03/20/1998 03:45 PM House L&C
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 20, 1998
3:45 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Jerry Sanders
Representative Joe Ryan
MEMBERS ABSENT
Representative Bill Hudson
Representative Tom Brice
Representative Gene Kubina
COMMITTEE CALENDAR
HOUSE BILL NO. 300
"An Act relating to health insurance; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 304
"An Act relating to the location of the convening of the
legislature in regular session; repealing provisions relating to
student guests of the legislature; and providing for an effective
date."
- MOVED HB 304 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 300
SHORT TITLE: ALASKA PATIENTS' BILL OF RIGHTS
SPONSOR(S): REPRESENTATIVES(S) BUNDE, James
Jrn-Date Jrn-Page Action
01/12/98 2023 (H) PREFILE RELEASED 1/2/98
01/12/98 2023 (H) READ THE FIRST TIME - REFERRAL(S)
01/12/98 2023 (H) HES, LABOR & COMMERCE
02/19/98 (H) HES AT 3:00 PM CAPITOL 106
02/19/98 (H) MINUTE(HES)
02/24/98 (H) HES AT 3:00 PM CAPITOL 106
02/24/98 (H) MINUTE(HES)
02/25/98 2423 (H) HES RPT CS(HES) NT 1DP 2DNP 2NR
02/25/98 2423 (H) DP: BUNDE; DNP: PORTER, VEZEY;
02/25/98 2423 (H) NR: DYSON, GREEN
02/25/98 2423 (H) ZERO FISCAL NOTE (DCED)
02/25/98 2423 (H) REFERRED TO L&C
03/20/98 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 304
SHORT TITLE: MOVE LEGISLATURE TO ANCHORAGE
SPONSOR(S): REPRESENTATIVES(S) GREEN, ROKEBERG, Ryan, Cowdery,
Hodgins
Jrn-Date Jrn-Page Action
01/12/98 2024 (H) PREFILE RELEASED 1/2/98
01/12/98 2024 (H) READ THE FIRST TIME - REFERRAL(S)
01/12/98 2024 (H) STA, L&C, FINANCE
01/15/98 2056 (H) COSPONSOR(S): RYAN
01/27/98 (H) STA AT 8:00 AM CAPITOL 102
01/27/98 (H) MINUTE(STA)
01/28/98 2167 (H) COSPONSOR(S): COWDERY
01/30/98 2189 (H) COSPONSOR(S): HODGINS
02/11/98 2277 (H) STA RPT 2DP 2DNP 3NR
02/11/98 2278 (H) DP: DYSON, HODGINS; DNP: ELTON, VEZEY
02/11/98 2278 (H) NR: JAMES, BERKOWITZ, IVAN
02/11/98 2278 (H) FISCAL NOTE (GOV/ALL DEPTS)
02/20/98 (H) L&C AT 3:15 PM CAPITOL 17
02/20/98 (H) MINUTE(L&C)
02/27/98 (H) L&C AT 3:15 PM CAPITOL 17
02/27/98 (H) MINUTE(L&C)
03/11/98 (H) L&C AT 3:15 PM CAPITOL 17
03/11/98 (H) MINUTE(L&C)
WITNESS REGISTER
PATTI SWENSON, Legislative Assistant
to Representative Con Bunde
Alaska State Legislature
Capitol Building, Room 106
Juneau, Alaska 99801
Telephone: (907) 465-6824
POSITION STATEMENT: Presented HB 300 on behalf of Representative
Bunde.
TIM WOLLER, DDS, President
Alaska Dental Society
3529 College Road, Number 205
Fairbanks, Alaska 99709
Telephone: (907) 479-6747
POSITION STATEMENT: Testified in support of HB 300.
TOM HIPSHER, DDS
Alaska Dental Society
800 East Dimond Boulevard
Anchorage, Alaska 99515
Telephone: (907) 349-5585
POSITION STATEMENT: Testified in support of HB 300.
LYNN HARTZ, Family Nurse Practitioner
Alaska Nurse Practitioner Association
3104 Brookside Drive
Anchorage, Alaska 99517
Telephone: (907) 248-4877
POSITION STATEMENT: Testified in support of HB 300.
KAREN DECKER-BROWN
2200 Shore Drive
Anchorage, Alaska 99515
Telephone: (907) 522-2254
POSITION STATEMENT: Testified on HB 300.
KATHY ODEGARD, Senior Operations Director
NYLCare Health Plans Northwest, Incorporated
1400 One Union Square
600 University Street
Seattle, Washington 98101-1158
Telephone: (800) 654-3250, extension 627
POSITION STATEMENT: Testified against HB 300.
KATHY VOLZ, President
Alaska Physical Therapy Association
2031 Saratoga Avenue
Anchorage, Alaska 99517
Telephone: (907) 274-6897
POSITION STATEMENT: Testified in support of CSHB 300(HES).
ROSS BLAKER
AETNA U.S. Health Care
4300 "B" Street, Number 205
Anchorage, Alaska 99503
Telephone: (907) 563-0433
POSITION STATEMENT: Testified on HB 300.
TERRY ALLARD, Chairperson
Health Committee
Southern Alaska Life Underwriters Association
1600 "A" Street, Number 300
Anchorage, Alaska 99501
Telephone: (907) 277-1616
POSITION STATEMENT: Testified against HB 300.
MARY VEALE, Legislative Liaison
Alaska Chapter
American Physical Therapy Association
P.O. Box 240286
Douglas, Alaska 99824
Telephone: (907) 364-2164
POSITION STATEMENT: Testified in support of HB 300, recommended
change to CSHB 300(HES).
LINDA FINK, Assistant Director
Alaska Hospital and Nursing Home Association
319 Seward Street
Juneau, Alaska 99801
Telephone: (907) 586-1790
POSITION STATEMENT: Testified against HB 300.
MARIANNE BURKE, Director
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
Telephone: (907) 465-2515
POSITION STATEMENT: Testified on HB 300.
DIRK WHITE, Pharmacist
705 Halibut Point Road
Sitka, Alaska 99835
Telephone: (907) 747-8006
POSITION STATEMENT: Testified in support of HB 300.
DEBRA DUMMANN, Member
International Brotherhood of Teamsters Local 959
6721 Saint Ives Place
Anchorage, Alaska 99504
Telephone: (907) 337-6014
POSITION STATEMENT: Testified against HB 300.
SHELBY STASTNY, Chief Financial Officer
NANA Regional Corporation
1001 East Benson Boulevard
Anchorage, Alaska 99508
Telephone: (907) 265-4159
POSITION STATEMENT: Testified against HB 300.
TOM TIERNEY, Director
Employee Relations
Municipality of Anchorage
P.O. Box 196650
Anchorage, Alaska 99519-6650
Telephone: (907) 343-4399
POSITION STATEMENT: Testified against HB 300.
QUINN McKENNA, Operations Administrator
Providence Health Systems in Alaska
3400 Providence Drive
Anchorage, Alaska 99508
Telephone: (907) 261-3134
POSITION STATEMENT: Testified against HB 300.
GREG STOKES, Administrator,
Alaska Electrical Trust Fund
Health Care Cost Management
Corporation of Alaska
2600 Denali, Suite 200
Anchorage, Alaska 99503
Telephone: (907) 2761246
POSITION STATEMENT: Testified against HB 300.
BRUCE GALE, Account Executive
Willis Corroon Corporation of Anchorage
4300 'B' Street
Anchorage, Alaska 99503
Telephone: (907) 275-9118
POSITION STATEMENT: Testified against HB 300.
CHUCK O'CONNELL, Business Manager
Alaska State Employees Association;
American Federation of State, County
and Municipal Employees
3510 Spenard Road
Anchorage, Alaska 99503
Telephone: (907) 277-5200
POSITION STATEMENT: Testified against HB 300.
JAMIE SLACK, Officer
VECO Corporation
813 West Northern Lights
Anchorage, Alaska 99503
Telephone: (907) 264-8127
POSITION STATEMENT: Testified against HB 300.
JIM CASE, Pediatric Dentist
880 'N' Street
Anchorage, Alaska 99518
Telephone: (907) 274-2525
POSITION STATEMENT: Testified in support HB 300.
DAVID LOGAN, President-elect
Alaska Dental Society
6205 Glacier Highway
Juneau, Alaska 99801
Telephone: (907) 780-6066
POSITION STATEMENT: Testified in support of HB 300(HES).
JERRY REINWAND, Lobbyist
Blue Cross of Washington and Alaska
2 Marine Way, Suite 219
Juneau, Alaska 99801
Telephone: (907) 586-8966
POSITION STATEMENT: Testified on HB 300.
ACTION NARRATIVE
TAPE 98-33, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:45 p.m. Members present
at the call to order were Representatives Rokeberg, Cowdery and
Sanders. Representative Ryan arrived at 4:00 p.m.
HB 300 - ALASKA PATIENTS' BILL OF RIGHTS
Number 0051
CHAIRMAN ROKEBERG announced the committee's first order of business
would be HB 300, "An Act relating to health insurance; and
providing for an effective date." He noted a quorum was not
present at the beginning of the bill hearing but said the committee
would begin taking testimony.
Number 0104
PATTI SWENSON, Legislative Assistant to Representative Con Bunde,
sponsor of HB 300, came forward to present the bill. She stated
the bill version before the committee is the House Health,
Education and Social Services Standing Committee substitute, CSHB
300(HES), labeled 0-LS1248\L. Ms. Swenson stated, "This House bill
concerns the rights of patients to choose who will provide their
medical care. This legislation also supports health care providers
by giving some recourse to physicians if their patients' treatments
are denied. House Bill 300 holds implications for all health care
consumers. Managed care organizations as well as preferred
provider organizations [PPOs] have traditionally limited their
enrollees' choice of provider by imposing a closed panel or closed
network of providers. By enabling consumers to choose their
provider, the closed panel will expand to meet the consumers'
needs. Choice is important to consumers; it's an arbiter of
quality and lets them get the care they need which may otherwise be
limited by managed care organizations. These limits are due to the
built-in incentive to reduce medically inappropriate and
unnecessary care, as well as what is actually needed. Many people
think that managed care, PPOs and other similar plans contain costs
without sacrificing medical benefits or attracting intrusive
governmental regulation. However, it is the health care consumers
that are making the sacrifice. Insurers promise preferred
providers a high volume of patients in exchange for charging lower
rates for their services. The idea is that, as the medical costs
rise, they have to contain costs to maintain affordability and
access to health care."
Number 0235
MS. SWENSON continued, "The reality is insurers are using health
care consumers as bargaining chips without their knowledge or
consent. Because [of] the ... insurers bargaining, health care
consumers now face restrictions on the type of care they receive
and where they can get it. The optimism about cost containment is
misplaced. Managed care and PPO contracts are subject to the same
upward pressure on costs resulting from new technology and rising
wages that other providers also face. Unable to control these
forces, managed care providers have used the few means they have
available to keep costs below those of fee-for-service providers.
They accomplish this by using fewer hospital days, denying newer
and perhaps more expensive treatments for patients, and by reducing
access by limiting the number of providers in a PPO. The strategy
delays treatment to the point that it may not be done or it forces
the patient outside of the plan where remuneration for treatment is
lower ... than that paid under the PPO. As more patients go
outside the preferred provider organization, the cost savings
through the managed care or PPO appears to be greater than would be
[for] fee-for-service. Consumers have to ask if their medical care
has improved or become more efficient since the beginning of
managed care. Many consumers say they can't see the physician they
wish to see, they spend less time with the physician they go to see
and they feel rushed out of the hospital when they're very ill.
