Legislature(1993 - 1994)

03/01/1994 03:00 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                    HOUSE LABOR AND COMMERCE                                   
                       STANDING COMMITTEE                                      
                          March 1, 1994                                        
                            3:00 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Rep. Bill Hudson, Chairman                                                   
  Rep. Joe Green, Vice Chairman                                                
  Rep. Brian Porter                                                            
  Rep. Eldon Mulder                                                            
  Rep. Bill Williams                                                           
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Rep. Joe Sitton                                                              
  Rep. Jerry Mackie                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  *HB 476:  "An Act relating to insurance for services                         
            performed by a dentist; and providing for an                       
            effective date."                                                   
                                                                               
            HEARD AND HELD IN COMMITTEE                                        
                                                                               
  *HB 439:  "An Act enacting the Uniform Fraudulent Transfer                   
            Act."                                                              
                                                                               
            PASSED OUT OF COMMITTEE                                            
                                                                               
  Confirmation hearings:                                                       
                                                                               
            Alaska Labor Relations Agency                                      
            Board of Marine Pilots                                             
            Board of Certified Real Estate Appraisers                          
            Real Estate Commission                                             
            Alaska Public Utilities Commission                                 
            Alaska Workers' Compensation Board                                 
                                                                               
  (* First public hearing.)                                                    
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  REP. GARY DAVIS                                                              
  Alaska State Legislature                                                     
  State Capital                                                                
  Juneau, Alaska  99801-1182                                                   
  465-2693                                                                     
  Position Statement:  Sponsor of HB 476                                       
                                                                               
  STEVE LEBRUN                                                                 
  Aetna Life Insurance                                                         
  P.O. Box 21645                                                               
  Seattle, Washington  98111                                                   
  1-800-426-3211                                                               
  Position Statement:  Opposed HB 476                                          
                                                                               
  DON KOCH, Chief                                                              
  Market Surveillance                                                          
  Division of Insurance                                                        
  Department of Commerce                                                       
  P.O. Box 110805                                                              
  Juneau, Alaska  99811-0805                                                   
  465-2577                                                                     
  Position Statement:  Gave overview and answered questions                    
                       on HB 476                                               
                                                                               
  JERRY STRANIK                                                                
  2601 Boniface Parkway                                                        
  Anchorage, Alaska  99504                                                     
  337-9474                                                                     
  Position Statement:  Supported HB 476                                        
                                                                               
  FRANK THOMAS-MEARS                                                           
  12541 Atherton                                                               
  Anchorage, Alaska 99516                                                      
  345-7181                                                                     
  Position Statement:  Supported HB 476                                        
                                                                               
  JERRY KURTZ                                                                  
  1050 Beech Lane                                                              
  Anchorage, Alaska  99501                                                     
  258-6051                                                                     
  Position Statement:  Supported HB 439                                        
                                                                               
  MARY ELLEN BEARDSLEY                                                         
  Assistant Attorney General                                                   
  Department of Law                                                            
  1031 W. 4th Ave.                                                             
  Anchorage, Alaska  99501                                                     
  265-5213                                                                     
  Position Statement:  Supported HB 439                                        
                                                                               
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 476                                                                
  SHORT TITLE: DENTAL INSURANCE COVERAGE                                       
  SPONSOR(S): REPRESENTATIVE(S) G.DAVIS BY REQUEST                             
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  02/14/94      2376    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2376    (H)   LABOR & COMMERCE, STATE AFFAIRS                  
  03/01/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
                                                                               
                                                                               
  BILL:  HB 439                                                                
  SHORT TITLE: UNIFORM FRAUDULENT TRANSFER ACT                                 
  SPONSOR(S): JUDICIARY                                                        
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  02/04/94      2256    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/04/94      2256    (H)   LABOR & COMMERCE, JUDICIARY                      
  03/01/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 94-17, SIDE A                                                           
  Number 001                                                                   
                                                                               
  CHAIRMAN HUDSON convened the meeting at 3:15 and invited                     
  Rep. Gary Davis to present HB 476.                                           
  HB 476 - DENTAL INSURANCE COVERAGE                                           
                                                                               
