Legislature(1995 - 1996)
04/26/1995 03:22 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR & COMMERCE STANDING COMMITTEE April 26, 1995 3:22 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Norman Rokeberg, Vice Chairman Representative Jerry Sanders Representative Kim Elton Representative Gene Kubina Representative Brian Porter MEMBERS ABSENT Representative Beverly Masek COMMITTEE CALENDAR HB 266: "An Act relating to preferred provider agreements offered by hospital or medical service corporations." HEARD AND HELD HB 251: "An Act relating to Native corporations." PASSED OUT OF COMMITTEE HB 243: "An Act relating to licensure of landscape architects." HEARD AND HELD HB 260: "An Act relating to marine pilots and the Board of Marine Pilots; extending the termination date of the Board of Marine Pilots; and providing for an effective date." HB 217: "An Act relating to employment of teachers." SCHEDULED BUT NOT HELD HB 232: "An Act establishing an economic development tax credit; and providing for an effective date." SCHEDULED BUT NOT HEARD WITNESS REGISTER LARRY CARROLL, Senior Securities Examiner Division of Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110807 Juneau, AK 99811-0807 Telephone: (907) 465-2521 POSITION STATEMENT: Answered questions on HB 251 TIM BENINTENDI, Legislative Assistant to Representative Carl Moses Alaska State Legislature State Capitol Building, Room 204 Juneau, AK 99801 Telephone: (907) 465-3764 POSITION STATEMENT: Answered questions on HB 251 ROBERTA COUGHNOUR Employee Relations Municipality of Anchorage 632 West Sixth Avenue, Number 610 Anchorage, AK 99501 Telephone: (907) 343-4517 POSITION STATEMENT: Testified on HB 266 CHARLIE MILLER, Lobbyist Alaska Regional Hospital P.O. Box 102286 Anchorage, AK 99510 Telephone: (907) 561-4773 POSITION STATEMENT: Testified in support of HB 266 DOUGLAS BRUCE, Chief Executive Officer Providence Health System in Alaska P.O. Box 196604 Anchorage, AK 99519-6604 Telephone: (907) 261-3055 POSITION STATEMENT: Testified against HB 266 MARIANNE K. BURKE, Director Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0805 Telephone: (907) 465-2515 POSITION STATEMENT: Answered questions regarding HB 266 GEORGE DOZIER, Legislative Assistant to Representative Pete Kott Alaska State Legislature Capitol Building, Room 432 Juneau, AK 99801 Telephone: (907) 465-3777 POSITION STATEMENT: Gave sponsor statement for HB 243 CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, AK 99811-0806 Telephone: (907) 465-2538 POSITION STATEMENT: Testified against HB 243 DWAYNE ADAMS 13311 Cover Circle Anchorage, AK 99515 Telephone: (907) 345-6958 POSITION STATEMENT: Testified in support of HB 243 LINDA CYRA-KORSGGARD, Landscape Architect 1509 "P" Street Anchorage, AK 99501 Telephone: (907) 279-9467 POSITION STATEMENT: Testified in support of HB 243 LEE WYATT P.O. Box 873768 Wasilla, AK 99687 POSITION STATEMENT: Testified in support of HB 243 BURDETT LENT, Landscape Architect 374 Sarah's Way Wasilla, AK 99654 POSITION STATEMENT: Testified in support of HB 243 PREVIOUS ACTION BILL: HB 266 SHORT TITLE: HEALTH CARE PREFERRED PROVIDER PROGRAMS SPONSOR(S): LABOR & COMMERCE BY REQUEST JRN-DATE JRN-PG ACTION 03/17/95 778 (H) READ THE FIRST TIME - REFERRAL(S) 03/17/95 779 (H) LABOR & COMMERCE, HES, JUDICIARY 04/12/95 (H) L&C AT 03:00 PM CAPITOL 17 04/24/95 (H) L&C AT 03:00 PM CAPITOL 17 04/24/95 (H) MINUTE(L&C) 04/26/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 251 SHORT TITLE: NATIVE CORPORATIONS SPONSOR(S): REPRESENTATIVE(S) MOSES, MacLean, Williams, Kott JRN-DATE JRN-PG ACTION 03/15/95 741 (H) READ THE FIRST TIME - REFERRAL(S) 03/15/95 741 (H) LABOR & COMMERCE 03/27/95 (H) L&C AT 03:00 PM CAPITOL 17 03/27/95 (H) MINUTE(L&C) 03/29/95 (H) L&C AT 03:00 PM CAPITOL 17 03/29/95 (H) MINUTE(L&C) 04/05/95 (H) L&C AT 03:00 PM CAPITOL 17 04/10/95 (H) L&C AT 03:00 PM CAPITOL 17 04/12/95 (H) L&C AT 03:00 PM CAPITOL 17 04/21/95 (H) L&C AT 03:00 PM CAPITOL 17 04/24/95 (H) L&C AT 03:00 PM CAPITOL 17 04/24/95 (H) MINUTE(L&C) BILL: HB 243 SHORT TITLE: LICENSING OF LANDSCAPE ARCHITECTS SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 03/08/95 644 (H) READ THE FIRST TIME - REFERRAL(S) 03/08/95 644 (H) STATE AFFAIRS, LABOR & COMMERCE 03/23/95 (H) STA AT 08:00 AM CAPITOL 102 