Physicians, on the other hand, say they can't afford to spend much
time with patients. Many tests that they would like to do for
diagnosis of medical conditions are denied by insurance companies,
their patients are not approved of for time in the hospital and the
physicians have very little recourse, and the insurance companies
are not paying for the care in a timely manner."
Number 0375
MS. SWENSON said, "In our state, I think and I hope, an unintended
effect of PPO is the ruination of some small businesses that are
involved in providing health care in rural areas of Alaska as well
as in urban areas of Alaska. There are dentists, chiropractors,
nurse practitioners, pharmacists and medical supply businesses that
are being forced out of business because they cannot compete, and
are not able to become of a PPO. The ramifications of the loss of
health care providers such as these is enormous in a state with
such vast geography. ... Is this the efficient, low-cost system we
are told to expect when insurers were touting managed care?
Consumers are putting more money out of their pockets at each
doctor's visit than ever before, only to find that their claim is
denied after months of waiting, ... or they are finally reimbursed
for some of their expenses. When insurers wish to contain costs
they simply use less medical service or force consumers outside of
the program, and this bill, House Bill 300, will go a long way to
help consumers and physicians. I urge the committee's positive
consideration of this legislation."
Number 0463
MS. SWENSON noted she had passed copies of some articles and
letters to the committee members, noting she included two letters
from states that had very broad patient rights or "any willing
provider" bills. She stated HB 300 was not an "any willing
provider" bill. She indicated the committee members had a list of
those states in their bill packets and she had contacted a few of
those states with demographics similar to Alaska. She said she had
received letters back saying there had been had no adverse effects
on consumers or insurance companies when this same type of bill was
passed. Ms. Swenson noted an article had also been included about
how technology would eventually force the cost of health care
upward.
Number 0519
CHAIRMAN ROKEBERG said he noted Ms. Swenson equated the PPO-type
contractual relationships with managed care and asked her if that
was correct.
MS. SWENSON replied that they were both the same.
Number 0540
CHAIRMAN ROKEBERG noted she said HB 300 was not an "any willing
provider" and asked how she would make the distinction.
MS. SWENSON said she believes there was a dentist present to
testify on that and explain further. She stated HB 300 was a
patients' rights bill; it stood up for patients and it says what
the insurance companies can not do.
Number 0573
CHAIRMAN ROKEBERG indicated he had glanced at the description of
Idaho's legislation from that state's health insurance coordinator,
noting there seemed to be a difference between what Idaho has and
what HB 300 provides for. Chairman Rokeberg indicated this was in
the sense a health care provider in Idaho who met the requirements
could be brought into an organization; it was not a straight fee
for service.
MS. SWENSON stated the chairman was right; she said Idaho has an
"any willing provider" law and HB 300 is different from that. She
indicated the reason she included information on Idaho was because
many people in Alaska thinks HB 300 is "any willing provider"
legislation. Ms. Swenson indicated she had been told repeatedly
"any willing provider" legislation would increase the cost of
insurance in Alaska, and she noted it did not in Idaho.
Number 0637
CHAIRMAN ROKEBERG asked if she wished the committee to wait for
further description of the distinction from the witnesses
MS. SWENSON answered in the affirmative.
CHAIRMAN ROKEBERG said he would assume, then, that this was "any
willing provider plus."
MS. SWENSON answered in the negative.
Number 0655
CHAIRMAN ROKEBERG indicated the committee would take witness
testimony for as long as possible at this meeting. He stated it
was not his intention to take formal action on HB 300 at this time,
indicating a further hearing on HB 300 is scheduled for March 23,
1998. Chairman Rokeberg noted there were many witnesses signed up
to testify, asking witnesses to also submit their testimony in
writing to the committee.
Number 0799
TIM WOLLER, DDS, President, Alaska Dental Society ["association"
stated on tape], came forward to testify. He stated he wished to
address the difference between this bill and an "any willing
provider" bill. Dr. Woller stated, "In an 'any willing provider'
bill, any provider who goes and meets the criteria that have been
negotiated by the insurance company has to be accepted as a
provider, and then that remuneration for the patient is accepted
just the same as it would be in the PPO .... This bill does not do
that. [In] this bill, people outside the plan have their own fee
schedule for private individuals. If a person who is under a PPO
elects to go outside the plan, they then have to go ahead and
receive money from the managed care provider and then pay the
difference to the outside person. In the case of Delta Dental and
also in the case of United Concordia [ United Concordia Companies,
Incorporated] which operate in Fairbanks, when a person goes in and
has theirs done by a preferred provider, they're remunerated at one
level. When they step outside the plan they only get about 60
percent of that amount of money." Dr. Woller stated the winner
there is the insurance company because the company had contracted
to receive and pay out that amount of money for each patient. He
indicated the company was economically rewarded when a patient
steps outside the plan. The Alaska Dental Society believes each
patient should have the same dollar amount of remuneration no
matter who performed the work. He said the patients would still
have economic incentive to stay in the PPO because that would
provide 100 percent coverage, or a coverage at a negotiated lower
rate. Even with the same dollar amount of remuneration, once the
patients step outside of the PPO they would have to pay some money
out-of-pocket. Dr. Woller indicated the Alaska Dental Society did
not think the managed care company should be economically rewarded
because the plan failed to meet that individual's expectation or
treatment needs. He noted that was the difference between "any
willing provider" and HB 300.
Number 0933
CHAIRMAN ROKEBERG asked it if was Dr. Woller's testimony that if a
member of a PPO-type plan used a health care provider outside the
plan's provider list, that consumer would be reimbursed at a lesser
rate.
DR. WOLLER confirmed that was correct.
Number 0955
CHAIRMAN ROKEBERG asked if that was peculiar to dental
practitioners or other healing arts practitioners.
DR. WOLLER said he knows it happens in other parts of the country
in dental, but did not know if it was specific to dental.
Number 0975
CHAIRMAN ROKEBERG mentioned a previous amendment to the bill and
said he was not sure where the language was located in the bill
which did what Dr. Woller was talking about.
Number 0992
DR. WOLLER indicated he was referring to Section 2, subsection
(c)(1) of the bill. Dr. Woller noted Section 1, subsection (a)(1)
read, "(a) A health care insurer may not include in the health care
insurance plan or contract a provision that (1) prohibits a person
from obtaining health care services from a health care provider of
the person's choice, including a specialist;" He stated that would
allow the person the freedom to go outside the plan. He then
quoted Section 2, subsection (c)(1), which read, "(1) directly or
indirectly reimburse a covered person at a different rate because
of the person's choice of provider;".
Number 1030
CHAIRMAN ROKEBERG said he appreciated that, but asked, "Is it also
your testimony that ... a fee-for-service provider outside a plan
would not be allowed to be mandated to be paid whatever his
requested fee is."
Number 1048
DR. WOLLER replied, "No, he would not be allowed to mandate his
requested fee. The patient would only receive that same dollar
amount to pay toward that. In other words, they would receive the
same dollar amount whether they are under the plan or if they ...
went outside."
Number 1066
CHAIRMAN ROKEBERG said he wanted to make sure these points were
well-understood by the committee and that was the reason for his
questions.
Number 1083
DR. WOLLER indicated the other portion of the legislation has to do
with a person's ability to receive full disclosure of any
treatment. He stated, "Under some of the provisions of very
restricted HMOs [health maintenance organizations] people have
actually had 'gag' clauses where they were not allowed to be able
to be told about more expensive procedures. We think that a
patient ... has the right to have full disclosure of all - all
given procedures, all procedures that are pertinent to their
treatment whether that's a covered expense or not. They still need
to know that it's available." Dr. Woller asked the committee to
consider limiting Section 2, subsection (b) to "Alaska-licensed
physician, dentist or consultant." Section 2, subsection (b) read,
"(b) A health care insurer may not deny, reduce, or terminate
health care benefits for a covered person unless the denial,
reduction, or termination is approved by a physician who is
licensed to practice in the United States." He commented, "The
reason is not because we believe our hands are anointed, it's
because this gives legal recourse for the patient through the
attorney general's office, through the state after review, back to
that individual. If you have an individual at an insurance company
who is acting in bad faith and doing these things this does give
some legal recourse to the patient toward that individual, and
that's why we'd ... ask that that provision be put in there. Other
provisions are allowing them to challenge the insurance companies
under this - this Act and not be disciplined for it."
Number 1172
REPRESENTATIVE JOHN COWDERY asked if Dr. Woller believed a consumer
group should be allowed to negotiate for the best possible price
and service.
DR. WOLLER answered in the affirmative.
Number 1189
REPRESENTATIVE COWDERY noted, "Price is the bottom of everything of
cost." He commented he is on the public employees insurance plan
and indicated he did not think he was limited as far as his choice
of providers.
DR. WOLLER said Representative Cowdery has a traditional indemnity
plan.
REPRESENTATIVE COWDERY asked Dr. Woller if he thought the cost of
insurance coverage to the consumers, who utilize the same plan as
Representative Cowdery, would be affected.
Number 1232
DR. WOLLER indicated people would stay with a plan designed by the
health maintenance organization or by the actual insurance company
that met their needs and would have an economic incentive to do so.
He indicated that if a plan was not providing quality service, a
few people would be going outside the plan whether the plan paid
that dollar amount to a preferred provider or to another provider.
It's still the same dollar amount, there should be no change. Dr.
Woller noted "the rub" would come in if large numbers of people
started leaving the plan for one reason or another. The plan's
operators would then lose their bargaining power with their
preferred providers and that could make a difference. However, Dr.
Woller said he would submit that if large numbers of people were
leaving their plan then something was wrong with the plan and it
would need to be examined. He commented holding people as economic
hostages in a plan that was not providing good service was not to
the benefit of patients.
Number 1311
REPRESENTATIVE COWDERY indicated he believed rates for employees
and employers were set through studies and actuaries, using every
consideration.
DR. WOLLER said he would assume so.
REPRESENTATIVE COWDERY questioned whether there was a problem out
there he hadn't seen, asking for details and noting the world was
not perfect.
Number 1352
DR. WOLLER replied the problem in Alaska is fairly low, noting
there were currently not a lot of dentistry PPOs in the state. He
said he thought that having guidelines in place would make these
things easier to tolerate as they proliferated. Dr. Woller
indicated the members of the Alaska Dental Society are aware of the
kinds of problems that could come up because their colleagues in
other states are having them. He said it was currently happening
on a smaller scale, noting, for example, many of the military
dependents in the Fairbanks area are under a PPO.
Number 1399
REPRESENTATIVE COWDERY asked if that was state or federal.
DR. WOLLER replied it was federal, mentioning United Concordia
Companies again.
Number 1415
REPRESENTATIVE JOE RYAN asked if that was TRICARE [TRICARE-Active
Duty Family Member Dental Plan] or if it was the old CHAMPUS with
the military.
DR. WOLLER confirmed it was United Concordia, indicating the
company had contracted nationally with the military.
Number 1440
TOM HIPSHER, DDS, Alaska Dental Society, came forward to testify
next. He noted that besides being a dentist, he is also a
registered civil engineer in Alaska and the owner of software
development company which marketed software for health care benefit
plans throughout the 50 states. Dr. Hipsher indicated he would
say, as a dentist, what HB 300 was, and then what it was not. He
noted there are people present who would probably try to make this
an issue about cost which it is really not. He stated they are not
attempting to set fees or premiums for insurance policies, but he
commented they would be led to believe this would probably cause
insurance rates to increase. Dr. Hipsher reiterated that HB 300 is
not "any willing provider" legislation. He stated they are not
attempting to eliminate closed panels, eliminate or undermine
managed care, eliminate utilization reviews or outcomes
assessments. He indicated he thought all of those things played a
very important role in overall patient health. Dr. Hipsher
indicated HB 300 is not necessarily about hospitals and the cost or
services provided by hospitals. He stated it is not about tort
reform as had been suggested by some legislators in prior
committees. It is not about doctors, doctors' fees, pharmaceutical
companies, pharmaceutical products or the cost of pharmaceutical
products.
