and
the economic impact of health care on our consumers.
Many of my patients do have a primary M.D. provider,
but for various reasons they are unable to get into
see their M.D. provider when an unexpected illness
occurs. Also, many times minor problems occur that
M.D.s do not choose to deal with such as tourists who
lose or forget their prescriptions while far away from
home, or working parents who are unable to schedule
far enough ahead for their children's day care or
sports physicals or immunizations in order to meet
deadlines at the school department - failure to meet
these regulations results in lost school days.
If this bill passes and I need a collaborative
physician in order to stay open, I don't know where I
would find one who would work for the percentage of
the salary that I and my fellow nurse practitioners
work for. Our profit margin is very small. If we are
unable to continue to provide the wide range of
medical services that we do, at such affordable
prices, I am sure that many health care needs,
especially those that include routine health
screening, would be neglected. We all know that
neglect of routine health care screening and lack of
... ongoing care only lead to more complicated health
problems and increased costs for us all.
Number 2012
LEONARD SORRIN, Assistant General Counsel, Blue Cross Blue
Shield of Alaska, testified via teleconference. After thanking
the committee for this opportunity to testify, he said:
As you know, we have testified in opposition to [SB
37] in the past, and continue to strongly oppose the
bill. As [an] initial housekeeping matter, I would
like to point out that the question of whether health
plans can and do regulate the ... medical advice that
doctors provide their patients has been long settled.
I know of no health plan in the United States, ...
including the state of Alaska, that limits the
alternatives that physicians can freely discuss with
their members - their patients. In fact, that issue
was covered in the [Alaska Patients'] Bill of Rights
..., and prior to the [Alaska Patients'] Bill of
Rights, our contracts in Alaska expressly encouraged
providers to discuss the full range of options with
each and every one of their patients.
I would also point out that, initially, it seems to me
- and this may have been corrected in a subsequent
(indisc.) draft - there are still references to price
in the legislative findings, at the beginning of the
bill, that are, I trust, ... an inadvertent oversight,
and I similarly trust that price is genuinely out of
the bill. The list of items on which physicians can
bargain collectively, in our view, are either very
competitive in nature - so that if they don't
expressly include price, they include very important
terms on which physicians can and should compete with
one another on and, therefore, have the same sort of
negative effect on the market place, as would joint
price negotiations - or, in the alternative, the items
included in the laundry list on page 2 have already
been addressed in the [Alaska Patients'] Bill of
Rights legislation that we worked on collectively with
the Alaska Medical Association and with members of the
committee a year or two ago.
Number 1916
MR. SORRIN continued:
In addition, we have some serious concerns about how
the process might work, where a health plan ... would
end up negotiating clinical practice guidelines - or
coverage criteria - with certain providers in one area
of the state, and that coverage criteria would be
different than coverage criteria for your citizens and
constituents in another area of the state, or how we
would reasonably negotiate administrative procedures
in one area of the state that might or might not be
different than administrative procedures that we
negotiate in another part of the state.
I'm sure you can understand that ... if we are to
manage our networks efficiently and provide low-cost
health coverage to Alaska citizens, we need to
economize wherever we can. And ... Balkanizing - or
breaking up - these standards under which our network
operates in Alaska would certainly increase our
administrative costs and would increase, I think,
costs and confusion to Alaska consumers. I would
simply close by reiterating the fact that many of the
most important things regarding patient welfare and
the delivery of health care to your constituents is
already addressed in the "[patients'] bill of rights,"
and the protections purportedly afforded by this
legislation are therefore redundant.
MR. SORRIN concluded:
I think in closing I would like to emphasize for the
committee what I have emphasized in repeated
discussions with the Alaska Medical Association and in
meetings with members of the legislature, and that is
that we regularly discuss the full range of issues
included in this piece of legislation with network
physicians. While it doesn't amount to collective
bargaining with physicians, we regularly take into
account physician concerns on a wide range of issues.
In fact, our health plans in the state of Washington
meet regularly with physicians collectively, and
discuss issues including our "costs on fee" schedules
and what fee schedules might look like in the future.
Nothing under state or federal law prevents those
sorts of discussions from taking place as long as
they're not a collective negotiation on price. And I
would encourage the Alaska Medical Association and the
proponents of the bill to consider responding more
favorably to our offers to participate in those sorts
of discussions than they have in the past.
Number 1807
REPRESENTATIVE JAMES asked: "When you're indicating that you
want to have these negotiations on everything except price, ...
isn't it really price, what you're talking about?"
MR. SORRIN, in response, said:
I hope I didn't misstate. We don't want to have
collective negotiations with physicians on price or on
any other topic. We are happy to have collective
discussions with doctors and hospitals and other
providers, including nurse practitioners and any other
provider type in our network, on issues that concern
them and are of joint concern to Blue Cross Blue
Shield of Alaska and the providers in question. I
think that's quite a bit different than a collective
negotiation. But we have, I think, a long history of
reaching results for our state of Washington plans,
and in Alaska ... [of] reaching some degree of
consensus on matters affecting the delivery of health
care to your constituents. We're happy to engage in
those discussions, and we do so regularly. The Alaska
[State] Medical Association [ASMA] has indicated to us
that they are reluctant to engage in any significant
discussions along those lines, claiming they've been
provided legal counsel that it violates the antitrust
laws. It's simply not true.
REPRESENTATIVE JAMES asked: "Why are you having this discussion
if it's not going to affect anything you're going to do?"
MR. SORRIN replied:
I'm not saying it won't affect anything we do, but
what the antitrust laws require is that you can engage
in these collective discussions. But what happens is,
then, the health plan - or the party; whether it's a
health plan or a automobile manufacturer, the law is
the same - ... needs to go back and exercise its own
independent judgment whether the, here's an example,
fee schedule would go up, would go down, how much it
might increase, and then offer it to the physicians.
That's very different than a collective negotiation.
It's not to say that it can't be a result, or that you
can't change a particular policy or procedure that
governs a certain part of your relationship with the
doctor, but it simply means that it's not a collective
negotiation. The health plan goes back, takes the
provider's concerns into account, and makes its own
business decision about whatever results it believes
is in the best interests of the Alaskan consumers of
health care.
Number 1687
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General, Fair
Business Practices Section, Civil Division (Anchorage),
Department of Law (DOL), mentioned that he wanted to first start
out by explaining a little more about the country's fundamental
policy on competition and why it's so important for our nation's
economic health. He said:
It exists primarily through the nation's antitrust
laws. And there are exceptions to antitrust laws,
which favor competition, but they allow exceptions
under certain circumstances where there are sufficient
safeguards, through regulation, to allow another
entity to control those kinds of things. So, if you
start with the premise that competition is good, if
you're going to take competition away, you can do so
only if you have sufficient government oversight.
And in this particular case, the state action doctrine
is a doctrine that can apply to a whole number of
different kinds of businesses and entities; it's not
limited only to these particular kinds of facts. The
state, if it wants, can enact a state action doctrine
to allow negotiations on just about anything; it has
to be clearly articulated and it has to be [a]
substitute for competition. In this particular case,
the FTC and our office have provided extensive written
testimony that this particular bill will not satisfy
the state action doctrine because it doesn't provide
the level of oversight required to satisfy the
niceties of that doctrine. And we have that spelled
out in letters and other things that we've submitted
to the committee.