03/23/95 (H) MINUTE(STA) 03/24/95 893 (H) STA RPT 1DP 5NR 03/24/95 893 (H) DP: ROBINSON 03/24/95 893 (H) NR: JAMES, WILLIS, IVAN, GREEN, PORTER 03/24/95 894 (H) FISCAL NOTE (DCED) 04/12/95 (H) L&C AT 03:00 PM CAPITOL 17 04/26/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 260 SHORT TITLE: MARINE PILOTS SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 03/15/95 745 (H) READ THE FIRST TIME - REFERRAL(S) 03/15/95 745 (H) TRANSPORTATION, LABOR & COMMERCE 03/22/95 (H) TRA AT 01:00 PM CAPITOL 17 03/24/95 (H) TRA AT 01:00 PM CAPITOL 17 04/05/95 (H) TRA AT 01:00 PM CAPITOL 17 04/05/95 (H) MINUTE(TRA) 04/07/95 1170 (H) TRA RPT CS(TRA) 2DP 2NR 2AM 04/07/95 1171 (H) DP: BRICE, WILLIAMS 04/07/95 1171 (H) NR: MACLEAN, SANDERS 04/07/95 1171 (H) AM: JAMES, G.DAVIS 04/07/95 1171 (H) FISCAL NOTE (DCED) 04/12/95 (H) L&C AT 03:00 PM CAPITOL 17 04/18/95 1356 (H) FIN REFERRAL ADDED 04/19/95 (H) L&C AT 03:00 PM CAPITOL 17 04/21/95 (H) L&C AT 03:00 PM CAPITOL 17 04/26/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 217 SHORT TITLE: TEACHER EMPLOYMENT RIGHTS & RETIREMENT SPONSOR(S): REPRESENTATIVE(S) IVAN JRN-DATE JRN-PG ACTION 03/29/94 (H) HES AT 03:00 PM CAPITOL 106 03/01/95 531 (H) READ THE FIRST TIME - REFERRAL(S) 03/01/95 531 (H) HES, JUDICIARY 03/07/95 (H) HES AT 03:00 PM CAPITOL 106 03/07/95 (H) MINUTE(HES) 03/29/95 (H) HES AT 03:00 PM CAPITOL 106 04/11/95 (H) HES AT 02:00 PM CAPITOL 106 04/13/95 (H) HES AT 02:00 PM CAPITOL 106 04/13/95 (H) MINUTE(HES) 04/18/95 1344 (H) HES RPT CS(HES) NT 2DP 1NR 1AM 04/18/95 1344 (H) DP: BUNDE, TOOHEY 04/18/95 1345 (H) NR: G.DAVIS 04/18/95 1345 (H) AM: ROBINSON 04/18/95 1345 (H) FISCAL NOTE (DOE) 04/19/95 (H) JUD AT 01:00 PM CAPITOL 120 04/20/95 1408 (H) L&C REFERRAL ADDED 04/21/95 (H) JUD AT 01:00 PM CAPITOL 120 04/21/95 (H) MINUTE(JUD) 04/22/95 1446 (H) JUD RPT CS(JUD) NT 5DP 1DNP 04/22/95 1446 (H) DP: VEZEY, PORTER, GREEN, BUNDE, TOOHEY 04/22/95 1446 (H) DNP: FINKELSTEIN 04/22/95 1446 (H) ZERO FISCAL NOTE (DOE) 04/26/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 232 SHORT TITLE: ECONOMIC DEVELOPMENT TAX CREDIT SPONSOR(S): REPRESENTATIVE(S) KOTT JRN-DATE JRN-PG ACTION 03/06/95 590 (H) READ THE FIRST TIME - REFERRAL(S) 03/06/95 590 (H) ECD, STA, L&C, FINANCE 03/21/95 (H) ECD AT 09:00 AM CAPITOL 17 03/21/95 (H) MINUTE(ECD) 03/22/95 850 (H) ECD RPT CS(ECD) 6DP 03/22/95 850 (H) DP: KELLY, MOSES, MACLEAN, KOHRING 03/22/95 850 (H) DP: SANDERS, ROKEBERG 03/22/95 850 (H) INDETERMINATE FISCAL NOTE (REV) 03/22/95 850 (H) FISCAL NOTE (DCED) 04/04/95 (H) STA AT 08:00 AM CAPITOL 102 04/04/95 (H) MINUTE(STA) 04/06/95 (H) STA AT 08:00 AM CAPITOL 102 04/06/95 (H) MINUTE(STA) 04/11/95 (H) STA AT 08:00 AM CAPITOL 102 04/11/95 (H) MINUTE(STA) 04/18/95 1345 (H) STA RPT CS(STA) 4DP 2NR 04/18/95 1346 (H) DP: GREEN, PORTER, JAMES, OGAN 04/18/95 1346 (H) NR: WILLIS, ROBINSON 04/18/95 1346 (H) INDETERMINATE FISCAL NOTE (REV) 04/18/95 1346 (H) ZERO FISCAL NOTE (DCED) 04/21/95 (H) L&C AT 03:00 PM CAPITOL 17 04/24/95 (H) L&C AT 03:00 PM CAPITOL 17 04/24/95 (H) MINUTE(L&C) 04/26/95 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 95-45, SIDE A Number 000 The House Labor and Commerce Standing Committee meeting was called to order by Chairman Pete Kott at 3:22 p.m. He informed the committee the teleconference printer, which prints who is on line, isn't working. He said he would poll the Legislative Information Offices (LIO) to see who was on line to testify on scheduled legislation. Members present at the call to order were Representatives Sanders, Elton, Kubina, Rokeberg and Kott. Members absent were Representatives Masek and Porter. CHAIRMAN PETE KOTT announced the order of business would be HB 266, HB 260, HB 232, HB 243 and if time is available, HB 217. He polled the LIOs so see who was on line. HB 266 - HEALTH CARE PREFERRED PROVIDER PROGRAMS Number 099 CHAIRMAN KOTT announced the first order of business would be the continuation of HB 266, "An Act relating to preferred provider agreements offered by hospital or medical service corporations." He said testimony had been given on the bill the previous Monday. REPRESENTATIVE NORMAN ROKEBERG interrupted to make a motion to bring another bill, previously heard, before the committee. HB 251 - NATIVE CORPORATIONS Number 116 REPRESENTATIVE ROKEBERG