Number 1527
DR. HIPSHER stated, "This bill is about patient rights; it's about
you and I as health care consumers wanting nothing more than to be
able to make choices about the health care that we receive and not
be penalized for making those choices." He said HB 300 is strictly
about patients; it is about eliminating discrimination with regards
to the care patients receive, eliminating discrimination in the
treatment that is recommended, and eliminating discrepancies in
payment for the reimbursement to the patients for the treatment
received. He continued, "This bill is about you and I as patients
having the freedom to seek medical and dental care from whatever
doctor we choose. It's about patients having the right to receive
all of the treatment options available to them for their particular
situation and having the right to choose the treatment that is most
appropriate to their needs without being penalized for doing that."
Number 1573
DR. HIPSHER continued, "As a practitioner, I believe in the concept
of free enterprise and competition. In my business the only way
that I can attract patients is ... by providing the highest quality
oral health care that I can at ... a reasonable cost. The fees
that I charge for my care are based on what it costs me to run a
practice in ... Anchorage, Alaska. There are no guarantees for me
in my business. I have to rely on my expertise as a dentist, I
have to rely on the fact that my patients will trust me as a
dentist, so all of this tends to make me a better dentist. If they
aren't satisfied with what I charge or if they aren't satisfied
with the type of work I do or my bedside manner or any of that,
they have the freedom to go anywhere they want. The decisions that
are made about their care are ultimately made by themselves. ...
I have to provide them with all of the options available to them,
and the cost of those options vary greatly, so ... it's their
choice as to what the treatment they want that is most appropriate
for their needs. And ... most importantly, is the treatment that
I render for my patients is I accept full responsibility for ...
that care. ... The insurance industry is in the business to make
money and I realize that that is a valid point, and I respect their
efforts to ... help keep costs low. However, in the process of the
day-to-day business, I feel that things get so bottom-line oriented
that they forget about the human elements involved. It's my job,
as a health care provider, to make sure that the human element is
cared for by providing treatment that is appropriate, that is
unbiased, and that is at ... a cost that is as reasonable as I can
provide it."
Number 1671
REPRESENTATIVE COWDERY asked, "What percentage ... do you feel of
our society is under insurance?"
DR. HIPSHER said he would say that probably 90 percent of the
people he saw were under an insured plan, noting he could only
speak from his practice.
REPRESENTATIVE COWDERY asked if the uninsured 10 percent of Dr.
Hipsher's patients came to his practice because of his ability or
good looks.
Number 1695
DR. HIPSHER said all of his patients came to him strictly through
word-of-mouth, noting he did not advertise and indicating his fees
were not lower than standard.
Number 1708
CHAIRMAN ROKEBERG said, "Doctor, your testimony was that what this
bill is, it's not a duck, even though it may look like one." He
asked if it would be Dr. Hipsher's contention that this would not
raise costs.
DR. HIPSHER said he did not feel it would raise costs.
CHAIRMAN ROKEBERG asked if he thought it would lower costs or keep
costs the same.
Number 1719
DR. HIPSHER said he would assume costs would remain the same unless
they saw patients that were unhappy with their current situation.
He indicated HB 300 was about allowing patients under managed care
or PPO plans who were not being treated correctly by their provider
to be able to go to another provider and be reimbursed at the same
rate they would have been reimbursed for under their plan.
Number 1755
LYNN HARTZ, Family Nurse Practitioner, Alaska Nurse Practitioner
Association, testified next via teleconference from Anchorage. She
spoke from a prepared statement:
The Alaska Nurse Practitioner Association is pleased to
support HB 300. This bill provides important consumer
protections including the right to full disclosure
regarding treatment options and assuring Alaskans
continued access to their clinician of choice.
This bill also protects health care providers from
discrimination. I refer to that part which states, "A
health care insurer may not (1) directly or indirectly
reimburse a covered person at a different rate because of
the person's choice of provider." Now, this section has
particular resonance for us because it's the Blue Cross
Federal Employee Program's discrimination against their
own nurse practitioner preferred providers since the
beginning of this year. Currently, nurse practitioners
with a preferred provider agreement with Blue Cross are
not reimbursed for their services until the patient has
met a $200 calendar year deductible. Physicians with a
preferred provider agreement with Blue Cross are paid in
full after a $10 copayment for each office visit. This
policy has led to ridiculous situations in practitioner-
physician practices in which patients are forced to decide whether
to see the nurse practitioner whom they may have seen for years and
pay $200 before their insurance kicks in, or see the physician in
the same office and pay $10.
In response to questions, so far Blue Cross has not
explained the rationale behind this policy and to date
has just forwarded complaints to their Washington, D.C.,
office.
This is not about cost. The Blue Cross Federal Employee
Program in this case is actually providing financial
incentives for their subscribers to see more expensive
providers and directing them away from less expensive
providers who are all preferred providers. They are also
practicing discrimination against a subgroup of their own
preferred providers without warning or explanation.
There are about 18 small solo nurse practitioner
practices and 4 nurse practitioner-owned health clinics
in Anchorage and Eagle River. Insurance company policies
similar to that of Blue Cross will seriously affect their
business, if not put them out of business.
The Alaska Nurse Practitioner Association believes that
this example provides ample evidence that HB 300 is
needed. We need your help. Providing high quality,
cost-effective health care is apparently not enough to
save us from insurance company policies like that of the
Blue Cross Federal Employee Program, a policy that is not
based on cost savings, nor does it have anything to do
with appropriate use of health care.
We strongly support HB 300 and hope that the Labor and
Commerce Committee will support it also and move it
forward.
MS. HARTZ asked if there was enough time to read two paragraphs
from a pediatric nurse practitioner who had not been able to be
there.
Number 1889
CHAIRMAN ROKEBERG said in the interests of time it would probably
be best if she faxed the statement to the committee, and he
provided the number, or if she gave it to the teleconference
monitor. He said it might be most appropriate for anyone on
teleconference who has any testimony to fax their written comments
to the committee, then summarize those comments in their verbal
testimony.
The statement Ms. Hartz spoke of was conveyed to the committee. It
was from Catherine A. Stange, MS ANP, and read:
I am a nurse practitioner working in a large group
pediatric practice in Anchorage. I am directly affected
in my practice by the inconsistency of benefits provided
to me as a nurse practitioner and that of the
pediatrician. Many of my patients I have cared for since
birth and therefore have a relationship with them and
their families. Presently, they are required to pay a
$200.00 annual deductible to see me but for the SAME
service could see the pediatrician in my office with only
a $10.00 co-pay. This encourages very poor continuity of
care as well as inappropriate use of the physician in a
collaborative practice, when both of the providers are
Preferred Providers. Incidentally, I have been a
preferred provider with Federal Blue Cross for several
years, in private practice, prior to joining this group
practice. Financially, the discrimination against nurse
practitioners does not make sense. By the inappropriate
use of physicians in the practice, patients will see them
instead of the nurse practitioners, and therefore,
Federal Blue Cross will be paying out much more in funds
for medical coverage to their clients. I also see that
by this discrimination, nurse practitioners' practice is
being restricted which is unconstitutional. I am
convinced that this discrimination has been an oversight
after many changes in the last 2 years of Benefit plans
with Federal Blue Cross and hope that this issue will be
addressed as soon as possible. Thank you for your
consideration in this matter.
Number 1911
KAREN DECKER-BROWN testified next via teleconference from
Anchorage. She stated she was testifying from a consumer point of
view and spoke from a prepared statement:
The consumer should have the right to choose any health
care provider, and that means not just physicians but
(indisc.) example use a nurse practitioner or a dentist
or whoever that they need for health care coverage. It
goes against all the principles ... our forefathers
fought for to make America free to have insurance
companies dictate who we can see for health care, what
services we are allowed, and limiting coverage for
individuals with certain problems.
In the book Animal Farm [by George Orwell] there is a
phrase that goes something like this, "All animals are
equal, it's just some are more equal than others." This
is what we will have with managed care and health
maintenance organizations here in Alaska.
Of great concern to me is that the insurance industry is
no longer wholly owned by American companies. Some of
the wealthiest and largest businesses in the United
States are in the insurance industry. They are great
companies to invest in, and personally I have stock in
insurance companies, but not at the expense of the
American and Alaskan people. It is my understanding that
companies such as New York Life and Equitable are owned
by the Japanese, if not wholly, then in part. We
defeated the Japanese from taking over our land and it is
of great concern that they are now buying America and
dictating the quality of life and health care of the
American people. It is by small bits over time great
changes take effect. It is almost imperceptible at the
time, but our choices and coverage will be greatly eroded
for financial gain of an overseas conglomerate. What has
that got to do with the here and now? It is looking at
the larger picture of which we are a small bit.
It is for this reason I support action relating to
patients' right under the health insurance and to
prohibit insurance companies' restrictive treatment
practices. Thank you.
Number 2004
KATHY ODEGARD, Senior Operations Director, NYLCare Health Plans
Northwest, Incorporated (NYLCare), testified next via
teleconference off-network from Seattle. She stated NYLCare is the
administrator of the state of Alaska's employee benefit plan. Ms.
Odegard testified that as the administrator of the state plan
NYLCare is well aware of budget pressures, et cetera. She said HB
300 will remove the current tools NYLCare has to assist the state
in managing the rapidly escalating cost of health care. She noted
the bill does not take into account a lot of the care that has
historically gone outside Alaska to the Lower 48. She said that in
NYLCare's reading, the current discounts applying to state of
Alaska employees would be eliminated, increasing cost to the state,
and could ultimately end up increasing costs to the consumer. She
noted the bill also did not appear to distinguish between the
geographical differences within or outside the state. She asked,
"Does this imply one rate for everyone, no matter where the
services are provided? Who actually benefits from this bill? Is
it the Alaska employers, the employees of the state of Alaska,
state of Alaska taxpayers? As we see it, the bill protects the
income of health care professionals against the economic pressures
(indisc.--coughing) the state today. In no other service industry
are employers or employees prohibited from shopping for the best
price or value. We don't see where health care ... shouldn't be
the same. ... It is our opinion that if this bill passes, it will
rapidly escalate the cost of health care. It also limits plan
design and provides a competitive disadvantage in a market. I
heard talk about Blue Cross and Blue Shield, as we read the current
bill we're not convinced it applied to the Blue Cross Blue Shield
Associations at all."
Number 2087
CHAIRMAN ROKEBERG noted NYLCare is the third-party administrator of
the state's plan and said it is his understanding the state's plan
was exempt under ERISA (Employment Retirement and Income Security
Act) from any state statute because it is a self-insured plan. He
asked her if that was her understanding as well.
Number 2100
MS. ODEGARD agreed but said it has been the state plan's practice
to adopt whatever regulations were passed for the state of Alaska.
Number 2114
REPRESENTATIVE RYAN commented this seemed like an obvious question,
but he asked, "Are not the benefit package that the employees
receive a negotiated portion of their compensation for the service
they perform in their job?"
Number 2131
MS. ODEGARD said she would say yes but thought he should direct the
question to the state, noting, "Usually a benefit plan is
definitely a part of their whole compensation package.
