Legislature(1993 - 1994)
03/01/1994 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.