  Number 005                                                                   
                                                                               
  REP. GARY DAVIS, Prime Sponsor of HB 476, stated that HB 476                 
  will require that health insurance policies and employee                     
  benefit plans which provide dental care benefits shall                       
  permit beneficiaries to select the dentist of their choice.                  
                                                                               
  REP. DAVIS added that it had been expected to be a fairly                    
  clean bill until the last minute, but he has been informed                   
  that the insurance industry has some problems with HB 476.                   
  Rep. Davis asked the committee to listen to all sides of the                 
  issue and then he would work with the various sides and come                 
  back to the committee with a cleaned up version of the bill.                 
                                                                               
  Number 064                                                                   
                                                                               
  STEVE LEBRUN, Account Manager, Aetna Health Plan, testified                  
  against HB 476.  Mr. LeBrun stated that it appears HB 476                    
  was primarily directed at managed dental care plans.  Mr.                    
  LeBrun stated that managed dental care plans have four main                  
  features:                                                                    
                                                                               
  1) health insurers such as Aetna make arrangements with                      
     selected providers to furnish comprehensive services to                   
     members;                                                                  
                                                                               
  2) the organization of these plans involve explicit                          
     criteria, providers are credentialed and are reviewed for                 
     participation;                                                            
                                                                               
  3) managed plans also involve formal programs for ongoing                    
     quality assurance and review of services;                                 
                                                                               
  4) managed plans incorporate financial incentives for plan                   
     members to use the contracted providers associated with                   
     those plans.                                                              
                                                                               
  MR. LEBRUN asserted that HB 476 would prevent or prohibit                    
  insurers from offering managed network products in Alaska.                   
  He added that Aetna currently offers a preferred dental                      
  network in the Anchorage area.  Much of the growth of                        
  managed care has been at the request of employers who are                    
  seeking ways to better manage cost and assure quality.                       
                                                                               
  MR. LEBRUN felt that managed plans have been proven over                     
  time to be valuable in controlling costs, at the same time                   
  they promote appropriate utilization and quality standards.                  
                                                                               
  MR. LEBRUN outlined a few of the specific provisions that                    
  Aetna thinks would be detrimental to the development and                     
  growth of managed dental care plans and would essentially                    
  prohibit insurers from continuing to offer or explore                        
  managed health care opportunities:                                           
                                                                               
  1) HB 476 would appear to allow any licensed dentist to                      
     participate in our dental network.  Essentially this                      
     would eliminate the credentialing currently in place and                  
     might even be interpreted to say that the provider need                   
     not comply with the terms of the contract.  Aetna                         
     believes its important that they have the ability to                      
     selectively contract with dentists who share a common                     
     treatment philosophy and will abide by certain treatment                  
     guidelines and protocols.                                                 
                                                                               
  2) HB 476 contains a provision that insurers give full                       
     freedom of choice to enrollees concerning provider                        
     selection and that insurers pay network and non-network                   
     providers the same rates.  This would prevent insurers                    
     from steering patients to network providers and from                      
     negotiating favorable rates from providers based on that                  
     volume.                                                                   
                                                                               
  3) HB 476 contains provisions that appears to prohibit                       
     insurers from working with providers to implement                         
     standards of treatment and utilization.  Language in                      
     HB 476 would prohibit interfering or intervening in the                   
     diagnosis or treatment of patients.  This language could                  
     be interpreted to mean the insurers could also be barred                  
     from communicating with providers regarding advanced                      
     certifications of care or specialty care referrals.                       
                                                                               
  4) HB 476 contains provisions that don't address managed                     
     care plans and provision that require disclosure of                       
     certain information on lines 9 through 17.  Aetna has no                  
     issue with those areas.                                                   
                                                                               
  MR. LEBRUN concluded by saying that more effort should be                    
  geared toward promoting the quality and cost efficiency that                 
  is found in managed care arrangements and not in restricting                 
  or prohibiting same.  Mr. LeBrun asserted that the employers                 
  feel that managed dental care programs are valuable and feel                 
  that giving up some choice is worth it to gain the cost                      
  savings and other benefits in managed care.                                  
                                                                               