REPRESENTATIVE RYAN confirmed the employees receive the benefit
plan in lieu of financial compensation, noting that was all he
wanted to establish.
Number 2143
CHAIRMAN ROKEBERG indicated there is a provision in the bill
requiring a health care professional, qualified for the particular
service, to provide whatever utilization review is appropriate. He
asked how that would affect the contract and practice of NYLCare in
providing services and what impacts there would be on costs.
Number 2158
MS. ODEGARD said, "If you're referring to the piece that indicates
the services done by someone licensed within the state of Alaska,
and we already have a medical director that is associated in the
state ... lives there and practices there, ... we don't believe it
would have an impact."
Number 2171
CHAIRMAN ROKEBERG asked if NYLCare did not have a provision for
some utilization review procedures and preauthorizations as part of
its contractual obligation with the state.
MS. ODEGAARD replied, "Yes, but ... we believe the bill states that
... we would still do that, we would just -- the actual utilization
review and services would -- we have people in Alaska today that do
that as well .... It won't impact the cost as we understand it."
Number 2203
KATHY VOLZ, President, Alaska Physical Therapy Association,
testified next via teleconference from Anchorage. Ms. Volz stated,
"I'm here on behalf of my organization, which is 180 licensed
health care practitioners, just to say, in summary, that we are in
support of the current version of this bill recognizing rights to
the consumers and providers as well."
Number 2228
ROSS BLAKER, AETNA U.S. Health Care (AETNA), testified next via
teleconference from Anchorage. Mr. Blaker commented he wanted to
keep it brief but indicated they feel health care costs are high
and are continuing to increase. He stated, "Insurers and employers
and consumers are all seeking some cost control in one of the
greatest human resource expenses. This bill really seems to limit
a health plan and an employer can define a health benefit package
to control one of his fastest rising costs. It also seems to apply
to insured plans only, not to the large self-insured plans, and
therefore, the small employers typically insured is gonna be the
target of ... this legislation. This (indisc.) group is typically
subject to the most mandated legislation as far coverage and level
of benefits is concerned. PPOs have been in Alaska for a number of
years now and - and they seem to be a viable financial alternative
to straight indemnity plans. PPOs are very popular in the
marketplace and many, if not most, of the plans being purchased now
are structured in the PPO model. They're popular because they're
the most effective towards controlling costs. In the PPOs that
AETNA U.S. Health Care offers, there's a meaningful benefit for
nonuse of a PPO provider. There's a better benefit for the use of
the PPO provider, assuming the member has coverage for that
particular service in question and they do have meaningful benefit
if they're outside the network. By eliminating the PPO
differential I offered a credentialling providers is undermined.
There will be no benefit differential and, therefore, no network.
Credentialling providers to quality cost to service is basic to
building a cost-effective PPO network. I really don't have a
problem with Section 390(b) [see Number 1083, Dr. Woller's
testimony]. We think that 390(e) could probably be reworded a
little bit, and I think in summary it seems to -- It seems hard for
us to see how this bill would benefits consumers of medical care
and we think it would be detrimental to insured plans."
Number 2307
CHAIRMAN ROKEBERG noted AETNA did approximately $160 million in
health insurance in Alaska in 1996 and had 43 percent of the
state's market, but AETNA had the state of Alaska's contract at
that time. He asked Mr. Blaker what the premium amount was and
what percentage AETNA had of the health care underwriting in Alaska
for calendar year 1997.
MR. BLAKER replied he could not currently tell the chairman that.
He said it shrank very, very substantially when the state of Alaska
went to NYLCare and became self-insured.
CHAIRMAN ROKEBERG asked for a guess.
MR. BLAKER indicated he couldn't even provide that.
CHAIRMAN ROKEBERG asked if it was from something like $160 million
down to $10 or $20 million. Chairman Rokeberg stated, "It's all
public record, you have to do it for CHIPRA [Comprehensive Health
Insurance and Payment Reform Act], so we'll get it eventually."
Number 2350
MR. BLAKER replied, "(Indisc.) comprehensive health insurance
association, but I really don't know because ... that premium is
based on AETNA having ... the state of Alaska insured for half of
the year. So, I presume what you're looking for is - is our
premium income as of ... December 31st, and I'm sorry, I just don't
know that."
Number 2364
CHAIRMAN ROKEBERG asked him to try to obtain that or provide the
information to the committee whenever the quarterly or annual
report comes out. He said the committee would very much like to
know because of the position AETNA previously had in the state. He
added he hopes AETNA would be remaining in the state as a provider
of health insurance. He asked Mr. Blaker if his firm currently
writes any individual policies in Alaska.
MR. BLAKER answered in the negative, stating it was strictly group
benefits.
Number 2385
REPRESENTATIVE RYAN asked for confirmation AETNA would be buying
NYLCare so they could get back in the state's market.
MR. BLAKER said he understood that the boards of directors of both
companies had approved it and it is now up to the regulators.
Number 2396
CHAIRMAN ROKEBERG asked why AETNA did not choose to write
individual policies in Alaska.
MR. BLAKER said AETNA had individual policies up until
approximately eight or ten years ago. He said he thought AETNA
decided it wanted to target the employee benefit field rather than
the individual field, and sold its "book of business" to Mutual of
Omaha Insurance Company.
Number 2425
TERRY ALLARD, Chairperson, Health Committee, Southern Alaska Life
Underwriters Association, was next to testify. Ms. Allard spoke
mainly from her prepared statement, noting they were concerned, as
agents representing employer groups purchasing benefit plans for
their employees, about the impact of HB 300 on their employer
clients. She said carriers would lose the ability to negotiate
favorable pricing on behalf of consumers and purchases by being
required to pay all providers the same fee, and that this would
increase the premiums by eliminating the carriers' ability to
control or at least help mitigate cost increases through use of
their networks. Ms. Allard stated, "Employers currently providing
preferred provider health plans can expect to see costs increases
of 10 to 15 percent due to the carriers' inability to steer
patients to preferred facilities where they have discounts
negotiated, and this would be in addition to the increases that
we're seeing of in the neighborhood of 6 to 10 percent that are due
just simply to inflation. ..." [TESTIMONY INTERRUPTED BY TAPE
CHANGE]
MISSING TESTIMONY TAKEN FROM MS. ALLARD'S WRITTEN STATEMENT
SUBMITTED TO THE COMMITTEE:
"It is estimated that approximately 80 percent of more of the
employers in the Anchorage area are currently providing PPO plans
for their employees. 2) Deny purchasers the choice of products
..."
TAPE 98-33, SIDE B
Number 0001
MS. ALLARD continued, "... choice of products that contain
incentives to use these provider networks. The price increases are
going to continue to escalate. There are options in the market for
employers today. They do have a choice of buying a PPO plan or a
traditional indemnity-type plan, and this has been stated by people
testifying prior to me. Employers are making the choice to buy PPO
plans because of the economy of purchasing that plan, and those
plans do provide a mechanism for somebody who chooses not to use a
preferred provider, to go outside of that network, and they still
have a benefit, they're choosing consciously to make - to utilize
services from another provider and they're paying the difference
out of their pocket. By passing this bill you would be taking away
the ability for an employer to make a choice to buy that plan
because if the carrier can't continue to negotiate the pricing, the
... discounted plan that they're purchasing is going to away and
that's where those 10, 15 percent rate increases are going to come
in."
Number 0048
MS. ALLARD stated, "We also fear that this is gonna increase
carrier administrative costs because of the provisions requiring
Alaska licensure for all medical professionals conducting
utilization review in Alaska and create an unfavorable environment
here for doing business by placing these restraints on carriers and
exposing them to increased liability. It's also my understanding,
as it's been expressed by someone prior to me, ... that the way
this legislation is worded, it's only going to affect plans that
are fully insured. The people that are out there are currently on
plans that are self-insured are not gonna be impacted by this
legislation. So, plans like the Blue Cross Federal Employee
program are not going to be impacted by this."
Number 0086
MARY VEALE, Legislative Liaison, Alaska Chapter, American Physical
Therapy Association, came forward to testify. She stated the
association strongly supports this bill, indicating the association
felt it was an important protection of Alaskan patients' rights for
patients to be able to choose their physical therapist. She also
recommended a change to Section 2, subsection (b)of CSHB 300(HES),
which currently read:
(b) A health care insurer may not deny, reduce, or
terminate health care benefits for a covered person
unless the denial, reduction, or termination is approved
by a physician who is licensed to practice in the United
States.
MS. VEALE requested more specific language stating the review be
made by a health care provider who is licensed and competent to
perform the service under review instead of physician denial. Ms.
Veale commented on Alaska's types of patient populations, like
commercial loggers, that physicians in the continental United
States might not be as familiar with, giving the example of a
physician without a specialty in rehabilitation medicine denying
benefits. She said she also thinks it would be cheaper for
insurance companies in the long run if the individual health care
provider was doing a review, noting a physical therapist reviewer
would cost the company less than a physician reviewer. Ms. Veale
additionally commented she had been unhappy with some of the things
she had seen relating to HMOs and PPOS when she worked in Seattle,
Washington. She said there were quite a few of those types of
organizations there and she noted many of her coworkers were
quitting and not working for these organizations because they felt
they could not offer the same quality of care as in an autonomous
practice. She said they felt limited by the amount of time they
could see the patient.
Number 0162
REPRESENTATIVE RYAN commented, "For a person to maintain a practice
... when it's a reduced pay, they have to push people through like
animals in a box car or else ..."
MS. VEALE agreed, and she said she felt the patients are the losers
in a situation like that.
REPRESENTATIVE RYAN asked if that affected her profession.
MS. VEALE replied very much so, noting there were places in Seattle
before she left that she would not work because of the association
mostly with HMOs. She indicated physical therapists were limited
to very short time intervals with patients and she felt the amount
of time allowed was inadequate to do thorough evaluations and
treatments. She indicated she did not find this situation so much
in Alaska.
Number 0186
CHAIRMAN ROKEBERG asked Ms. Veale if she moved to Alaska to get
away from an HMO environment.
MS. VEALE indicated she moved mostly to get away from traffic.
Number 0199
REPRESENTATIVE RYAN noted he had a rhetorical question for Chairman
Rokeberg. He said, "You've heard all this testimony, this money
hasn't gone away, it's still in somebody's pocket. Who's got the
money?"
CHAIRMAN ROKEBERG replied that was the issue here, "Whose pocket
does the money go in?"
Number 0216
LINDA FINK, Assistant Director, Alaska Hospital and Nursing Home
Association, came forward to testify. She said the association
represents all of the community hospitals in the state and strongly
opposes HB 300, specifically Section 21.42.390(a)(1) and (c)(1), in
Section 2 of CSHB 300(HES). She stated the bill will take away one
of the few options Alaska businesses have, contracting with
hospitals for volume discounts, to manage the cost of offering
health insurance benefits to their employees. She stated the bill
interferes with the right of a business to fully define the benefit
package it would offer and also interferes in the contracting
relationship between purchasers and providers. Instead of
providing choice, they believe it will reduce the variety of health
plan options on the market; the net results would be higher health
costs for everyone in Alaska, and more people losing health
insurance.
Number 0254
REPRESENTATIVE JERRY SANDERS asked if patients currently have a
choice to go anywhere they wish.
MS. FINK replied she believes they do.
REPRESENTATIVE SANDERS said then the only difference is in who pay
for it; if the patients exercised their choice, they pay for it.
MS. FINK replied she thought it depended on what kind of insurance
they had.
REPRESENTATIVE SANDERS indicated if HB 300 was passed, that when
the patients exercised their choice, he would pay for it. He noted
that was his understanding.