Having said that, though, I want to say that with the
removal of price terms from this bill, there certainly
is ... less of an impact on competition, especially
the impact that the antitrust laws are concerned
about. And FTC director of [the Office of Policy
Planning, R. Ted Cruz], testified before the [House
Labor and Commerce Standing Committee] that without
the price provisions in this bill, really, this bill
is not necessary. Physicians can already negotiate
quality-of-care issues with health care insurers;
you've heard testimony from the [Blue Cross Blue
Shield of Alaska] representative who explained how
that already continues.
MR. SNIFFEN concluded:
So without these kinds of terms, we really do question
the need for this kind of legislation. It would just
create another layer bureaucracy that physicians would
have to go through in order to engage in the kinds of
activities that they can already engage in without
that level of bureaucracy. And if this is intended to
create a sort of safeguard of some kind for the
physicians in the event these negotiations might
include some price-related quality-of-care terms, it's
already been established, at least by the FTC and by
our office, that this structure would not protect the
physicians from that. So there really isn't a
safeguard aspect of this bill that has any purpose,
and if it's simply to allow quality-of-care issues, we
also submit that it has no purpose.
Number 1546
REPRESENTATIVE JAMES indicated that Mr. Sniffen's comments
reflect her understanding of how things are supposed to happen.
She suggested that in actuality, however, what is supposed to
happen doesn't happen. She asked: What are patients to do when
they can't get the doctor to do what they want them to do
because the insurance company won't cooperate? Where are the
patients' rights then?
CHAIR ROKEBERG opined that those rights are already there; "We
already have them in the bill I passed two years ago.
REPRESENTATIVE JAMES said she understood that concept, but added
that she didn't think "they're" doing their job.
CHAIR ROKEBERG noted that there has also been legislation
adopted that allows the director of [the Division of Insurance]
to follow up on complaints made by individual insureds.
REPRESENTATIVE JAMES said: "I don't want to be argumentative
here, but there is something that's not working." She said that
as a member of the general public, "we are being led down a path
of no choice for us to even affect the charges of the price of
the insurance and/or what they cover, and the prices go up on
the insurance and what they pay goes down, and there is
something wrong with that picture."
MR. SNIFFEN replied that he understood and appreciated that
concern. He opined, however, that SB 37 won't necessarily be
able to affect that situation. "If physicians are able to
collaborate and negotiate on certain things that might impact
price, I think the end result would only be that your health
care premiums might go up, but there's certainly debate on
that," he added. He observed that Chair Rokeberg's Alaska
Patients' Bill of Rights was an attempt to address some of those
issues, and noted that there are folks from the Division of
Insurance present who could possibly provide additional answers.
SENATOR KELLY asked Mr. Sniffen: "Have you ever gone through a
health care provider contract."
Number 1452
MR. SNIFFEN said he has been provided with samples of various
contracts from the state medical association; "I can't say that
I've gone through them in any detail, but I've seen them."
SENATOR KELLY noted that during the three years that this
legislation of his has been going through the process, it has
been altered "over and over and over again" to address Mr.
Sniffen's concerns. He added:
You said there were problems with the bill, but you
wouldn't provide any solutions; well, you tried to
early on, but then your bosses shut you down - I'll
give you credit for that. But the fact is, ... we've
changed the bill for you ..., and now you say it's
doesn't ... do anything.
The fact is, I think if you had read some of these
health care provider contracts, you'd see that there
are plenty of things in there that deal with non-price
issues that are very important to our constituents,
that allow the physicians to discuss these things in
negotiating with an insurance company, that have
nothing to do with price. But if this bill wasn't in
place, they would be slapped by the FTC.
SENATOR KELLY concluded:
It does do something; it still does something even
after all the considerations for your department. And
those are the things that really deal directly with
our [constituents], and that is ...: What are the
things that the doctor can stand up to these large
insurance companies [on] and say, "I need to negotiate
in favor of ... my patient." Those things are still
in here; they're valuable, and they allow the doctors
to negotiate and to just discuss these things between
themselves, before they negotiate with these
companies, without getting slapped by the FTC.
Number 1366
MR. SNIFFEN responded:
I don't know if there's a question in there, Senator
Kelly, but I thank you for your comments. I have just
some brief responses, and I appreciate everything you
say. I don't know that physicians, currently, could
not negotiate on some of those quality-of-care issues
that you find in those contracts now. You are
speculating that the FTC would come down on them, and
we've heard testimony from the FTC before the [House
Labor and Commerce Standing Committee] that they
could, in fact, negotiate on some of those issues. So
it would be up to them, I suppose, to determine
whether or not the kinds of things they were
negotiating on were, in fact, allowable or not.
CHAIR ROKEBERG asked whether Mr. Sniffen could comment on:
The market share percentages: the 30 percent of
market for practicing physicians, for the authorized
party; the less than 5 percent market share [to]
determine number of covered lives; and then ... the
geographic service area consisting of 40 or fewer
individuals.
MR. SNIFFEN replied:
I can, and let me say I think in other legislation
that has been passed in Texas, there are some
restrictions on the geographic market areas that
providers can negotiate in, and they have restrictions
on specialties, [and] they have restrictions on
percentage. I think in this bill it says essentially
up to 30 percent of the physicians can negotiate with
a health benefit plan if they have more than 5 percent
of the market share; if the health benefit plan has
less than 5 percent, then 100 percent of the
physicians in an area can negotiate; and the attorney
general has some discretion under this version to
restrict those sizes under certain circumstances.
That might allow, for example, an area where there are
limited specialties -- and maybe [in] Juneau there are
only three allergists; those allergists may comprise
100 percent of the allergy specialty market for those
services in Juneau, but they might not ... comprise
... 30 percent of the market of physicians here. And
those are issues that were raised by someone else
earlier, as well, that are problematic. But I have to
say that if we're talking [about] just negotiations
about quality of care, these geographic market issues
are really not as important simply because those
things can already be discussed anyway. So, I don't
know that under this scheme, if we're not worried
about whether or not this is an antitrust violation,
if it really makes that much difference.
CHAIR ROKEBERG remarked that the attorney general's office has
provided a "pretty big fiscal note on this." He asked, "Is this
bill going to take an assistant attorney general to bird-dog
this thing all the time?"
Number 1219
MR. SNIFFEN replied: "Just a half of one, and we have 'half of
ones' around that are certified." In response to a question, he
remarked that in response to amendments made to the bill, the
fiscal note has been reduced to $113,000.
CHAIR ROKEBERG said there seems to be some question about
"transparency" in SB 37; he indicated that it says a written
decision is required from the attorney general's office if "it's
disapproved" but not if "it" is approved. Therefore, he opined,
anybody that disputes whatever the decision was wouldn't have
"grounds" in terms of a legal report, and so would not "know how
to approach any disputation of the findings." He asked, "Do you
think that's an appropriate situation?"
MR. SNIFFEN said: "If I understand your question, ... you're
saying that in the event that a contract is disapproved, there
is no mechanism in the bill to provide an opportunity for
interested persons to appeal that decision...?"
CHAIR ROKEBERG said: "No; as I understand it, if you disapprove
it, doesn't the attorney general have to ... issue a report with
the findings on the basis of disapproval?"
MR. SNIFFEN offered that that is his understanding of the bill.
CHAIR ROKEBERG said: "But shouldn't it, conversely, also be
that way?"
MR. SNIFFEN replied:
I've read those comments by the FTC as well, and the
suggestion there is that if it was approved, there
should be some basis for the approval as well, to give
the consumers an opportunity to understand why it was
[that] these competitive forces were being adjusted,
according to the negotiated contract. Yes, I do think
that makes some sense.