moved to rescind the committee's action on tabling HB 251. CHAIRMAN KOTT said there is a motion to rescind the committee's action in tabling HB 251. REPRESENTATIVE ROKEBERG said it is rescinding the tabling. He said he would move to take it off the table. CHAIRMAN KOTT said probably the appropriate motion would be to move to untable. He explained there is a question as to which motion Representative Rokeberg wants. He said the motion to untable is not debatable. To rescind the committee's action is debatable. REPRESENTATIVE ROKEBERG said he wishes to rescind the committee's action in tabling. REPRESENTATIVE KIM ELTON said he isn't interested in debating it. He stated it doesn't matter which motion is made. However, he noted he had a question of Representatative Rokeberg. He asked why the motion is being made now. He said it seems to him that a message has been sent. The bill was put aside for awhile and now the bill is being brought up in a point in time when those who are most interested in the bill aren't in the room. Representative Elton said it seems sudden to him. REPRESENTATIVE ROKEBERG said he believes the committee was at a point, at the last meeting when the bill was under consideration, to take a vote when the committee lost a quorum. He said as he recalls that was the reason the committee didn't vote at that time. However, there is a question as to the nature of the exact document that the committee would vote on. CHAIRMAN KOTT said he doesn't believe there was a question as to which document the committee would have moved had they had the quorum to move it. He referred to Representative Elton's question of "why now," and said, "Why not now?" He said the issue was debated. He noted public testimony wasn't taken during the last two hearings on the measure. There is nothing that the public could have offered. Chairman Kott noted there is a representative from the Division of Banking, Securities and Corporations, Department of Commerce and Economic Development, in attendance if there are any questions. He asked Representative Rokeberg which motion he desires to make. Number 168 REPRESENTATIVE ROKEBERG moved to untable HB 251. CHAIRMAN KOTT said there is a motion to untable, bring it off the table, HB 251. He said that motion is not debatable. He asked if there was an objection. REPRESENTATIVE ELTON objected. Number 182 A roll call vote was taken. Representatives Kott, Rokeberg, Kubina and Sanders voted in favor of the motion. Representative Elton voted against the motion. So HB 251 was before the committee. REPRESENTATIVE GENE KUBINA asked for a copy of the bill that was before the committee. A brief at ease was taken at 3:32 p.m. CHAIRMAN KOTT called the meeting back to order at 3:34 p.m. CHAIRMAN KOTT announced the committee has been provided with a copy of the latest committee substitute (CS) for HB 251, Version O, dated 4/24/95. He said the CS increases the petition numbers. He said 15 percent of the shareholders must sign a petition if the corporation has 500 or more shareholders. If there are less than 500, then the number is 25 percent. There is a provision in the bill that extends the time from the previous CS of 90 days to 180 days after filing. He explained on line 21, the years were increased from one to two years. Chairman Kott said all the civil and legal penalties were removed. Number 204 REPRESENTATIVE ROKEBERG moved Amendment 1, a conceptual amendment. He explained that would be on page 2, line 15, after the word "corporation" insert a "." and delete "within 180 days after the filing." Representative Rokeberg referred to line 21, after the word "preceding" change "two" to "one". Then change the word "years" to "year". He moved his amendment. CHAIRMAN KOTT asked Representative Rokeberg to divide the question and to deal each of the changes separately. CHAIRMAN KOTT recapped Amendment 1. On page 2, line 15, after the word "corporation" insert a "." and delete "within 180 days after the filing." REPRESENTATIVE ROKEBERG said that is correct. CHAIRMAN KOTT said Amendment 1 has been moved and he would object for the purpose of discussion. Number 254 REPRESENTATIVE ELTON said he would prefer that the "two" to "one" year was the first amendment, because that will affect the way he will vote