MS. FINK answered, "Yes" She said she thinks it depends on what
kind of insurance they have.
Number 0295
REPRESENTATIVE RYAN commented there was a point he was trying to
get clear. He asked Ms. Fink if it was her understanding the
benefit package offered to the employees of the association's
hospitals, along with actual monies for services performed, was
part of the employees' compensation package. He indicated the
association's members were in a competitive job marketplace.
MS. FINK indicated it was her understanding insurance coverage was
part of an employee's compensation package in most cases.
REPRESENTATIVE RYAN noted that and said, "Then, if utilization
review comes along and denies them, has not whoever did this
utilization review and denied them, stolen something of value from
them - taken something without compensating them some other way in
cash money?"
Number 0321
MS. FINK replied she thought most plans had specific things they
compensate for and it was not blanket or carte blanche.
REPRESENTATIVE RYAN indicated he had received a bill for a couple
of hundred dollars because his wife had surgery from a provider who
was covered under her plan but the surgery was done at a facility
other than Providence Alaska Medical Center.
MS. FINK indicated some of the other witnesses might be able to
address that better than she could.
REPRESENTATIVE RYAN indicated his comments were not directed
specifically at her.
Number 0357
CHAIRMAN ROKEBERG asked if Ms. Fink knew if Bartlett Regional
Hospital in Juneau has any PPO arrangements.
MS. FINK said she did not know.
Number 0385
MARIANNE BURKE, Director, Division of Insurance, Department of
Commerce and Economic Development, came forward to testify next.
Ms. Burke indicated she had received a letter dated March 13, 1998,
from the committee requesting certain information. She said the
specific questions raised by Chairman Rokeberg addressed points
touched on that day. Ms. Burke noted one question was the number
of health insurers licensed to do business in Alaska. She stated
her information was based on calendar year 1996, noting the 1997
information was not due in to the state until March 1. She said
there are literally thousands of reports being processed and that
data is being compiled. Ms. Burke stated there were 142 insurance
companies who held a certificate of insurance and had the authority
to write group health coverage in Alaska. There were also other
insurers who had what was known as specialized authority to write
other nontraditional health care or managed care policies; she gave
the examples of cancer or disability coverages. She noted 226
insurers in total held certificates of authority in Alaska and
Alaska additionally had two medical service corporations, nonprofit
entities, Blue Cross Blue Shield Alaska and "Alaska Vision."
Number 0490
MS. BURKE added that although the question was not asked she would
like say that there are no HMOs in the state of Alaska. Although
the state does have enabling legislation, no HMO has applied for a
license in Alaska. The premium volume by carrier is available in
the division's annual report, and she noted she has provided
selected pages to the committee. The premium volume is on calendar
year 1996. The total dollars of premium written in Alaska was
$269,271,000. She stressed that is insured plans and does not
include plans that are ERISA self-insured. She indicated the
division does not have the authority to gather that data and the
data is not available, it is proprietary to the entities and the
division is precluded by federal law from requesting that data.
She said the committee's letter also asks for information about the
types of policies underwritten particularly as it relates to
individuals. Currently, Blue Cross [Blue Cross Blue Shield Alaska]
writes approximately 90 percent of the individual policies written
in the state of Alaska. Since 1995 Blue Cross has experienced a
steadily declining number of policy holders. Fewer people are
seeking individual health insurance. This is for a number of
different reasons, not the least of which is that the premiums for
individual health insurance have been steadily rising. There are
some fixed costs that remain as the number of individuals
decreases, so there are fewer people to spread that cost over. In
addition, there has been significant increase in the cost of health
care and delivery in Alaska as in a number of other states.
Number 0614
MS. BURKE said the remaining 10 percent of insurers writing
individual policies were scattered over 10 to 12 different
companies, none of which had a significant amount. She added in
many cases that health insurance was more or less written as an
accommodation to the insurance company's client who might have a
very large portfolio of other insurance. Ms. Burke indicated the
March 13 letter also requested her to specifically address a
December 3, 1997, memorandum written by legislative counsel Michael
Ford which said it was the author's opinion state mandates could
apply to ERISA self-insured plans. Ms. Burke indicated Signe
Anderson, an assistant attorney general assigned to the Division of
Insurance, had responded and the committee has been provided with
a copy. Ms. Burke said there is 24 years of case law, all over the
country, which clearly says states are preempted from mandating any
coverage to an ERISA self-insured plan. She commented that has
been challenged all over the country and it has never been
overridden. According to the information the division was
voluntarily provided, Alaska's larger employers such as ARCO
Alaska, Incorporated; BP Exploration (Alaska) Incorporated; Carr-
Gottstein and Fred Meyer were all self-insured. Ms. Burke
indicated HB 300 would not apply to these employers or to the Blue
Cross Federal Employees plan mentioned previously. She said that
was a federal plan and they have no authority over it.
Number 0728
REPRESENTATIVE RYAN commented the testimony had said PPOs were
giving substantial discounts to get business. He said providers
were rushing patients through in an attempt to make enough money to
pay the overhead, but premiums are going up. Representative Ryan
asked who is making the money.
Number 0753
MS. BURKE replied the division has had no such complaints of
patients being rushed or about PPOs with the exception of very
isolated situations. She said in those cases more often than not
the problem had not been the reimbursement itself, but either the
time the reimbursement took or other matters. Ms. Burke noted the
premium that has been determined and which employers pay in did not
contemplate 100 percent of any service was going to be paid, that
all individuals were going to have equal amounts of claims. She
said, referring to Representative Cowdery's remarks, this was
actuarially determined and was based on the provisions of the plan.
For example, if there was a PPO plan, it was assumed in the
actuarial assumptions that the amount to be paid out would be in
accordance with the discounted or negotiated cost. Therefore, the
amount of money coming in for the coverage was less than if an
indemnity plan had been negotiated which contemplated the rates
could vary and be higher. Ms. Burke noted it was a choice.
Number 0833
CHAIRMAN ROKEBERG indicated he has some questions for Ms. Burke
which he hopes can be answered and discussed at the March 23, 1998,
hearing. He said he wanted to follow-up on the question about
whether Ms. Burke believed and the statistical evidence showed that
the availability of individual health insurance plans in Alaska was
in jeopardy. He noted this was a separate issue from HB 300. He
additionally asked, "Secondly, ... whether the - the issues that
revolve around the status of ERISA as it relates to state mandates
and the split case law on that. ... Thirdly, what the state's
relationship to CHIPRA and the entire availability of health
insurance in the state is because of the - the shifting companies'
ownership and the availability of their ability to underwrite
individual and/or group plans in the state."
Number 0900
DIRK WHITE, Pharmacist, testified next via teleconference from
Sitka. Mr. White stated he was a community practice pharmacist,
and he and his wife, also a pharmacist, own and operate the two
pharmacies in Sitka. He said they had approximately 22 full-time
employees and they pay for a health insurance program for those
employees. Mr. White said he supports HB 300. He stated, "Before
the onset of the health care issues made front-page news, you could
go and see the doctor or dentist of your choice. They'd provide
care for you and they might write you a prescription which you
could then take to your favorite pharmacist to fill. Well, then
the insurance companies got involved and now you need to ask them
who you can see and where you can go to get your prescription
filled -- after they designate that it's okay that you see the
particular health care provider that's gonna write that
prescription. I want to know why we've given that right away to
them, why they've that taken that right from us or why we've
allowed it to happen. Also, my concern is that myself and other
pharmacists like me will be forced out of business by the current
practices of these insurance companies. In the last five years,
the three biggest pharmacy benefit managers, those being mail-order
houses, have been bought by drug companies. PCS, which is
Prescription Card Services of Scottsdale, Arizona, is owned by Eli
Lilly [Eli Lilly and Company]. Med-Co ... Cost Containment Company
is owned by Merck [DuPont Merck Pharmaceutical Company].
Diversified Pharmaceuticals is owned by Smith Kline Beecham." He
noted he does not own stock in any of those companies and would not
buy it.
Number 0979
MR. WHITE said those three pharmacy benefit managers (PBMs)
controlled, or were under contract by insurance companies to
provide mail-order pharmacy services to over three-fourths of the
insured lives in America. He expressed concern about the overall
health of his community and his profession, stating, "Unless we
stop these practices, your pharmacist probably will soon become
your mailperson." He gave a recent example of a patient who needed
a prescription for antibiotics but was covered under a plan Mr.
White said he wasn't even given the option to join. He said the
person could not afford the prescription but had to be in Ketchikan
for work about a week later, and had the prescription filled at the
Carrs Quality Center there. Mr. White commented about possible
worsening of the patient's condition because of the delay in
receiving medication which would have cost the insurance company
more and kept the patient from going to work when he reached
Ketchikan. He indicated the healthy community and their health
care rights were why he was testifying in support of HB 300, urging
the committee's support. He stated, "Our insurance reps do not use
the word 'negotiate.' They tell us what they'll pay us for our
services and we can take it or leave it and those rates have not
gone up in ten years -- well my insurance premiums certainly have
to cover my employees."
Number 1081
CHAIRMAN ROKEBERG referred to his conversation with Mr. White the
previous week. He mentioned previous written comments Mr. White
had provided to the committee and commented on a statistic he found
in the bill packet indicating a number of states had the "any
willing provider" provisions but they only really related to
pharmacy. He asked Mr. White if he was familiar with other states
that have this particular provision that only relates to
pharmacies. He asked Mr. White if he could follow up on that and
get back to the chairman at a later date.
Number 1117
REPRESENTATIVE RYAN asked if it was correct that an insurance
company paid Mr. White a particular fee for filling a prescription
over the wholesale - the generic rate of the drug.
MR. WHITE answered in the affirmative.
REPRESENTATIVE RYAN asked how much money was that in Alaska.
MR. WHITE asked if he was talking about the welfare rate.
REPRESENTATIVE RYAN said what Mr. White could get paid over, what
the generic cost of the drug was if Mr. White could buy it at that
cost.
MR. WHITE replied the problem was that the insurance companies'
reimbursement rates for pharmacy are currently well below Alaska's
welfare rate. He said the Alaska's welfare rate was set up in 1989
to provide pharmacists $0.25 profit on every prescription. He
noted they were paying about $18 per hour for pharmacist and the
current rate is now $29 per hour.
REPRESENTATIVE RYAN asked if Mr. White could buy those drugs at a
wholesale or generic rate like a large company like Carr-Gottstein
Foods Company can.
MR. WHITE answered in the negative, commenting, "Nowhere near."
REPRESENTATIVE RYAN asked Mr. White if he gained or lost, in
effect, on the rate he was paid by the insurance companies.
MR. WHITE replied he lost.
REPRESENTATIVE RYAN observed that all of Alaska's insurance laws
had been given to them to pass by the insurance companies. He
stated, "We don't know diddley-squat about insurance law but we
just take it and pass it, and we wind up with this kind of stuff."
MR. WHITE agreed.
Number 1190
CHAIRMAN ROKEBERG asked if there was anything preventing Mr. White,
as an independent pharmacist in Alaska, from forming a buying
network.
MR. WHITE replied there are anti-trust laws, indicating there are
both federal and state anti-trust laws. He said he doesn't discuss
his prices with other pharmacists at all, noting they have been
told by insurance companies they would be taken to court if they
did.
CHAIRMAN ROKEBERG said the committee would look into that further,
noting he was sure buying networks existed elsewhere.