Number 1089
BOB LOHR, Director, Division of Insurance, Department of
Community & Economic Development (DCED), said that the primary
mission of the Division of Insurance is to protect Alaska
insurance consumers, indicating that to this end, the division
opposes SB 37. He elaborated:
We oppose this legislation because, number one, the
bill is simply unnecessary, since the [Alaska
Patients'] Bill of Rights already addresses the issues
raised by the physicians regarding the quality of
care. Second, it will increase the cost of health
insurance and thereby the number of uninsured
Alaskans. Third, it will discourage insurers from
entering or remaining in the Alaska market. And
fourth, specific problems regarding health insurance
[benefits] should be addressed by the legislature, not
health care providers, for the protection of insured
Alaskans.
This bill would apply to less than 20 percent -
actually it's less than one in four, about 23 percent
- of Alaskans: 115,000 out of a total of more than
500,000. [This] means that the remaining 70-plus
percent are either uninsured or covered by a health
plan that is not subject to [SB 37]. This bill also
does not apply to federal employee programs, State of
Alaska, Medicaid, Medicare, Indian Health Service, or
other government payors, as well as the largest
private employer in the state, which are self-funded.
This bill would harm those Alaskans that are most
vulnerable, specifically, small Alaskan employers and
individual families that purchase health insurance
through a health care insurer.
MR. LOHR, noting that the proponents of the bill have made a
number of statements regarding why SB 37 is needed, pointed out
that written testimony provided by the division rebuts, in
detail, each of those claims. With regard to the issue of
quality of care, he emphasized that quality-of-care issues were
addressed in the Alaska Patients' Bill of Rights, which became
effective July 1, 2001. Under that legislation, the provider
contract must protect the ability of the provider to communicate
openly regarding treatment options. There is clear-cut
language, he noted, that prohibits insurers from imposing gag
orders or discouraging a provider from discussing all
appropriate options, including potentially higher-cost options.
Number 0921
MR. LOHR posed the question: Why do insurers contract with
providers? He answered that they do it primarily to get lower
cost health care services for their insureds and to protect
their insureds by assuring that a provider they contract with is
properly licensed, has the proper credentials, and maintains
medical malpractice insurance. He noted that currently, there
are no health maintenance organizations (HMOs) in Alaska and
only limited health managed care. Health insurers in Alaska do
not provide care, he explained, unlike those in the Lower 48;
they are simply payors, they are not medical care providers, and
they do not make medical decisions. Health insurers merely
decide what services will be covered under an insurance contract
with an Alaskan insured. Mr. Lohr indicated that the division's
written testimony also covers a number of other points that
rebut proponents' claims.
CHAIR ROKEBERG asked Mr. Lohr to comment on Representative
James's experience and address her concerns. He posited that
Representative James has voiced concerns held by every consumer
in the state, adding that perhaps those concerns stem in part
from the fact that the Alaska Patients' Bill of Rights did not
go into effect until just July of 2001.
REPRESENTATIVE JAMES, at the request of Mr. Lohr, relayed again
the experience she had regarding dental services her husband
received. She added that she objects strongly to Aetna's
practice of using information pertaining to Anchorage to
determine the UCR for Fairbanks, since the cost of living is not
the same for those two areas.
MR. LOHR noted that UCR is the fancy term for Usual, Customary,
and Reasonable [Fees], that this term refers to an actuarial
technique used for determining how insurance companies set their
reimbursement levels, and that it is one of the areas of concern
about which the division receives the most consumer complaints.
He explained:
Our regulations in that regard are largely procedural
in nature, that is they deal with, "Has the update
been done within every six months, as required," and
that sort of thing. But the basic notion of UCR is
somewhat like credit insurance in that it is perceived
by costumers as an unfair system of reimbursement.
But the purpose of it, as I understand it, is to
contain the highest cost providers from getting full
reimbursement for their services, otherwise there is
no incentive whatsoever to control the fee set when it
is being reimbursed by an insurance company. And what
this does is use an averaging mechanism to establish
the basis for reimbursement.
REPRESENTATIVE JAMES pointed out, however, that service
providers merely turn to their patients for any amounts owed
beyond the UCR calculation, indicating that this system of
reimbursement does nothing to contain providers - there is no
incentive for providers to control their fees. She added that
in her situation, she would not have let the dentist go unpaid,
and that it was a reasonable charge for the services rendered.
Number 0610
CHAIR ROKEBERG referred to the amendment regarding multiple
employer welfare arrangements (MEWAs), and asked Mr. Lohr to
comment.
MR. LOHR explained:
A MEWA is an acronym for a multiple employer welfare
arrangement. ... Basically, it's an entity designed
to provide insurance coverage to more than one
employer. And it is substantially similar to some of
the arrangements that are being discussed in the
Fairbanks area at this time. And the question that
came up ... from staff was, "Well, if Fairbanks
physicians are promoting the bill, why wouldn't it
make sense once the bill takes effect, if it does, for
it to be applicable to MEWAs - to these organizations?
Why would they want to be excluded from the provisions
of the bill?" And I believe you raised a question,
and the division responded to you by letter, outlining
the legal rationale for retaining coverage of MEWAs
under this legislation.
CHAIR ROKEBERG added: "In a nutshell, it's because they're
actually acting as insurance companies. And there's issues that
relate to solvency, and other issues that demand [a] certain
modicum of regulation."
MR. LOHR said that is correct. He pointed out that currently,
MEWAs are treated exactly like insurance companies under Title
21; the Alaska insurance code requires "substantial capital and
surplus requirements," the same as is required when forming an
insurance company. "That, to us, appears to be excessive," he
remarked, noting that there is legislation pending that would
address the requirements regarding the formation of MEWAs and
which would set a more realistic capital reserve level.
CHAIR ROKEBERG asked: "So you would agree that we need to
maintain the regulatory control of your division over any of
these particular amalgams of businesses or other groups?"
MR. LOHR said he would agree. He said he believes the amendment
regarding MEWAs is an appropriate one.
CHAIR ROKEBERG said he strongly believes that a MEWA is a very
positive thing for the state of Alaska; he asked Mr. Lohr to
comment
MR. LOHR said he agreed completely, "provided it is a proper
MEWA." He noted that there are some entities "outside" that
have caused havoc because they have sought to use the term MEWA
as a way to try to escape state insurance authority and claim
exemptions.
Number 0351
BECKY DEDURA (ph), Director, FTC Resource Center on State
Legislation (ph), American Medical Association (AMA), testified
via teleconference in support of SB 37. She said:
I basically just wanted to counter some of the
objections to the bill that you've heard about from
both the FTC and your Department of Law there in
Alaska. I know one of the key arguments against this
bill at this time of course is that there's
insufficient active state oversight; I know that in
support of that proposition, the FTC and the [DOL]
both have cited ... the [Federal Trade Commission v.
Ticor Title Insurance Co.] case, which is founded on
the presumption here that there be inactive state
oversight - inappropriate active state supervision -
simply by agreement among private parties. And I do
want to point out a distinction in the Ticor case,
which is that it involved four title insurance
companies, in four different states, that basically
agreed to some sort of illegal price fixing.
And I do want to distinguish that from the construct
you have in front of you in your bill, in that we're
talking about two different parties here, not four
common (indisc.) insurance companies, that want to
agree. In other words, ... two different groups of
physicians that would want to come together and agree
to terminology. Also, the key proposition that came
out of Ticor, as well, was one of the negative option,
which allows for an approval - a deemed approval - of
a particular proposition, in this case the rates, if
they didn't hear back from the oversight entity.