  Number 200                                                                   
                                                                               
  CHAIRMAN HUDSON asked Mr. LeBrun who is being left out                       
  currently.                                                                   
                                                                               
  Number 208                                                                   
                                                                               
  MR. LEBRUN stated that most of the dental coverage Aetna                     
  provides in Alaska is traditional dental coverage, fee for                   
  service.  The percentage of people covered under managed                     
  dental plans is small in Alaska and HB 476 would make it                     
  nonexistent.                                                                 
                                                                               
  Number 235                                                                   
                                                                               
  REP. DAVIS asked if the testimony could be provided in                       
  writing.                                                                     
                                                                               
  Number 245                                                                   
                                                                               
  MR. LEBRUN responded that he would provide Rep. Davis with                   
  written comments.                                                            
                                                                               
  Number 260                                                                   
                                                                               
  DON KOCH, Chief of Market Surveillance, Division of                          
  Insurance, Department of Commerce, stated there are four                     
  different ways to provide dental care service in Alaska                      
  today:                                                                       
                                                                               
  1) private insurance companies authorized under AS 21.09                     
                                                                               
  2) self insurance - employer assumes total risk                              
                                                                               
  3) dentists form an HMO (not currently used in Alaska)                       
                                                                               
  4) hospital or medical service corporation (for example,                     
     Blue Cross).                                                              
                                                                               
  MR. KOCH stated that an insurance company authorized under                   
  AS 21.09 can't contract with a provider.  A self-insurer is                  
  not blocked from contracting with a provider.  An HMO will                   
  only provide the care with the dentists that are part of an                  
  HMO.  A medical service corporation goes out and contracts                   
  with the providers then sell access to the public to that                    
  contract.                                                                    
                                                                               
  MR. KOCH stated that HB 476 provides for a number of changes                 
  and requirements that will necessitate some statute changes                  
  to the insurance code.                                                       
                                                                               
  Number 454                                                                   
                                                                               
  CHAIRMAN HUDSON asked if there needed to be statutory                        
  changes in order to fix the problems in the bill as he                       
  perceives them.                                                              
                                                                               
  Number 460                                                                   
                                                                               
  MR. KOCH answered that if the bill is aimed towards                          
  providing a Preferred PO mechanism for insurance companies                   
  it would require a statutory fix.  Mr. Koch added that there                 
  are provisions in HB 476 that address the relationship                       
  between the insurance company and the dentist and that                       
  relationship only comes about by contract, which would also                  
  need a statutory change.  Mr. Koch stated that there are                     
  other areas that need to be addressed.                                       
                                                                               
  Number 481                                                                   
                                                                               
  CHAIRMAN HUDSON stated that it would benefit the committee                   
  and everyone else if the Division could get together with                    
  the sponsor and others and go over the various problems with                 
  the bill.                                                                    
                                                                               
  Number 503                                                                   
                                                                               
  REP. GREEN asked if it was improper now for an insurance                     
  company to contract directly with a dental provider.                         
                                                                               
  Number 510                                                                   
                                                                               
  MR. KOCH answered yes, if they are providing coverage under                  
  an insurance policy.                                                         
                                                                               
  Number 523                                                                   
                                                                               
  REP. GREEN stated, "I thought I heard you say something to                   
  the effect that an agreement is reached, not a contract, but                 
  an agreement between some providers and some technicians."                   
                                                                               
  Number 533                                                                   
                                                                               
  MR. KOCH answered that hospital medical service corporations                 
  can enter into agreements referenced above by their                          
  certificate of authority, but an insurance company can't.                    
                                                                               
  Number 549                                                                   
                                                                               
  JERRY STRANIK read the following sponsor statement:                          
                                                                               
  HB 476 is a "freedom of choice" bill.  It allows the patient                 
  to be able to choose his or her own dentist.  It also allows                 
  the dentist to participate in any dental insurance policies                  
  or plans he is willing to provide services for.                              
                                                                               
  Health care is definitely in the forefront of our national                   
  consciousness.  Certain popular buzz words like "managed                     
  care" on the surface sound very good.  But we must be very                   
  careful not to lose the good qualities we enjoy in our                       
  present care system.                                                         
                                                                               