MR. WHITE injected he had misunderstood. He stated there are
cooperatives allowing them to pool their purchasing ability, but he
said even then they still could not get the optimal rates nonprofit
hospitals and government can obtain. He indicated he would check
into the "any willing provider" state laws regarding pharmacy
Chairman Rokeberg had mentioned.
Number 1248
CHAIRMAN ROKEBERG confirmed there was no one who wished to testify
via teleconference from Fairbanks at that time.
Number 1278
DEBRA DUMMANN, Member, International Brotherhood of Teamsters Local
959, testified next via teleconference from Anchorage. She stated
she is a member of the International Brotherhood of Teamsters Local
959, a consumer and a mother. Ms. Dummann spoke from a prepared
statement:
I am concerned after reading House Bill 300 that the Act
which says the Preferred Provider Arrangement may be
legislated away. I'm a 24-year union member of Teamsters
Local 959. I've participated in our union/employer
negotiations, have been on the Teamsters Health and
Welfare Task Force Committee for 3 years, along with some
other 15 members from around our state. I was recently
asked to participate in a parent advisory board at one of
our local hospitals. My husband and I were recently
elected to share one board position for the National
Mucopolysaccharide Society [MPS Society] which is the
group of disorders of which our youngest son suffers
from. However, put all that aside, I feel that my
greatest knowledge in the health care field comes from
being a mom. I am an informed, aware consumer and must
oppose your HB 300. I also feel that our 5,000 plus
statewide Teamster Union members are informed consumers
and they all have a voice to express their questions or
concerns when it comes to using PPOs.
Our task force members, as well as shop stewards work in
the trenches with their fellow members on a daily basis
statewide. If their questions, concerns or opinions by
which the task force member or shop steward is
unfamiliar, these members can phone their business
agents, the local trust offices or continue up the
ladder. The members' comments are listened to and acted
upon accordingly. As an example, our Trust discontinued
using an insurance provider in 1996 because of poor
service, but more importantly because of the concerns
that were raised by our members. The task force was
formed to look into these important health issues and we
mailed some 5,000 questionnaires, statewide, to our
members. We were shocked and amazed to receive over
3,500 informative questionnaires back. These respondents
didn't hold back, and yes, they participated in obtaining
a new insurance provider. Because of this, I know that
our statewide membership has a voice which is a valuable
tool when it comes to our union negotiating with our
employers to save 'me the consumer' money.
The negotiated PPO arrangements, which I am familiar
with, are negotiated to obtain a higher level of care for
less money. Makes sense. However, if this negotiated
arrangement is legislated away, that will result in
higher costs to our Welfare Trust, our employers,
employees and passed down to our families. An even worse
scenario would be higher costs, with reduced coverage.
Instead our union has been on track to keep the rising
costs of health care down and to provide the utmost in
quality care that our members deserve.
However, as I'm writing this - reading this, I guess - I
can see the issue goes even beyond being a Teamster.
What about retirees in general that have other insurance
and their own negotiated PPOs? These are people who
lived on fixed incomes. How can you legislate away their
PPOs? How can you contain their costs? Who is going to
look out for them? The PPO arrangements at least have a
negotiated cost fixed for a specific period of time to
edge out the continuous rise in health care costs. Last
but not least, I'm disappointed at the notion that I am
trading chip in the insurance world and I continue to
oppose HB 300. I do have a choice. We all have a
voice.
CHAIRMAN ROKEBERG said he would recess the hearing on HB 300 for a
moment to take up another order of business.
HB 304 - MOVE LEGISLATURE TO ANCHORAGE
Number 1473
CHAIRMAN ROKEBERG announced the committee would briefly take up HB
304, "An Act relating to the location of the convening of the
legislature in regular session; repealing provisions relating to
student guests of the legislature; and providing for an effective
date."
Number 1495
REPRESENTATIVE COWDERY made a motion to move HB 304 out of
committee with individual recommendations and the attached fiscal
note. There being no objection, HB 304 was moved out of the House
Labor and Commerce Standing Committee.
HB 300 - ALASKA PATIENTS' BILL OF RIGHTS
Number 1519
CHAIRMAN ROKEBERG announced the committee would return to the
public hearing on HB 300.
Number 1529
SHELBY STASTNY, Chief Financial Officer, NANA Regional Corporation
(NANA), testified next via teleconference from Anchorage. He spoke
from a prepared statement:
In a recent study it was determined that NANA accounts
for 2,000 jobs and $80 million in annual payroll - all
within the state of Alaska. Now, NANA is a self-insured
organization and so the provisions of this bill won't
necessarily affect directly NANA, but we believe that it
will affect ... significantly the ability of others in
the economy, and indirectly us through the lessened
competition. In order to stay competitive and continue
to be a strong positive economic force in the community,
it's imperative that we and our other businesses seek
ways to control costs. NANA is also an employer that
cares about its employees. Many of our employees are in
positions that do not require high levels of education or
experience, thus are not at the top of the economic pay
scale. We continually seek ways to provide benefits for
our employees to improve their quality of life, while
still remaining competitive in our low margin businesses.
As health care costs have risen in the last few years,
it's been tougher and tougher to meet our desire to
provide reasonably priced health coverage for our
employees.
A group of our managers, along with our insurance
consultants, have worked for the last several months to
provide health coverage to the families of more of our
less highly compensated employees while remaining
competitive to our customers. Effective April 1, in less
than two weeks, we begin our new program. A larger
number of our employees' families will have coverage
because it will be more affordable. An integral part of
our ability to provide this coverage has been our ability
to hold down hospitalization costs through the use of a
preferred provider network of hospitals. As a purchaser
of medical services, our cost will be reduced
significantly by a volume purchase agreement arranged
through our insurance administrator. Virtually all
hospital service providers in Alaska were given the
opportunity ... to participate, however, not all
responded. Our employees are not required to receive
services from the preferred providers. They are free to
choose the provider of their choice. If, however, they
choose another provider, it's gonna cost NANA more money,
since we do not have the discount arrangement. As an
incentive for the employee to utilize the service that
will cost NANA the least amount of money, the employee
pays a higher share of the cost in a non-preferred
hospital. There is no credible evidence that the
preferred hospitals provide a lower quality of service.
We object to the passage of HB 300 since it interferes
with ours and other businesses' right to appropriately
manage health care costs and provide the highest level of
health care service possible for our employees at a
reasonable cost.
Number 1691
REPRESENTATIVE COWDERY asked if Mr. Stastny knew of anyone who had
been hurt by the present system.
MR. STASTNY replied not to his knowledge, but said he was not an
expert in the area.
Number 1704
CHAIRMAN ROKEBERG commented, "But Shelby, as ... one of my former
accountants, you'd say that the cost containment benefits of a - a
contractual relationship you've entered into is - is beneficial, is
that correct?"
MR. STASTNY replied it would save them hundreds of thousands of
dollars a year and these savings have allowed them to cover more of
their employee families. He noted NANA has always covered the
employees themselves.
Number 1736
REPRESENTATIVE RYAN commented "what seems to be the hook in this
thing" is there is no determination of the value of the benefit
package. He stated, "It's given as compensation to compete in the
job marketplace, to hire people, but nobody puts value on it for
the employee." Representative Ryan mentioned three possible
different benefit levels - "first class," "ordinary-type," "in the
back door" - and said he thought perhaps they needed look at
tightening that up in statute that these benefit packages were part
of compensation and people had a right of legal recourse receive
the value of that compensation.
MR. STASTNY said he guessed that was one way of looking at it,
noting NANA provided its employees with the knowledge of what it
cost NANA to provide the employees' benefits.
REPRESENTATIVE RYAN said he understood, noting the employees just
have to be able to receive that value when they went use that
benefit.
Number 1800
CHAIRMAN ROKEBERG checked again to see if anyone was on
teleconference in Fairbanks. There being no reply, he confirmed
there were no other teleconference sites with witnesses waiting
beside Anchorage.
Number 1815
TOM TIERNEY, Director, Employee Relations, Municipality of
Anchorage, testified next via teleconference from Anchorage. He
commented the municipality has approximately 2,900 employees
covered; there are approximately 8,000 total lives including
spouses and children. In 1997, the city's claims were in excess of
$16 million of which inpatient hospitalization was $5.7 million,
out-patient medical services were $7.5 million, prescription drugs
were $0.5 million, dental care was $2.3 million and vision care was
$0.4 million. Mr. Tierney said the municipality has had rapidly
escalating cost increases over the past many years, like most other
businesses in Anchorage, in Alaska and throughout the country. In
the face of this problem the municipality had, before he got there,
taken many actions in attempts to mitigate those increases. In
1987 the municipality began utilization review. In 1990,
utilization review began for mental health care. In 1991, the
municipality instituted the joint cost containment committees with
its bargaining groups. In 1993, the municipality approved AETNA's
use of a PPO as a cost containment tool. He said equally important
during this period was that the municipality had a continuing and
intensive review of plan design, including level of copayments and
deductibles. In short, he said, the municipality had left no stone
unturned in its attempts to control its medical costs. He said
that, unfortunately, costs have risen, and as costs rise they have
to be borne by someone, either the municipality's employees or its
taxpayers. He stated, "Make one thing clear, on our system they're
not paid by the insurer carriers. I think the insurance carriers
-- I'm not gonna defend them here today, but the cost of increased
medical care are not borne by the insurance carriers, they're borne
by taxpayers and by employees. The responsibility for the health
care of our employees is one we take seriously and it's a very
personal matter for each of us, but it's also a business and that
brings us to the present legislation."
Number 1970
MR. TIERNEY stated the municipality feels it is essential to
continue to have the ability to negotiate with providers of health
care on behalf of its employees in order to achieve the maximum
value for the employee and the taxpayer's health care dollar. Mr.
Tierney said the legislation would severely restrict the
municipality's ability to do this and, therefore, the municipality
opposes HB 300. He commented on the well-known benefits of using
purchasing power to negotiate better deals and said restricting
municipality's ability to do this shifts the balance of power in
favor of the health care providers and against individual users of
their services for those employees of the municipality. He stated
HB 300 is called a patients' bill of rights. If it results in
increased costs to consumers, and they think it will, then it will
be an empty bill of rights. He said there could be no question
that certain of the rights of the municipality's employees had been
restricted but medical costs would bankrupt every employer and
government entity in the state if left unchecked. Mr. Tierney
stated the municipality's employees understood this and complaints
about the municipality's PPO had been almost nonexistent. He noted
they did not think this was an area which needed to be fixed.
Number 2045
CHAIRMAN ROKEBERG noted the committee had Mr. Tierney's March 6,
1998, letter but asked him to provide that additional report.
MR. TIERNEY replied he would.
CHAIRMAN ROKEBERG confirmed the municipality uses an insured PPO
but is not self-insured.
Number 2066
MR. TIERNEY agreed, noting the municipality was not totally self-
insured; there was an insurance component of its plan. He said the
employee has a choice on some of the municipality's plans, noting
they could go with a non-PPO option which cost the employee more
and he said it is not a very popular option.
CHAIRMAN ROKEBERG asked whether there is a list of physicians or if
an employee was assigned to specific providers.
MR. TIERNEY replied that the PPO is with respect to hospital care
and he confirmed the employees could select their own physicians.
Number 2126
REPRESENTATIVE COWDERY asked if a municipal employee covered by
another plan could waive the municipality's coverage and receive
additional financial compensation.
MR. TIERNEY replied that the question did not come up because the
municipality's coverage covered so much.
REPRESENTATIVE COWDERY said he is covered under the municipality's
plan and has waived coverage available to him in Juneau with the
state.