In the construct that you have before you in [SB 37],
it's very clear that there must be specific approval
by the attorney general after a proposed contract is
agreed to by both parties. And of course that
proposed contract won't be finalized until final
attorney general review and approval. So, I do want
to distinguish that. Certainly, in our opinion, we
... strongly believe that there is sufficient active
state oversight, ... [but] I know in the FTC's letter
there's ... reference to ... insufficient attorney
general authority to approve and disapprove the
negotiations.
Number 0172
MS. DEDURA continued:
I do want to point out that before negotiations can be
entered into, approval must be sought from the
attorney general, and there's a final signoff at the
very end, which will alleviate a number of the
concerns that we've heard today, both from the nurses
and other concerns as well; if there are any
inappropriate terms that come out of those
negotiations, that is something that the attorney
general will be looking for, and that final contract
will not be approved.
I also want to address the issue and concern of this
legislation leading to price fixing. As Senator Kelly
pointed out very early in this hearing today, that
remains illegal under this construct; there's nothing
in this bill that will permit price fixing. It
remains (indisc.) illegal, and, quite frankly, we need
to recognize that this is a construct that's voluntary
in nature. There will be no price fixing absent any
agreement by the insurance companies, they have to
volunteer to come to the table, and whatever final
contract they want to negotiate, again, there must be
agreement, and, again, there must be signoff by the
attorney general. ... I think it's quite clear that
that's not a scenario that can come about under [SB
37], and there are numerous layers of (indisc.)
processes in place here.
I also want to address the arguments we have heard
that in terms of the quality-of-care issues, there is
already a sufficient construct in place for physicians
to address these issues with their insurance
companies. That is something we have heard about over
the years: ... [that] physicians currently can
negotiate with insurers over quality-of-care issues.
There has to be such a high level of integration -
such a high threshold that's met - that this makes it
virtually impossible for the physicians to do. And
that of course is why you have this bill before you
today; the level of integration required currently
under federal law requires significant financial and
legal integration.... It also requires physicians to
integrate; in other words, you don't have autonomous
practice by physicians any more. And I think that
those are not risks that we wanted to take.
TAPE 02-47, SIDE A
Number 0001
MS. DEDURA continued:
I know that physicians are able to basically seek
letters [inquiring whether or not] the level of
integration that they are currently going through
would meet with the [U.S.] Department of Justice
standards; they can receive some sort of opinion
letter back at some point in the process. But, again,
that is not a blessing for the Department of Justice;
the level of integration that they are seeking for
purposes of negotiating will be sufficient when they
reach the endpoint process. So after going though all
of that - the significant expenditure of funds, of
course - they may still not be able to negotiate. And
again, that is something that they're trying to
address within this bill.
I'd be happy to answer any questions any of you have,
but I was very concerned with a number of the
arguments I saw in ... FTC and Department of Law
letters. These are arguments we saw both ... down in
Texas and in New Jersey just prior to both of their
bills passing. And I know [that] three years after
Texas's law [passed], ... we have seen a couple of
groups go through the approval process and we haven't
seen further objections from the Federal Trade
Commission. I don't know if that means that the
process has now been found to be sufficient, but the
actual processes in terms of pre- and post-approval of
contracts do not differ significantly. So, I want to
point that out, and let you know [that] in our
opinion, this is a very sound bill, and certainly one
that needs to be a construct of [a] state action
doctrine. Thank you.
Number 0122
CHAIR ROKEBERG remarked that he'd raised the issue of
"transparency." He asked Ms. Dedura whether she sees anything
wrong with asking the attorney general to write a report if he's
approved the negotiations.
MS. DEDURA said that although she did not see that as
problematic, if something that both parties have agreed to is
approved, she would hate to waste the attorney general's time by
requiring a report to accompany that approval.
CHAIR ROKEBERG said that it seems to him that the public ought
to know what the grounds are, both for approval and for
disapproval.
MS. DEDURA commented that according to her understanding of SB
37, the report detailing reasons for disapproval would be given
to the parties involved in case either party objected to that
decision; if a contract is approved, however, it means that both
parties are satisfied with the outcome and so a detailed report
would not be necessary.
REPRESENTATIVE JAMES posed the situation in which consumers
objected to a contract reached through this type of negotiation;
she asked whether the consumer oughtn't to be able to learn what
the grounds for approval were.
MS. DEDURA said she was not aware of any mechanism in the bill
by which members of the public - consumers - could object to the
outcomes of this negotiation process.
REPRESENTATIVE JAMES pointed out that the purported purpose of
the SB 37 is to protect the public.
Number 0317
CHAIR ROKEBERG agreed. He asked, "Is there no transparency at
all, even on disapproval?"
MS. DEDURA said:
I'm sorry, I must be misunderstanding your question.
... Your concern is whether there should be something
on record for the public to observe? Should there be
objections by the public, even though the other two
parties have agreed to it?
CHAIR ROKEBERG said: "I can't think of this being proprietary.
Could it be?"
MS. DEDURA replied:
I couldn't think of a good reason why that would be
the case. I do know that there are standards; my
understanding is that there is a standard by which the
attorney general will review the proposed contract in
terms of looking at ... whether the anticompetitive
benefits outweigh the others. And if that's the case,
I'm assuming that approval means that it did meet that
standard. If there seems to be a need for more
specifics in drawing those conclusions, I personally
wouldn't find that objectionable if that meets with
your environment there.
REPRESENTATIVE COGHILL noted that page 5 of SB 37 contains the
criteria regarding approval; they are set out in subsections
(f)(g) and (h). He posited that if there was a deficiency in
any of those criteria, it would be noted in the disapproval
report. "We could ask for report on [the approval], but the
fact is, they've got go through this filter before they can get
an approval, so I think that it's understood that those would be
scrutinized," he added. He said that he is satisfied that the
criteria will be used to filter through requests.
Number 0469
MIKE HAUGEN, J.D., M.B.A.; Executive Director, Alaska Physicians
& Surgeons, Inc. (APS); said that his organization, which is an
individual practice association (IPA) representing about 160
doctors - a multi-specialty group - strongly supports SB 37.
Commenting on points raised by opponents of SB 37, he said:
The nurses had, in their view, a valid concern that
physicians may be trying to cut them out of contracts
if this bill were to go forward. Senator Kelly put an
amendment into the bill on page 6, line 9, several
committees ago, to address the concern. And basically
what this amendment said was that if the physicians or
the health plans tried to cut any other provider group
out, that would be, per se, against the law, and it
continues to be. And I know you've got another
amendment in front of you today ... - a two or three
line amendment - that basically reiterates the same
point. The physicians have no desire cut other health
provider groups out of a contract, and effectively, if
an insurer and a doctor try to do that, that's a
conspiracy - it's against state law and it would be
against federal law. That's the first point. So
we've tried to address the nurses concerns.
The second point is that I firmly believe that there's
great utility in allowing physicians to negotiate
these non-fee- or non-price-related items. The Alaska
[Patients'] Bill of Rights was a great document and it
was a great start; it contained a limited list of
contractual prohibitions that insurers could no longer
insert in contracts, like gag clauses, for example.
But there are literally dozens, and potentially
hundreds, of other examples of non-price-related terms
that are very important for physicians to be able to
negotiate, on behalf of not only themselves - I'm
going to be upfront and say there is a component of
this bill that addresses physicians' anger at the
current state of affairs - but there are also many
non-fee-related issues that will help patients.
For example, contracts are routinely written that
require no mutual written consent to change the terms
of the contract. So if a doctor did not read the fine
print of a contract and signed it, what has he really
got? Two months down the road, the terms of the
contract could be changed unilaterally. That has
happened with great regularity across the country.