  One of these is the freedom to choose your own dentist and                   
  for your dentist to be able to participate in the plan that                  
  you have.  This bill provides for that.                                      
                                                                               
  In addition, HB 476 prevents the insurance company from                      
  interfering with the diagnosis and treatment plan that the                   
  patient and dentist have agreed upon.  The patient must be                   
  the final judge of what is best for them.                                    
                                                                               
  Finally, HB 476 helps prevent needless exposure to x-ray                     
  radiation by allowing only necessary x-rays be taken to                      
  diagnose and treat dental disease.  The insurance company                    
  will not be able to demand additional x-rays for it's                        
  purpose.                                                                     
                                                                               
  HB 476 is good for health care and for the public.  It                       
  increases access and promotes competition.                                   
                                                                               
  Nineteen states protect the rights of patients to receive                    
  care from the dentist of their choice.                                       
                                                                               
  The Supreme Court without comment left standing a similar                    
  Virginia law that was challenged by Aetna Life Insurance Co.                 
                                                                               
  Number 605                                                                   
                                                                               
  CHAIRMAN HUDSON asked if Mr. Stranik's clinic would like to                  
  have the legal authority to be able to negotiate with an                     
  insurance carrier to provide exclusive services to their                     
  insured.                                                                     
                                                                               
  MR. STRANIK replied no, he believes the patient should have                  
  the freedom of choice who they can go to.                                    
                                                                               
  Number 615                                                                   
                                                                               
  FRANK THOMAS-MEARS, insurance agent, testified that the                      
  random choice of allowing the patient to choose any one                      
  dentist is what allows free market competition to exist.                     
                                                                               
  MR. MEARS stated that in 1991 Aetna sent out solicitations                   
  to approximately ten dentists in the Anchorage area asking                   
  them to provide managed care to their subscribers.  Many of                  
  these dentists called Mr. Mears for help in reading the                      
  contract.  Mr. Mears contends that contrary to what Aetna or                 
  other large insurers may say, the contracts have little to                   
  do with quality of care and everything to do with the                        
  economic bottom line.                                                        
                                                                               
  TAPE 94-17, SIDE B                                                           
  Number 001                                                                   
                                                                               
  MR. MEARS advised the dentists that they were in short                       
  supply and high demand and should ask for 100% of their fees                 
  and to strike some of the less attractive parts of the                       
  contracts.                                                                   
                                                                               
  CHAIRMAN HUDSON interrupted Mr. Mears and suggested that he                  
  give a layman's outline of what he was talking about in                      
  regards to HB 476.                                                           
                                                                               
  MR. MEARS replied that the bottom line was that a patient                    
  should be able to choose the dentist they want, and the bill                 
  allows the dentist and patient to decide between them what                   
  kind of treatment they want without interference.                            
                                                                               
  Number 108                                                                   
                                                                               
  MR. KOCH stated that HB 476 would not have any effect on a                   
  third party administrator's actions, which is basically what                 
  Aetna is.                                                                    
                                                                               
  Number 130                                                                   
                                                                               
  CHAIRMAN HUDSON suggested that a working group should get                    
  together and clarify this issue and bring it back to the                     
  committee at that point.                                                     
  HB 439 - UNIFORM FRAUDULENT TRANSFER ACT                                     
                                                                               
  Number 170                                                                   
                                                                               
  CHAIRMAN HUDSON brought up HB 439 and invited Mr. Kurtz to                   
  testify.                                                                     
                                                                               
  Number 175                                                                   
                                                                               
  JERRY KURTZ, Attorney and Commissioner on the National                       
  Conference of Commissioner on Uniform State Laws, testified                  
  in support of HB 439.  He stated that HB 439 is aimed at                     
  bringing Alaska in line with other states in the field of                    
  fraudulent transfer.  Fraudulent transfer is not a criminal                  
  fraud, although some have gotten close.  Mr. Kurtz explained                 
  that creditors advance money to an individual after looking                  
  at the person's apparent financial strength.  A typical                      
  situation is where a debtor owes money and realizes he is in                 
  serious trouble so he transfers assets to others so that                     
  creditors will be deprived of their value.                                   
                                                                               