on the 180 day period. For example, if the two year period is maintained, he may prefer leaving the 180 days in. He said if chair and maker of the amendment doesn't object, maybe the two amendments can be flipped. REPRESENTATIVE ROKEBERG and CHAIRMAN KOTT stated they didn't object. CHAIRMAN KOTT said Amendment 2 would be first. He asked Representative Rokeberg to withdraw his motion. REPRESENTATIVE ROKEBERG withdrew his motion on Amendment 1. He then moved Amendment 2, line 21, after the word "preceding" change "two" to "one". Then change "years" to "year". CHAIRMAN KOTT said there is a motion to move Amendment 2. He asked if there was an objection. Chairman Kott said he would object for the purpose of discussion. He asked why the number of years is being reduced from "two" to "one." REPRESENTATIVE ROKEBERG said in the interest of only modifying the existing corporate regulations (indisc.) corporations, it is the sponsor's belief that this would be more readily acceptable to all parties in order to move the bill along. He asked for the committee member's support. CHAIRMAN KOTT said he will maintain his objection. Number 254 REPRESENTATIVE ELTON said he believes the committee has done a very good job reaching a middle ground, something that everybody is starting to feel more comfortable with. The committee has heard a lot of testimony. He said he believes the people in his district feels very strongly about one year rather than two years. The issue that we are trying to get to is repetitive petitions or repetitive votes. He believes this is acceptable to both sides. Representative Elton said he sees this as an attempt to make it less onerous and, hopefully, smooth passage down the road. Number 263 CHAIRMAN KOTT referred to his objection and said he thinks that when you start reducing the amount of time, such as from two years to one year, you provide a mechanism that would cause some disruption within the corporation and interfere with their ability to enhance the position of the shareholders. Every year the shareholders can come back if they acquire the number of signatures and cause disruption within the corporation. Therefore, probably cause some concern among the board members and their ability to do their assigned task. REPRESENTATIVE ELTON said he believes the chairman has identified a significant problem. He said a majority of that problem comes about when there is an annual meeting and things don't go the way a shareholder would expect. So the day after the annual meeting, when a vote has been taken, they're on the street with a petition. He said he thinks that is where most of the problem occurs. This provides for a one year cooling off period. It is his guess it would substantially meet the purposes to the repetitive petition. There being no further discussion on Amendment 2, a roll call vote was taken. Representatives Rokeberg, Elton, Sanders and Kubina voted in favor of the motion. Chairman Kott voted against the motion. So Amendment 2 was adopted. Number 291 REPRESENTATIVE ROKEBERG moved Amendment 1. CHAIRMAN KOTT objected for the purpose of discussion. REPRESENTATIVE ROKEBERG said by removing this requirement, we would take away one of the most divisive issues that the committee heard in public testimony. That was to set up a limiting time frame as to how long the petitions could be circulated. He said it would return the petitioning process to the existing statutory language. He asked for the committee's support. CHAIRMAN KOTT said what he believes was done by changing two years to one year, and now taking away the time certain that the shareholders have to collect the signatures, will place a great degree of disruption within the corporation. Now they would be battling the petition and collection of those signatures for an indefinite amount of time. The committee has already, by adoption of the previous amendment, placed another problem in front of them. He said he believes the committee is going in the wrong direction. Number 313 REPRESENTATIVE ELTON said he believes the amendment is more of a problematic amendment then the others. There is the one year cooling off period. He said he guesses that if the language is kept in the bill, it would be guaranteeing that a divisive issue will be back