Another example is unilateral compensation rate
changes without notice. This is an area where non-
fee-related issues start to blend into fee
discussions. And this is one of the reasons why
physicians need this kind of protection. We're not
talking about a rate schedule when we're talking about
unilateral changing of what they're going to get paid,
but the doctors are often not even notified, ... and
they have no ability to say no, other than to try to
cancel the contract. There are credentialing issues,
quality-of-care issues, utilization review issues,
that directly affect patients.
Number 0673
MR. HAUGEN continued:
One of the things that was left out of the
"[patients'] bill of rights" was something called the
definition of medical necessity. Now, that is a term
of art that basically means who gets to decide - is it
a physician or some clerk in [an] insurance company -
whether or not a service is covered.... Under this
bill, we could actually negotiate a definition of
that, and advocate for patients. Doctors simply will
not negotiate these non-fee-related and non-price-
related terms without some sort of protection like
this, because the slope is too slippery between what
may be construed as [a] non-fee-related issue blending
into something that might affect price.
An example would be medical necessity. If the
physicians were to advocate for a very strong patient
oriented medical necessity definition, that may in
fact cost more for an insurance company, but in the
collective physicians' opinion, it may be a much
better thing for patients. And if an insurance
company didn't like the way the negotiations were
going, all they would have to do is pick up the phone,
dial an 800 number, and call the FTC and basically
anonymously tell the FTC, "The doctors are trying to
affect price - they've gone too far."
Now, that's the reason the doctors won't negotiate
these terms; unless you carve out, under the state
action doctrine - and that's a state's rights issue -
the ability to protect the physicians in this area of
discussions, the status quo will remain. And
ultimately it's the physicians who advocate for
patients, not the insurance companies. It's a one on
one relationship in that office, and when you're sick,
that's the one you go to. And right now, they are
basically gagged, not in the sense of treatment
options but on a whole host of other issues, because
the fear level is just too high.
Number 0790
CHAIR ROKEBERG asked Mr. Haugen if he thinks the ability of a
group of physicians in a community to bargain for the definition
of medical necessity is what SB 37 is all about.
MR. HAUGEN replied that that is not the only purpose of SB 37;
the definition of medical necessity would merely be one of the
issues that could be discussed. Whether an insurance company
would actually sit down with a group of physicians and discuss
that issue or any other is a debatable and open question, he
added, since SB 37 merely establishes a voluntary process.
REPRESENTATIVE JAMES surmised, then, that:
Because of the trap ... that ... doctors would be in
by even wanting to discuss these issues, ... they're
chilled from doing anything at all. And this, as long
as we have it in statute, ... we've established what
they can do, so that gives them protection.
MR. HAUGEN said: Exactly; it gives physicians a lot more
protection than they have now, which is effectively none.
REPRESENTATIVE JAMES also surmised, then, that although people
have testified that doctors "can do these things now," because
it's not written in statute, doctors are under the impression
that they cannot do "these things." Further, that doctors think
that "if they did do that, they could be dumped over the side
then, into the Federal Trade Commission challenges."
MR. HAUGEN said that is correct.
SENATOR KELLY said: "It happened."
CHAIR ROKEBERG clarified that the FTC has already investigated a
group of Fairbanks physicians. After noting that no one else
wished to testify on SB 37, he closed public testimony.
Number 0944
CHAIR ROKEBERG moved to adopt Amendment 1, which read [original
punctuation provided]:
Page 7, Line 15, after "include,"
Delete: "a multiple employer welfare arrangement
or"
CHAIR ROKEBERG, noting that there were no objections, announced
that Amendment 1 was adopted.
Number 0950
CHAIR ROKEBERG moved to adopt Amendment 2, which read:
Page 2, line 13, following "subsection":
Insert ", but may not negotiate the exclusion of
providers who are not physicians from direct
reimbursement by a health benefit plan, and may not
negotiate the setting in which providers who are not
physicians deliver services"
CHAIR ROKEBERG, noting that there were no objections, announced
that Amendment 2 was adopted.
CHAIR ROKEBERG announced that SB 37 [as amended] would be held
over so that he could look at the "transparency issue."
HB 472 - PAWNBROKERS/SECONDHAND DEALERS
Number 0991
CHAIR ROKEBERG announced that the last order of business would
be HOUSE BILL NO. 472, "An Act relating to persons who buy and
sell secondhand articles and to certain persons who lend money
on secondhand articles." [Before the committee was CSHB
472(L&C).]
Number 1021
LAURA ACHEE, Staff to Representative Joe Green, Alaska State
Legislature, sponsor, on behalf of Representative Green, said
that under current statute, all secondhand dealers - which is
defined as anyone in the business of buying and selling
secondhand articles or lending money on secondhand articles -
are required to keep a record of every item that they purchase
or take in pawn, and as part of that record, they are required
to obtain the name, age, address, and signature of the person
selling the item. She explained that HB 472 requires that
businesses regulated under this proposed statute provide weekly
reports of those records to their local police departments. She
said the reason Representative Green sponsored HB 472 is that
items stolen in a particular community don't always stay there -
sometimes items go to other communities; therefore, it is
necessary to institute a statewide law.
Number 1100
DAVID HUDSON, Captain, Administrative Services Unit, Central
Office, Division of Alaska State Troopers (AST), Department of
Public Safety (DPS), testified via teleconference in support of
HB 472. He said that HB 472 will benefit law enforcement: "It
will allow us to increase our ability to track stolen property
and ultimately identify a person last in possession of those
items." He briefly mentioned that an amendment discussed in a
prior committee pertained to defining secondhand brokers, adding
that he has not yet seen that language.
CHAIR ROKEBERG relayed that a few years ago he had an item
stolen from his home. He said that he had difficulties: at
that time there was only a "half a person" at the Anchorage
Police Department (APD). He asked Captain Hudson what level of
manpower he intends to devote to "a detail" to handle this type
of crime in the future, and what level is available now.
CAPTAIN HUDSON said that currently there is no detail that
tracks [stolen property]; there is not a specific person
assigned to this task, and the AST does not anticipate assigning
anyone to it in the future. What the AST is expecting out of
passage of this legislation, he added, is that the information
gathered will at least be forwarded to law enforcement so that
they can use it when the need arises.
CHAIR ROKEBERG asked whether the AST has sufficient hardware and
software to "be able to track this if it is not on a diskette or
DVD."
CAPTAIN HUDSON said that according to his understanding, it has
not yet been determined what specific format will be used in
forwarding the information to local law enforcement; therefore,
he is unable to say at this time whether the AST has the
sufficient hardware/software.
CHAIR ROKEBERG explained his biggest concern:
We're throwing the net out and including a lot of
secondhand stores that really haven't had to have
[reporting] requirements before, ... whereas
pawnshops, usually under municipal ordinance, have
them. But secondhand stores like antique shops,
secondhand books, although they're excluded, I
believe, under the bill -- there's a litany of other
types of secondhand shops. ... Are secondhand or used
automobiles in any way tracked, currently?
CAPTAIN HUDSON said that secondhand vehicles will be exempt from
the provisions of HB 472, and are not currently tracked
specifically for the purpose of determining whether they are
stolen goods. He noted, however, that all vehicles, including
secondhand vehicles, are tracked through the Division of Motor
Vehicles' registration process, which allows law enforcement to
determine whether a vehicle is stolen.
Number 1318
DAVE ADAMS testified via teleconference in support of HB 472.