  MR. KURTZ stated that current Alaska law in this area was                    
  adopted from the state of Oregon and has received little                     
  legislative attention.  Mr. Kurtz gave an overview of the                    
  history of the Uniform Fraudulent Transfer Act (UFTA) in the                 
  United States.                                                               
                                                                               
  MR. KURTZ stated the importance of HB 439 is to bring Alaska                 
  business practices between creditors and debtors under the                   
  same rules and into conformity of the federal bankruptcy                     
  act.                                                                         
                                                                               
  Number 277                                                                   
                                                                               
  MARY ELLEN BEARDSLEY, Assistant Attorney General, Department                 
  of Law, testified in support of HB 439.  She stated HB 439                   
  is extremely beneficial to the state as it will assist the                   
  state in collecting debts.                                                   
                                                                               
  MS. BEARDSLEY noted that under current law the plaintiff has                 
  the burden of proving the existence of fraudulent intent and                 
  this can be extremely hard to prove.  She said UFTA would                    
  eliminate the present Alaskan necessity of finding actual                    
  intent by a property transferor to hinder, delay or defraud                  
  a creditor in many situations where the transferor is                        
  obviously transferring assets solely to keep them out of the                 
  reach of the transferor's creditors.                                         
                                                                               
  MS. BEARDSLEY stated that UFTA also sets out specific                        
  factors that can be considered by the court when determining                 
  if there is intent on the part of the debtor.                                
                                                                               
  MS. BEARDSLEY added that current law allows an insolvent                     
  debtor to convey all or some of his property to one                          
  creditor, but in HB 439 this would be considered fraud.                      
                                                                               
  MS. BEARDSLEY explained that HB 439 also provides remedies                   
  to creditors against the debtor, the property that has been                  
  transferred, and against the transferee and the transferee's                 
  property in some circumstances.                                              
                                                                               
  MS. BEARDSLEY added that HB 439 also addresses a statute of                  
  limitations.                                                                 
                                                                               
  Number 361                                                                   
                                                                               
  REP. PORTER stated that his staff has put in considerable                    
  amount of work on HB 439 and supports the bill in total.                     
                                                                               
  Number 381                                                                   
                                                                               
  REP. MULDER moved HB 439 with zero fiscal note and                           
  individual recommendations.  No objections were heard; it                    
  was so ordered.                                                              
  CONFIRMATION HEARINGS                                                        
                                                                               
  Number 390                                                                   
                                                                               
  CHAIRMAN HUDSON read the following names and their                           
  nominations to boards and commissions:                                       
                                                                               
  ALASKA LABOR RELATIONS AGENCY                                                
                                                                               
  Stuart H. Bowdoin Jr.                                                        
  Sally A. DeWitt                                                              
  Karen J. Mahurin                                                             
  Alfred L Tamagni Sr.                                                         
                                                                               
  BOARD OF MARINE PILOTS                                                       
                                                                               
  Michael J. O'Hara                                                            
                                                                               
  BOARD OF CERTIFIED REAL ESTATE APPRAISERS                                    
                                                                               
  Chris Anderson                                                               
                                                                               
  REAL ESTATE COMMISSION                                                       
                                                                               
  Audrey J. Foldoe                                                             
  Kristan Tanner                                                               
                                                                               
  ALASKA PUBLIC UTILITIES COMMISSION                                           
                                                                               
  Alyce Hanley                                                                 
  Dwight D. Ornquist                                                           
                                                                               
  ALASKA WORKERS' COMPENSATION BOARD                                           
                                                                               
  Twyla Barnes                                                                 
  John Giuchici                                                                
  Steve Hagedorn                                                               
  Florence S. Rooney                                                           
  Patricia Wollendorf                                                          
                                                                               
  Number 443                                                                   
  CHAIRMAN HUDSON stated that hearing no objections from the                   
  committee all the names above were confirmed by the Labor                    
  and Commerce Standing Committee.                                             
                                                                               
  CHAIRMAN HUDSON adjourned the meeting at 4:30 p.m.                           

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