Number 2204
CHAIRMAN ROKEBERG asked if the municipality's PPO was with
"Providence" or "Alaska Regional HCA Columbia" [Columbia/HCA is the
parent company of Alaska Regional Hospital, recently renamed from
Columbia Alaska Regional Hospital].
MR. TIERNEY answered with "Providence."
CHAIRMAN ROKEBERG asked if that meant the municipality employees
could not go to "Alaska Regional HCA Columbia."
MR. TIERNEY answered in the negative, indicating he knew of some
employees who choose to go to Alaska Regional Hospital. Speaking
from personal experience, he said the municipality has made special
fee arrangements neutralizing the adverse effect of going through
the PPO. He said he has been told this was no longer being done,
but knew it had been done in the fairly recent past.
Number 2266
CHAIRMAN ROKEBERG asked if he had ever considered that the
municipality was exempted by ERISA from any state mandates
generated by the legislature because it is a large group.
MR. TIERNEY replied, "We're not, sir, at least we don't think so.
The municipality did not believe it was exempt. The mandates,
interestingly enough, always seem to cost us more money ... which
is interesting in the sense that many of our collective bargaining
agreements are, like, four-year agreements so the costs have to be
-- you normally have caps with a sharing above that for collective
bargaining groups."
Number 2333
REPRESENTATIVE RYAN observed that with 250,000 people in Anchorage
and 2,900 municipal employees, there is 1 employee for every 86
people. He asked Mr. Tierney if that makes him comfortable and
gives him some security.
MR. TIERNEY stated, "Their health care needs are well-cared for,
sir."
TAPE 98-34, SIDE A
Number 0014
QUINN McKENNA, Operations Administrator, Providence Health Systems
in Alaska, testified via teleconference from Anchorage. He stated
Providence Health Systems in Alaska opposes HB 300 and he
encouraged the committee not to pass it. They believe it would
increase health care costs for the community, limit choice of the
number of insurance plans available to the community and decrease
competition. He said he agrees with other testimony provided,
indicating other states have addressed the issue of "any willing
provider" legislation and that he does view HB 300 as "any willing
provider" legislation. He noted "any willing provider" means any
patient can go to any provider and that is exactly what HB 300
provides for. Mr. McKenna indicated Montana passed an "any willing
provider" bill in 1991 and then let it sunset in two years. He
said Montana asked the United States of America Federal Trade
Commission (FTC) to give the state an opinion on its legislation
which Mr. McKenna noted was very similar to HB 300. He quoted from
the February 4, 1993, letter to the attorney general of the state
of Montana from the FTC, "By preventing PPOs from limiting the
panel of providers the law discourages contracts with providers in
which lower prices are offered in exchange for the assurance of
higher volume. Although the law may be intended to assure
consumers greater freedom to choose where they obtain services, it
appears likely to have the unintended effect of denying consumers
the advantage of cost-reducing arrangements and limiting their
choice in the provision of health care services. The commission
has observed that competition among third party payers and health
care providers can enhance the choice and availability of services
for consumers and can reduce health care costs. In summary, we
believe that 'any willing provider' requirement may discourage
competition among providers, in turn raising prices to consumers
and unnecessarily restricting consumer choice in prepaid health
care programs without [Mr. McKenna commented he emphasized the next
point] providing any substantial public benefit." He stated FTC's
primary purpose is to prevent unfair methods of competition and it
is the FTC's opinion that legislation like this would increase
costs, decrease competition and limit choice.
Number 0230
CHAIRMAN ROKEBERG noted that letter was in the committee members'
packets due to Mr. Reinwand's efforts. He indicated the committee
would next hear from Mano Frey.
THE TELECONFERENCE MONITOR at the Anchorage Legislative Information
Office (LIO), informed the chairman that Mr. Frey would be return
for the Monday, March 23, hearing.
Number 0280
GREG STOKES, Administrator, Alaska Electrical Trust Fund, Health
Care Cost Management Corporation of Alaska, testified via
teleconference from Anchorage. He said his organization provides
benefits for the International Brotherhood of Electrical Workers
(IBEW), statewide. He noted they are a member of the Health Care
Cost Management Corporation of Alaska, which has approximately 19
members. Plans represented are mainly in the construction industry
and they represent over 30,000 households in Alaska. Mr. Stokes
said they oppose HB 300 and agrees with previous speakers who
testified against the bill. The legislation would greatly limit
their ability to exercise cost containment efforts. He thanked the
committee for allowing him voice his concerns.
CHAIRMAN ROKEBERG asked what the purpose is of his organization.
MR. STOKES responded that they are a health care cost coalition
that collectively negotiates PPO discounts.
CHAIRMAN ROKEBERG asked if his business and the other businesses
are just under one umbrella organization for the purpose of
negotiating a single contract with a single PPO provider.
MR. STOKES responded in the affirmative.
Number 0424
BRUCE GALE, Account Executive, Willis Corroon Corporation of
Anchorage, was next to testify via teleconference from Anchorage.
He informed the committee his business is an insurance brokerage
and health care consulting firm. Many of their clients are
corporate clients who are their employers. Their clients purchase
health care services through the purchase of employee benefit
plans, some of which are insured and some of which are self-
insured. Mr. Gale said he would like to indicated their
displeasure with HB 300. In their opinion, the employer comes to
Willis Corroon Corporation of Anchorage and asks them to reduce
health care costs. He explained there are basically three
alternatives. Mr. Gale said they can reduce benefits, pass on more
of the employer's costs to the employee or they can use managed
care techniques to drive down the cost of claims by virtue of
agreements that will include discounted costs from providers. Mr.
Gale stated that HB 300 will eliminate the possibility of the use
of managed care in any way, shape or form on insured contracts. He
said they also believe that even though it will not affect self-
insured clients, the elimination of the possibility of using
managed care in the insured market is going to hinder efforts to
establish managed care plans in the Alaskan economy.
CHAIRMAN ROKEBERG asked Mr. Gale what the nature is of his
business.
MR. GALE stated they are an independent brokerage and consulting
firm. He noted they would work with all licensed insurers in the
state of Alaska.
CHAIRMAN ROKEBERG asked Mr. Gale how many underwriters he works
with that writes individual health policies in the state of Alaska.
MR. GALE responded that they work with Blue Cross and United Omaha.
CHAIRMAN ROKEBERG asked how many other underwriters they have for
property, casualty, et cetera.
MR. GALE said he couldn't answer that question as he works
exclusively on benefits.
Number 0600
CHUCK O'CONNELL, Business Manager, Alaska State Employees
Association (ASEA); American Federation of State, County and
Municipal Employees (AFSCME), testified via teleconference from
Anchorage. He stated he strongly opposes HB 300 and is speaking on
behalf of 7,500 members in the general government bargaining unit.
He said it is the policy of the state of Alaska to engage in
competitive bidding in an effort to extend the state's resources in
a way that is fiduciarily responsible. Mr. O'Connell stated HB 300
would remove competitive bidding from the health care industry. He
referred to Section 21.42.390 (b) and said it seems that it would
preclude insurance companies from having a maximum level of
benefits. The language says you cannot terminate benefits for any
reason. He said, "If somebody has a $1,500 maximum on a dental
plan, you might have just quadrupled that." Mr. O'Connell informed
the committee members that he is also opposed to Section 21.42.390
(c)(1), which has to do with directly or indirectly reimbursing a
covered person at a different rate because of the person's choice
of provider. In the state of Alaska, they do not have preferred
provider agreements with their medical benefits. The NYLCare plan
has not yet consummated any preferred provider arrangement. He
pointed out that the only place they are really available is in
Anchorage. Mr. O'Connell referred to the opening testimony on the
bill which made reference to preventing HMO abuses and stated there
aren't any HMOs so there aren't abuses. If the legislation is
passed, it would destroy any opportunity to manage health care
costs in Alaska. He respectively asked that the committee members
all vote to kill the bill.
Number 0814
CHAIRMAN ROKEBERG said, "Mr. O'Connell, as the executive director
of the largest government employee union in the state, do you think
if you were involved in negotiations with the state of Alaska - if
they were to offer you a choice of a lower cost PPO type plan, vis-
-vis a self-insured NYLCare fee for service plan - what do you
think your membership would prefer to have?"
MR. O'CONNELL stated he doesn't think it makes any difference. He
said they have two very good hospitals in Anchorage. If one
hospital were to agree to provide a level of service at one rate
and the other hospital does not, he wouldn't have a problem
encouraging the members to go to where they'll receive the best
level of benefit. Mr. O'Connell stated they have experienced
significant health care claim cost increases and they are looking
at trying to get into preferred provider arrangements. If they do
so, it will save about $4 million in the general government unit in
terms of the state's premium costs. If that is done statewide, it
could save about double that amount.
CHAIRMAN ROKEBERG said, "If NYLCare could figure out how to write
a check in a timely fashion and/or there was another third party
provider for the state's self-insured plan, if that particular
provider could arrange for a PPO style contract, you believe that
your union members - because of the cost containment measures in
savings - would prefer to go along with that? Like, for example,
take a cut in their cost of their medical benefits in order to
offset and increase their regular pay. Would that be a fair
assessment?"
MR. O'CONNELL stated that health claims have a fiscal note. If
health claim costs are increasing at a very high rate - it is
currently about 7.5 percent to 8 percent, there are very few
options. One option is to pay more money for insurance. The
second option is to negotiate preferred provider agreements. He
referred to the first option and said it would increase the cost to
the employer and/or the employee, or both. He stated that HB 300
would hurt the 100 largest employers in the state of Alaska. It
would have a disastrous effect on them.
Number 0992
REPRESENTATIVE RYAN said, "Don't you, as a strategy when you're
negotiating for your members, and you fit an impasse as to what
hard money you can get, isn't the next strategy to go for a better
benefit plan to try to bring home a little something more to
present to the membership for ratification?"
MR. O'CONNELL responded that is a strategy, yes. There is pretax
benefits and post-tax benefits.
CHAIRMAN ROKEBERG asked if some of the bargaining groups have a
problem with the state's contract because they failed to anticipate
the increase of costs, and therefore, there is an issue about who
is paying for what because of a cap that was bargained for.
MR. O'CONNELL responded that they are engaged in a major dispute
with the state. That dispute comes out of a situation where the
state wasn't paying its full premium costs and they underpaid the
premium over a period of time. He said, "As far as we're
concerned, they owe about $3.36 million to the plan."
Number 1079
JAMIE SLACK, Officer, VECO Corporation, was next to testify via
teleconference from Anchorage. He informed the committee members
that he is responsible for employee benefits for the company. As
stated earlier, there really are only three choices in this matter
as it relates to cost. You either absorb the cost and go back to
the provider to try to negotiate discounts, pass the costs on to
the employees or reduce the benefits. Mr. Slack stated that is the
struggle VECO Corporation deals with every year in regards to
increasing costs. Last year, they had to ask for a 25 percent
increase on the level that their employees are paying for their
health insurance because VECO Corporation was in a position where
they didn't want to have to turn back benefits. Mr. Slack stated
VECO Corporation is against HB 300 as they feel there isn't an
advantage to it. He agreed with previous comments against the
bill.
CHAIRMAN ROKEBERG asked Mr. Slack if they have a dental plan.
MR. SLACK responded in the affirmative.
CHAIRMAN ROKEBERG asked if employees can select their own dentists.
MR. SLACK responded they can select their own dentists as they
don't have a PPO with dentists. He noted the only PPO provision
they have relates to hospitalization.
CHAIRMAN ROKEBERG asked who underwrites their PPO.
MR. SLACK responded that they are a self-insured program, but the
program is funded through Great West. He noted their broker is
Willis Corroon of Anchorage.