He posited that an experience he had ties into the genesis of
the bill. He elaborated:
My office was burglarized in August of 2000. And I
believe that if the bill was in effect at that time,
that we may have solved a crime - the theft of some
property from my office which is irreplaceable. The
appraised value of the theft was about $14,000. I've
been talking off and on with ... Anchorage Detective
Balega ever since that theft, and one of the problems
that he noted was he'd felt like the merchandise had
left the city of Anchorage and the pawn records that
would work in Anchorage for them to trace the property
were not in effect statewide; [the property] probably
went to the peninsula or to Palmer/Wasilla area. If
the reporting was in effect, we could have traced the
material down.
... This is the first time anybody's heard this out
loud, what I'm going to say now: Two very personal
and valuable items were stolen that are irreplaceable,
they cannot be replaced, no amount of money or an act
of God could replace these items. However, the
criminals saw fit to take some other item with them -
and I will not describe it anywhere outside of talking
to the police - [that] is highly traceable. And we
had hoped over the intervening months that that item
would have been taken to a pawnshop. We could've, by
finding that item, found our way back to the
irreplaceable items that I'll probably never see
again.
MR. ADAMS concluded:
So the scope of a bill like this is much greater than
meets the eye. So, I would encourage you to support
it. Yes, there may be some cost. If it costs the
business people something, well, how many thefts, how
[much cost] must the public, like myself - $14,000 -
have to bear; if you tracked all of the lost value in
un-recovered property, I believe this bill would pay
for itself to the public in recovered property.
Secondly, it may provide a deterrent effect; these
criminals are smart enough to leave Anchorage with the
things that they steal here. Well, that's because of
the ... [ordinance]. If the ... [concept of the
ordinance] goes statewide, there's a good possibility
that ... [it'll] have a deterrent effect on the
professional criminal that we believe struck my office
and property.
Number 1487
CHAIR ROKEBERG thanked Mr. Adams for his testimony, and said to
him:
I'd also like to share with you the fact that a few
years back, my wife's engagement ring and her mother's
wedding ring and engagement rings were stolen from my
household, we think by domestic help. And even though
we knew who stole it, and I hired a private detective
to run them down, ... I had a great deal of
frustration with the Anchorage Police Department
because they had a half person assigned.... ... We
verified later that my suspicions were correct, but
the rings and the jewelry - ... worth in excess of
$20,000 - was not recoverable because they dealt them
right away for drugs. ... So, those, too, were
irreplaceable because of sentimental value....
CHAIR ROKEBERG said that he did not share Mr. Adams's faith that
enacting HB 472, only to have the records just sit in a corner
of someone's office, will be that helpful, adding that if the
proposed reporting requirements could be incorporated into an
automated system, he might feel a lot more comfortable with the
bill.
MR. ADAMS remarked that if Chair Rokeberg were to talk to
Detective Balega, he would share that Mr. Adams has a high
degree of perseverance regarding this [issue]. "I would go
myself and look at those records, as I'm sure at the time you
would have also gone to look at the records, even if the
department's weren't staffed to do it; the problem is, there's
no place for this information to come into one point," he said.
Even today, he added, he would gladly go sit down and look at
all the records if they'd be brought together.
CHAIR ROKEBERG said that is a good point, particularly if "they"
could be automated and entered into a database that could be
sorted.
Number 1574
JERRY CLEWORTH testified via teleconference. He said
Word of this bill is just starting to circulate in
Fairbanks, and for a lot of us that ... come under
this new definition of secondhand dealer, there's a
lot of concern. I'll just give you my case. I own a
coin shop here in Fairbanks; a lot of the business
that I do is bullion-related. This bill in front of
you calls for a mandatory 30-day holding period. I
think you can imagine what would happen ..., on a day
that I buy tens of thousands' worth of bullion. If I
can't liquidate it or trade it ... [on] the same day,
then there is no point in me buying it, because if I
have to hold it for 30 days, one, I'll go broke [and],
two, I'm gambling on the price of gold or any other
precious metal that's out there. It just can't be
done. Buying (indisc.) many of you, I'm scared of the
bill because that's about half of my business; I can't
operate under such strict restrictions....
Too, if I buy an estate, and a lot of estates are very
large, it states in here that if it has a $75 value or
more, that I have to itemize each item. I literally
can't do that; I don't have the time to do that - run
a shop and sell, and then turn that in weekly [to the]
local police departments. That presents very severe
problems for small businesses. The sponsor statement
that you folks have received from Representative Green
talks only about pawnbrokers, which I found
interesting; it doesn't refer to secondhand dealers at
all.
MR. CLEWORTH concluded:
I've been in business 22 years, and [in] all those
years I have only had two instances where I have known
of stolen property; both those situations [were]
between a child and a parent, [and] ... we interceded
for them and recovered [the item]. That is it, [in]
22 years. And we're the only coin shop here in town.
This is not a chronic problem that I [can] see. If
the idea here is to get pawnbrokers to submit
information that could be put on some kind of a
computer format that [the] police department can draw
up so they can see what was stolen in various parts of
Alaska, then I think that's a noble [effort]. But to
drag a lot of us into this thing, [there's] some
repercussions that I hope that the sponsor of this did
not intend.
CHAIR ROKEBERG said he shared Mr. Cleworth's concerns regarding
the 30-day holding period. To any businessperson, he said, it's
like holding and putting your inventory in cold storage for 30
days." It just doesn't work, he added; business owners can't
afford to do that. He mentioned that the sponsor [is willing]
to create some exemptions, but added that he has concerns should
"somebody" be missed.
Number 1729
MARGE THOMPSON, Co-owner, Alaskan Photographic Repair Service,
testified via teleconference. She said that HB 427 will have a
severe impact on her life. Although the aim of HB 427 is to
stem the illegal purchase of stolen goods, the broad scope the
bill will affect a variety of secondhand shops reselling items
such as firearms, watches, cameras, sporting goods, antiques,
paintings, boats, and computer equipment. The list will be
virtually endless, she warned. If the police and the AST are
having trouble shutting down those businesses that buy stolen
goods, why then, she asked, are secondhand dealers of all
commodities with a $75 retail value also being targeted?
MS. THOMPSON said that she did not believe that the paperwork
required of the purchaser of secondhand goods is at all
reasonable. To have to keep these records on hand for a year
and be subject to inspection by law enforcement at any time, she
opined, is akin to being treated like a criminal. She posited
that the vast majority of secondhand dealers are honest and
above reproach. The requirement that she keep goods on hand for
a period of 30 days before selling them, she added, will eat up
her income substantially; her business is based on turning
inventory around quickly. She pointed out that there are many
folks who buy merchandise on the Internet; those folks would
have no way to gather the information required by HB 472, and no
way of verifying past ownership or identity. Internet
secondhand businesses would have an unfair advantage over her
business, she noted.
MS. THOMPSON, in closing, said that she didn't think that the
state can afford the process of attempting to enforce this
legislation, reiterating that her business cannot afford it
either. "Please don't tie our hands behind our back," she
asked; stiffer penalties or requirements should apply to those
convicted of trafficking in stolen goods, not the honest
business owners. "Don't take the honest folks [in] society and
make policemen of us all," she added.
Number 1832
BEN CARPENTER, Owner, Ben's Super Store, testified via
teleconference. He said:
I own a large secondhand store in Fairbanks known as
Ben's Super Store. I recently learned of [HB 472] and
I am extremely disturbed about one section of the
bill. I would like to address the 30-day holding
period for purchased secondhand merchandise. The 30
days that I would be required to hold this merchandise
would cause undue financial hardships and excessive
[recordkeeping] and storage problems for my store and
all other [secondhand] businesses.