perhaps within a year and a half. If you take that away, that divisive issue may not be back on the table for two years. What is being done is the amount of time is being extended between the divisive votes. CHAIRMAN KOTT said the divisive issue may never go away based on having unlimited amount of time to collet signatures. He said he would maintain his objection. REPRESENTATIVE KUBINA said he has had communication from numerous Native corporations and people involved with them. What a lot of them have realized is that they just have to have better communications. A lot of them have solved this problem. Number 336 CHAIRMAN KOTT said one of the provisions was agreed to by one of the members on the panel, it was one of the shareholders who said this would be acceptable. Obviously, there has been a change of heart and it is no longer acceptable by some of the members in the shareholder community. A roll call vote was taken. Representative Elton voted in favor of the amendment. Representatives Kott, Sanders, Kubina and Rokeberg voted against the amendment. So Amendment 1 failed to be adopted. Number 355 REPRESENTATIVE KUBINA said he has a problem he would like to discuss. He referred to page 2, line 8, and read, "The notice must state in detail the purpose of the special meeting and include a copy of the petition or request and all materials to be used in connection with the solicitation." Representative Kubina said his problem is with the wording "and include a copy of the petition or request and all materials to be used in connection with the solicitation." He said he understands that one of the biggest problems was that they are trying to get some kind of mechanism so that what gets put out is factual. This sounds like they have to do this all at the beginning. He said it seems this is like a campaign and when you have a campaign, you may not have everything at the beginning. He said he was wondering if technically, could the corporation then use this to stymie their free speech. CHAIRMAN KOTT asked Larry Carroll to come forward. Number 375 LARRY CARROLL, Senior Securities Examiner, Division of Banking, Securities and Corporations, Department of Commerce and Economic Development, referred to Representative Kubina's concerns and said the point he raised is appropriate. He explained it seems to him that filing must be at the time that the petition is filed and should include all materials which would then handicap people if the course of the campaign needed to change and new materials needed to be developed. If materials weren't filed initially, theoretically an objection could be raised. Mr. Carroll referred to material the department sent over and said it was suggested that the notice be in detail for the purpose of a special meeting and include a copy of the petition or request and stop right there so that they had some latitude of with what they would use. Number 389 REPRESENTATIVE SANDERS said he agrees with those statements. He said things do develop like a campaign and change as you go along. However, the things that come along later would still need to be submitted. MR. CARROLL said they have to file anything they use with his division. REPRESENTATIVE SANDERS asked if it isn't in the bill, would they still have to file with the division. MR. CARROLL indicated they still would have to file with the division. REPRESENTATIVE KUBINA referred to the last sentence and said if they don't comply, the petition is invalid. He said what he fears is we will see these people in court. He said he thinks it would be appropriate for him to move that on page 2, line 8, put a "." after the word "request" and delete the rest of the sentence. CHAIRMAN KOTT said it would then read, "The notice must state in detail the purpose of the special meeting and include a copy of the petition or request." Delete the remaining portion of that sentence which reads, "and all materials to be used in connection with the solicitation." Number 410 REPRESENTATIVE ROKEBERG objected to the motion for the purpose of discussion. He said as the division has said it is necessary that the material be filed. He said he thinks that is currently the case. REPRESENTATIVE KUBINA said his problem is it appears that once they submit it, they can't use any