CHAIRMAN ROKEBERG said they're a third party administrator and VECO
Corporation is self-insured.
MR. SLACK responded, "Yes, to a certain limit."
Number 1166
CHAIRMAN ROKEBERG asked if they are exempt from ERISA requirements.
MR. SLACK informed the committee members there is some argument
about the real interpretation of that because there is eventually
an insurance layer in there. He said their feeling is that whether
they are exempt or not, they certainly feel that competition is
what built the United States and Alaska, and to be in a position
where competition would not be allowed in the medical arena would
do nothing but increase costs and eliminate the quality of care.
Number 1226
JIM CASE, Pediatric Dentist, testified via teleconference from
Anchorage in support of HB 300. He informed the committee members
of several organizations that he is a member of, and noted he was
the first pediatric dentist in Alaska in which there are now nine
pediatric dentists. Dr. Case said, "I have a general feeling here
after listening to much of the testimony that what we may be facing
here is a case where dentistry is sitting over on the side and
decisions are made in health case on the basis of what happens over
in what we call 'medicine.' And those filter over into the little
dentistry corner and create all kinds of problems for patients and
for the profession. I do know of people who I think have been hurt
by the current system. To echo a question I heard asked, 'Who has
been damaged?' Well I believe that some kids have damaged who have
stayed with dental practitioners and not been referred to
specialists because that's what their plan said need to happen, or
there was an economic disincentive to their parents. The general
dentist wanted to refer to me (indisc.) specialist, but the parents
were at an economic disadvantage in their plan to follow up on that
referral. I don't believe that the -- or (indisc.) the parent was
damaged because they did follow up on the referral but it cost them
more. So their pocketbook was damaged where if -- or a certain
procedure that an insurance company was providing 'X' amount to
whatever willing provider there was, the patient and parent would
have had the freedom. I don't believe the Alaska people want to
give up their economic and regulatory rights to choose a
practitioner just so that employers can do the volume negotiation
that we've been hearing about."
CHAIRMAN ROKEBERG thanked Dr. Case for his testimony.
MR. CASE said he had something else to say. He stated from his
view as a specialist, he thinks people are often not aware that as
a specialist, many specialists can do treatment cheaper than the
general dentist. Dr. Case said specialists often knows how to
handle situations with less treatment. They can do it faster and
more efficiently with lower overhead because of their experiences
of doing that. He stated he is not a referral specialist as most
of his clients come out of the population by word of mouth from
patients.
Number 1415
CHAIRMAN ROKEBERG asked Dr. Case if he has had an experience where
he has had patients that may have wanted to come to him, but have
not because of the way their insurance is structured.
DR. CASE responded in the affirmative. He added that he has had
patients who have delayed coming to him, but eventually came to
him. He said patients have told him they wished they had come a
lot earlier.
CHAIRMAN ROKEBERG asked Dr. Case if he is aware of other types of
insurance policies that apply to the practice of dentistry that
usually provide over $1,000 or $2,000 worth of case per year.
DR. CASE responded, "No, you're talking what covers almost all, if
not all, plans. That's the arena we're talking about here in
dentistry."
CHAIRMAN ROKEBERG stated he doesn't understand why there are
restrictive elements here when there is almost very little
disincentive or incentive to move one way or the other unless you
have a PPO situation where you're given greater levels of care as
a benefit within your contract or within you're plan. He said he
isn't sure how HB 300 will impact dentists.
DR. CASE said, "Say the service costs $125 and if that preferred
provider -- the company will pay $110, and in my office they'll pay
$70. It's not a large amount, but it's an amount that people will
make their decisions on."
Number 1599
DAVID LOGAN, President-elect, Alaska Dental Society, came before
the committee members to give his testimony. He informed the
committee members that he is a practitioner in Juneau. Dr. Logan
stated HB 300 is a patient rights bill. Patient rights are what
people should have regardless of what type of insurance coverage
they have. They should have the right to choose who they seek for
their health care. They should have the right to know who is
reviewing their health care and what their qualifications are, and
they should have the right, if they choose, to see somebody, a
health care provider, to be paid at the same rate, regardless of
who the choice is. Dr. Logan pointed out that there has been a
great deal of testimony regarding costs and how, if the bill
becomes law, costs are going to increase. He stated he protests
that, he does not believe that and believes it is completely
totally false. He referred to the testimony that PPOs will die if
the bill is passed and stated they will succeed very well and there
are very good reasons why PPOs will succeed. He said, "If you have
a PPO, all we're asking is that no matter who you see, you get paid
the same amount regardless of whether you're participating in the
PPO or not. For the patient, I think that is a very valuable
right. If the patient chooses to see a provider outside of the PPO
network, they will have increased costs. They will have to pay the
difference, if there is any, between what the PPO will reimburse at
and what the provider will charge. That isn't always the case that
there is a difference. I can speak to a dental plan, United
Concordia (ph.). For instance, their fee schedule under their PPO
network, of which I am not a provider, is about 125 percent, for
the most part, of what my fee schedule is. However, if one of my
patients is participating in the United Concordia, (indisc.) they
get paid at 80 percent of my rate, not the rate that they would
normally be reimbursed at if they see a provider within the United
Concordia network. PPOs will not go away on this, people will not
lose their bargaining power. If there is nothing to prevent
employers from negotiating rates, the only difference here is that
when a patient goes to somebody who is participating in a PPO or
does not go to somebody who is participating in a PPO, they will
receive the same reimbursement from the insurance company. The
difference is they will pay extra possibly to see somebody outside
the PPO network."
Number 1749
DR. LOGAN explained the bill will not set a rate for any plans. He
pointed out that Blue Cross, AETNA, et cetera, does not pay at the
same rate within all their plans. The insurance companies will set
the rates and reimbursement according to what they set for
premiums. It is a (indisc.) that they turn, they turn it up
forward when they pay more on their premiums, they pay less under
other plans. It's a negotiated benefit depending upon the
particular plan you sign up for.
DR. LOGAN stated HB 300 would not affect self administered plans.
There seems to be a giant misconception out there that if the bill
passes, it will somehow affect what is happening with ERISA plans.
It will not. There is pending national legislation, the Parker
bill, that could possibly affect that but at this time there is
nothing. He thanked the committee for listening to his testimony.
Number 1809
REPRESENTATIVE COWDERY asked Dr. Logan if all the dentist rates are
on the same level.
DR. LOGAN indicated he didn't have that knowledge. He noted there
was an article in the Juneau Empire last year which discussed some
dental rates in Juneau and there was a huge spread. He said he
believes that he was one of the lowest.
REPRESENTATIVE COWDERY asked Dr. Logan that because he was one of
the lowest, does he think the quality of his service is any less
than anybody else.
DR. LOGAN said he doesn't believe that. He stated he charges what
he feels is a fair fee for the service he provides. It is based on
the time it takes him, the materials he uses and the time that it
has taken him to acquire the knowledge to deliver that care. It is
not based on any sort of pre-mandated profit margin.
REPRESENTATIVE COWDERY asked Dr. Logan if he makes a profit.
DR. LOGAN responded that he does.
Number 1867
CHAIRMAN ROKEBERG said it seems to him that the disparities between
what is typically written in a dental insurance plan in the state
of Alaska is really minor. He asked if that is a fair assumption.
DR. LOGAN stated he believes that there is similarity between most
of the plans, but there is still a wide range. There are some
plans that are fairly minimal plans. They'll cover some of the
basic preventative services, but are minimal for restorative or
none at all. There are some more traditional plans that will have
a cap at $1,000 or $1,500. Occasionally, there is a cap of $2,000,
with a sliding rate fee depending on the services provided.
Number 1922
CHAIRMAN ROKEBERG said, "If you have a heart bypass, you're going
from $35,000 to $60,000. There was not one doctor here today and
there was a letter from AMA [American Medical Association]. Are
the dentists the stocking oars here for the medical profession? Or
why are you not advocating for a dental only type (indisc.).:
DR. LOGAN stated he can only speak to the dental end of things. He
is not a physician, he has minimal contact with hospitals, he
doesn't know the inner workings of hospitals. Dr. Logan said he
cannot say what the physicians or hospitals are feeling. He said
he can only speak to the dental end of things. Dr. Logan asked the
committee to move the bill out of committee. He noted that in
speaking for the General Executive Council of the Alaska Dental
Society, they support the bill in its present form and urged it be
passed. If the committee has problems with the present form, he
would ask that the committee members make whatever changes are
necessary to move the bill out of committee.
CHAIRMAN ROKEBERG said it seems that there would be a better
opportunity for movement of the bill if it was more dental
specific. He asked Dr. Logan if he discussed that with his
colleagues.
DR. LOGAN explained it has been a general topic of discussion. It
seems there is relatively broad-based support without the health
care providers. It is a global bill and perhaps some parts of it
may not be as appropriate for medicine and hospitals as others are.
Number 2120
JERRY REINWAND, Lobbyist, Blue Cross of Washington and Alaska, was
next to address the committee. He said, "The effect of the bill is
really any one provider. I mean whether that was the intent or
not, that's the effect of the bill." Mr. Reinwand stated he can
assure the committee members that the director of the Division of
Insurance reviews all the rate filings. He said Blue Cross of
Washington and Alaska actually is audited substantially. Mr.
Reinwand said he doesn't think that there are political excess
profits being garnered by insurance companies, at least not under
the current director. He referred to rates of pay and said there
600 pages in the insurance statute. Mr. Reinwand said, "I frankly
wish it were true, I wish the insurance industry had written a
code. It would look a lot different than it does now. We haven't
-- you can see what happened on -- just some of our concerns about
unfair discrimination that hasn't been addressed, it still
continues to be an issue. So there are lots of things that can be
regulated that were talked about that really had nothing to do with
this bill. It (indisc.) any willing provider bill. Again, I'm not
saying that's the intent of the author, but that's the effect of it
and we have serious concerns about it. I got lots of paperwork I
could give you, but I won't bother you today, we can come back to
that tomorrow. And Mr. Chairman, I'd like to say I think you hit
on an important point looking about what's available out on the
market. These kinds of controls apply to a smaller and smaller and
smaller segment of the population of Alaska over time simply
because so many people are going self-insured to get away from this
kind of stuff. So you hit on a very good point and we'd like to
participate in that discussion when you come back to that."
Number 2203
CHAIRMAN ROKEBERG inquired whether anybody from Blue Cross of
Washington and Alaska would be available to testify at the next
meeting the following Monday.
MR. REINWAND indicated there would be somebody available.
CHAIRMAN ROKEBERG stated that there is information in the committee
packet which includes the rate structures of the two different
types of plans that Blue Cross of Washington and Alaska is
currently offering in Alaska. He asked Mr. Reinwand if one of the
plans is PPO type of a plan.
MR. REINWAND said that could be true. He noted he hasn't seen the
package of information that Chairman Rokeberg is talking about.
CHAIRMAN ROKEBERG stated he is concerned because of the change of
percentages of payments into the CHIPRA which is actually their
only source of information that we've been able to identify. He
pointed out that in 1996, Blue Cross of Washington and Alaska had
approximately 35 percent of the market. He said he is curious as
to what happened in 1997. He said he would like to know the shift
of their business between the number of individual policies written
versus group. Chairman Rokeberg said he would like to be made
aware of any name and financial changes in their prospects for
servicing the people of the state of Alaska.
MR. REINWAND indicated there would be people available to testify
regarding the questions Chairman Rokeberg had.
[HB 300 was held over.]
ADJOURNMENT
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 6:00 p.m.
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