I have contacted several fellow business owners here
in Fairbanks to discuss our views and concerns. I
have spoken to a coin shop operator ...; a used
sporting-good storeowner; several jewelry stores; a
gold dealer; ... a stamp collectible shop; an antique
dealer; a clock and watch repair shop; and numerous
recreational [vehicle] dealers including sellers of
snow machines, "four wheelers," boat dealers, and jet
ski dealers. After talking with my fellow business
owners, I would like to explain the financial
hardships we would be facing with the 30-day holding
period.
When dealers acquire [secondhand] items such as snow
machines, off-road vehicles, and all boats and
watercraft ... midseason, for example, July or early
August, and [the items] are held for 30 days - to
about the first part of September - the season is
over. The items have to be carried over to the next
season, approximately mid-May. The season for these
vehicles is about four and a half months here in
Fairbanks. Taking 30 days out of [that] timeframe to
sell an item is a crippling financial disadvantage.
The depreciation factor on these items is high,
resulting in several hundreds of dollars in lost
depreciation.
Number 1925
MR. CARPENTER continued:
The 30-day holding period has the same disadvantage to
coin dealers, as Mr. [Cleworth] has explained; when
they are locked into a 30-day period, they cannot sell
and the fluctuation of gold prices [puts] them at high
risk and can result in a monetary loss. The storage
and extra bookkeeping will be a major problem for most
stores. [In] my store, the storage space will be a
huge problem. We do not have the space to store 30-
days worth of merchandise. We deal in many bulky
items such as furniture, exercise equipment, and
appliances. We may [be] forced to stop handling these
items, which are a good portion of our business, if we
[have] to hold them for more than 30 days, ... due to
the lack of storage. We feel that the 30-day holding
period is [unnecessary].
The [secondhand] storeowners are members of this
community. As property owners, we are very concerned
about stolen property, and we have always cooperated
[with] law enforcement's attempts to recover stolen
property [and] prosecute (indisc.) Fairbanks. We are
very vigilant in our efforts to not deal in stolen
property. We business owners haven't had enough time
and opportunity to express our concerns pertaining to
[HB 472]. We strongly urge you to seek more input
from all concerned citizens. Please do not rush this
bill until you have fully heard our side of the story
and have all the facts.
As for our present business practices, my store has
been complying with present Alaska law regulating
[secondhand] stores, and have no problem with it. We
have been getting full names, addresses, phone
numbers, Alaska driver's license or state ID
[identification] numbers, plus [a] full description of
the merchandise purchased with serial numbers, as well
as signature of the seller. We have purchase invoices
filed for the past ten years; they have always been
available for inspection. Including a 30-day holding
period is overkill and unjustified.
Number 2018
MR. CARPENTER concluded:
Over the past ten years [we've] owned this [secondhand
store], Ben's Super Store, I can recall only one
incident when stolen property was sold before it was
deemed stolen. It was a bicycle, and it was recovered
and the purchaser received [a] refund. The incident
rate of stolen property received by [secondhand]
stores is not as high as perceived by some people.
The national rate of stolen property that is sold at
[secondhand] stores is about one-half of 1 percent.
The Fairbanks percentage rate is lower than the
national average, at approximately [one-quarter] of 1
percent, based on my [store's] experience. We
strongly urge you to take your time to get the facts
and statistics before you [act] on [HB 472]. We urge
you to seek more input from secondhand [storeowners];
we will be affected by the 30-day holding period. We
are very [concerned] about the future of our
[companies] if this holding period becomes law.
Number 2072
DAN HOFFMAN, Lieutenant, Fairbanks Police Department (FPD), City
of Fairbanks, testified via teleconference in support of the
intent of HB 472. He said that it will better allow the FPD to
track stolen property. He noted, however, that he can certainly
appreciate the concerns of the secondhand storeowners that "seem
to be getting drug into this." He opined that the state needs
to take a close look at who to include into the bill. He
offered that from his original discussions with the APD and
other law enforcement, HB 472 was being looked at primarily as a
way to assist in regulating pawnbrokers. Mr. Hoffman remarked
that Chair Rokeberg makes a valid point in that it would be
ridiculous if the information gathered merely sat in corner
collecting dust. He suggested that HB 472 ought to be
considered the forerunner of a way for law enforcement across
the state to be able to access, perhaps through a single web
page, all the information, which ought to be collected in a
uniform manner, provided by every pawnshop. He noted that such
a system will never be realized until statewide legislation
regulating pawnshops is implemented.
CHAIR ROKEBERG asked Mr. Hoffman whether he would be disturbed
if secondhand dealers were "deleted" from HB 472.
MR. HOFFMAN said that personally, he would not be too disturbed,
noting that if the bill initially focuses on pawnshops and it is
later found that some types of secondhand venues need to be
regulated in the same fashion, they could be added as
appropriate. He said that he hopes that the "secondhand issue"
doesn't bog the bill down entirely.
CHAIR ROKEBERG said that the committee fully supports a
"criminal justice MIS (management information system) system
that would be statewide." He asked whether the City of
Fairbanks currently has a "pawnbroker reporting requirement."
MR. HOFFMAN said yes, adding that one of the major problems is
that it currently relies on 19th century technology, with all of
the pawnbrokers filling out paper tickets. He explained:
We don't have the manpower resources to go around,
physically pick up shoeboxes full of paper tickets,
and have people go through and hand-sort those things.
But if we were to try and change our city ordinance
and force our local pawnbrokers to go to a
computerized system, it would be too easy for those
folks to argue that, "Well, the people in North Pole
don't have to do that," or, "The people down in the
valley don't have to do that." As I said, that's why
we need a statewide standard, so that if you want to
make a local change, it will come up to that standard.
Number 2202
NORM BLAKELEY testified via teleconference, noting that he owns
a pawnshop/secondhand store in Soldotna and has owned it for
approximately 20 years. He said:
About two or three years ago, a police officer from
the [Alaska State] Troopers met with the police chief
in Soldotna with a bunch of the local brokers, and we
all sat down and discussed the issues that you're
talking about at the present time: ... about doing
weekly [reports] and having them turned in. Most of
the pawn dealers, excluding me, didn't want to do it
and refused to do it. And I told them that I would
... try to comply with what they wanted - see how it
worked and what went on with it. So, my shop - I only
had myself and one other employee - did do this. We
did it for about three or four months, and finally
Officer Donnelly (ph) said that it was too cumbersome,
[and] that they didn't have time to pick up the
reports. I think they looked at it once in the four-
month period; we did a lot of work - nothing ever
happened with it. And so he suggested that we just do
away with it.
... I don't believe he's in this area now; he was with
the [Alaska State] Troopers. And so the idea of doing
this [was] tried at our place. The [Alaska State]
Troopers didn't have the manpower to do it, and
couldn't do it. Our records are open, continuously,
to anyone that has the authority, meaning the [Alaska
State] Troopers or law enforcement officers, that want
to look at our records. ... Actually, in our area, I
think [we] have a great reputation. We have helped
Kmart [Corporation] ... [catch] people that worked for
them that were taking merchandise, that they never
knew, the [Alaska State] Troopers never knew, or
anyone else never knew about. One of the incidences
... [involved merchandise] in excess of [$80,000 or
$90,000] that we notified them about, and they told us
it couldn't be happening, and they looked into it and
it was happening, and they did bring that to a
conclusion, and some people went to jail for that.
Number 2289
MR. BLAKELEY continued:
Part of the problem that I see you having is ...
[that] people don't only go from our location to
Anchorage or other places; they are fencing the stuff
at yard sales now, all types of places. I think they
think secondhand dealers and pawnshops are watched a
lot closer than they used to be. I think the dealers
have become more reputable; ... we would not
intentionally, in anyway, take anything [stolen].
And, in fact, we try to help the community: ...
anything that we think is suspicious is ... [turned]
in. A lot of the articles that you're talking about
are unidentifiable - ... rings, jewelry, things like
that - and the fact [is] that there's a lot of them
that are manufactured [that] look a lot alike,
[though] I understand a lot of them aren't.
The gentleman that talked ... from Anchorage that said
that he had his business broke into, I think if
Anchorage maybe could have notified us, as dealers
separately, that we would have been more than happy to
try to help him, and to try to help recover his
property. Myself I have had merchandise stolen out of
my shop; I had [a] snow machine stolen from the shop -
the chain cut and driven off when we were there. So I
can empathize with how he's feeling. As far as him
being able to go [through] the records if they were
complied in a place where he could do that, I think
there's a lot of people that do business with me that
would not want the everyday public going through their
records and seeing their names. I have dealt with
attorneys, doctors, all kinds of people in my
business, because, I feel, I have a great reputation:
they trust and understand me. So I think that's an
issue that if you would even [think] about, that
wouldn't be acceptable.
A lot of the problems we have with stolen merchandise
are related to relatives: children - thieves -
stealing things from their folks and bringing them in.
And we try to work with the parents, and we don't take
any merchandise ... from anybody that isn't 18 years
of age. They have to have a positive identification -
pictured ID - such as a driver's license or state ID;
we don't accept anything other than that. [In] our
area we have a hard time even getting the City of
Soldotna, [City of] Kenai, and the [Alaska State]
Troopers to help us try to figure out what's going on
with stolen merchandise. So, to try to put this on
[a] statewide basis and have the state do it, I think
is really more cumbersome than what you would think it
would [be]. If the cities want to pass their own
ordinances to do this, I think that's a better way to
look at it than to probably put it in a state
perspective.
TAPE 02-47, SIDE B
Number 2363
CYNTHIA BRIDGES, Detective, Anchorage Police Department (APD),
Municipality of Anchorage (MOA), testified via teleconference,
noting that Anchorage has been monitoring its pawnshops for
several years. She said:
It works out really well. But those records are not
public records. ... We don't give out that doctors
pawn their property, or anything like that. That's
not public record. ... The purpose of having that
record is, when we are looking for stolen property, we
can identify who has pawned stolen property, or, if
someone has an article stolen and they may have a
suspect, we can run that name and determine ...
whether or not that person pawned something. But ...
that's not information that goes out to the general
public.
There are a couple of things that I specifically
wanted to address. We had a burglary ... last summer,
and the guys involved in this burglary pawned some of
the property. And we caught them doing a burglary,
and when we ran ... their names through our pawn
system, [we] were able to tie them to several
burglaries and were able to subsequently return a lot
of stolen property that we would not have necessarily
been able to return had we not known the name of a
potential burglar.
Also, as far ... secondhand shops ... [having] a
problem with this bill, I had a case where a lady
stole some property from an elderly couple that she
was [caretaker] for. She stole their property, she
pawned some of it at a pawnshop; some of the property
that she pawned at a pawnshop she retrieved from the
pawnshop and then took to a coin dealer and sold it to
the coin dealer. I found out from the pawnshop that
this is what she had done; by the time I contacted
[this company], ... within a week or two, ... they'd
already disposed of the property.
Number 2265
MS. BRIDGES said:
So, ... if they're going to take in secondhand
property ... - I'm not saying that they know that it's
stolen, and they have no expectation that it's stolen
- ... there is potential that it could be stolen. And
with jewelry it's very difficult to distinguish items;
[with] jewelry specifically, what the problem is, is
[that] it is not always going to the pawnshop. And if
our criminals find out that the jewelry stores will
take this jewelry, and there's virtually no way that
they can get caught, they're going to start doing it.
And there is nothing to say that they haven't already.
It will create a lot more work for me and the [people]
that work with me who enter this information if we do
start collecting this information from secondhand
stores like jewelry shops and computer stores, but in
the situation where they're taking this kind of stuff,
there's got to be some kind of monitoring, because
that's where the stuff's going to be going.
Number 2228
MS. BRIDGES addressed a couple of concerns about the bill:
One of the biggest concerns is ... there's a line in
there that says if items are sold in [lots of] ten or
more, ... like DVD movies or CDs [compact discs] or
video games and things like this, you only have to
report them if they're sold in a bunch of that many or
more. Well, if our criminals find out that they're
not being reported unless there's ten or more, they're
going to start going from pawnshop to pawnshop. ... I
had a case where a gentleman, in the span of six
months, pawned 2,700 DVDs - the movies. Now, if you
do the math, and you buy each one for $15 from a
store, that's ... [$40,500] worth of DVDs in six
months.
Now, he didn't get that much for them from the
pawnshop; ... he didn't always pawn ten or more at a
time, he would pawn three or four here, go to another
pawnshop [and pawn] five or six. And if we have no
way of tracking something like that, then we have a
big problem with that also. So, I kind of have a
problem with that. But if [removing] that particular
line hinders the bill, then I would say leave it in;
if it doesn't hinder the bill, then I would say take
it out.
CHAIR ROKEBERG asked whether it is the MOA's ordinance that
dictates what information pawnbrokers have to report.
MS. BRIDGES said that it is the MOA's ordinance that dictates
that pawnbrokers must report everything. For anything that
pawnbrokers take in, whether they buy it outright or loan on it,
they have to report; there is no stipulation pertaining to
serial numbers, value, or quantity. If they fail to report,
they are in violation, she added.
CHAIR ROKEBERG asked how pawnbrokers report.
Number 2141
MS. BRIDGES explained:
The majority of our pawnshops e-mail us; we have [an]
e-mail address, and they e-mail it to us. And then we
download it to our system, and it's rewritten in a
form that our computers can read. And I have two
clerks that work for me, and they download the
information and modify it slightly to go into our
system, and then it's downloaded to the state for [an]
APSIN [Alaska Public Safety Information Network] check
for stolen property - serialized property. I do have
two pawnshops that still report with tickets; we have
hand tickets that we provide to the pawnshops, and
they fill them out, and I pick them up once a week,
and my clerks enter them into our system. And then
some of the pawnshops ... report via disk; they
download the information to a disk, I pick it up on a
weekly basis, and it's downloaded to our system.
So ... there are several different ways to report.
And a lot of it has to do with what the pawnshops'
ability to report is. One of the reasons why we would
like to see this go on and get the whole state to
report is because what we're seeing is a lot of our
stolen stuff is going either out to the valley or down
to the Kenai. And we don't have the ability to access
that information. Our jurisdiction is Anchorage and
... we can't just hop in our car and run down to Kenai
to see if any of our stolen stuff shows up in the
pawnshop down there.
So there's no way for us to track the outside
agencies' jurisdictions to see if our stuff is showing
up down there. Now, if they were online, similar to
us, ... it's possible in the future that we would be
able to communicate with each other via computer, and
they would be able to download our information
(indisc.) and us theirs. And that's kind of what
we're hoping for but in order to do that, we have to
have a bill where the state, or different
municipalities other than Anchorage, actually have
their pawnshops reporting to them.
CHAIR ROKEBERG announced that HB 472 would be held over.
ADJOURNMENT
Number 2045
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:50 p.m.
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