other material because it says that all materials to be used in connection with this campaign has to be submitted at the beginning. If they used a different flyer and sent it out to everybody, according to the last sentence the corporation could argue that the whole thing should be thrown out. REPRESENTATIVE ROKEBERG said it is his understanding that by providing all those materials, at least there is public disclosure. There is no question about what they're using. CHAIRMAN KOTT asked Mr. Carroll if we're talking about providing this to the corporation. MR. CARROLL said that is correct. He said the division's requirement is that they be filed with them, and they (indisc.) to our false and misleading standards and all the provisions of the Securities Act, notwithstanding anything that is said in the bill. What they bill is saying is the corporation wants it in its hands at the onset. The division is saying that it has to be filed with the division concurrent with distribution to shareholders. That is what the Securities Act states. REPRESENTATIVE KUBINA asked if the documents would then be available to the corporations at that point as they are public documents. MR. CARROLL stated that is correct. CHAIRMAN KOTT asked if the bill sponsor's staff want to make a comment. Number 435 TIM BENINTENDI, Legislative Assistant to Representative Carl Moses, said the provisions (indisc.) originally knowing that material was automatically submitted to the division, it was put in to help blunt or maybe to help (indisc.) groups to do a little self policing on the so called "false or misleading statements" or anything that later might become fuzzy. In the third hearing (indisc.) bill, this topic was discussed and, except for a couple of the large corporations, it was pretty much agreed that we could do without this since the material is submitted automatically and anybody can get it from the division. The sponsor was happy to (indisc.). He said Representative Moses would support that direction. REPRESENTATIVE ELTON asked Mr. Carroll if all Alaska Native Claims Settlement Act (ANCSA) corporations file with the Division of Banking, Securities and Corporations. He asked if the small ones don't need to file. Representative Elton asked if we would only be talking about the larger corporations with a certain number assets. MR. CARROLL said Representative Elton is correct. The threshold is corporations having $1 million in assets and the number of shareholders amounts to 500 or above. REPRESENTATIVE ELTON said what we're talking about is only for certain (indisc.) Number 456 REPRESENTATIVE KUBINA said the other side of that coin is that the problem doesn't seem to be with the small corporations, it seems to be with the larger ones that are asking for the changes. He said what he is hearing from the smaller corporations is that they don't want any change. REPRESENTATIVE ROKEBERG said it should probably be left in there because there is no other disclosure material from the smaller corporations. This is the only means for disclosure. Number 465 MR. BENINTENDI said he doesn't remember it being specifically being discussed with Representative Moses, but suspected that he would support the removal of that as well as it ties so closely to the other. REPRESENTATIVE KUBINA said the last sentence could be removed and it would say, "any subsequent material produced." MR. CARROLL said the committee could possibly adopt language that says, "concurrent with distribution." REPRESENTATIVE KUBINA said leave that (indisc.) in all materials and all subsequent... He asked Mr. Carroll to restate his language. MR. CARROLL said, "The notice must state in detail the purpose of the special meeting and include a copy of the petition or request and all materials to be use in connection with the solicitation, concurrent with their distribution to shareholders." Number 485 CHAIRMAN KOTT said Representative Kubina's new Amendment 3 would remove the "." after solicitation and insert the words "concurrent with their distribution to shareholders." REPRESENTATIVE KUBINA indicated that is correct. CHAIRMAN KOTT said there is a motion to move Amendment 3. He asked if there was objection. REPRESENTATIVE ELTON said he almost prefers the way it was the first time round. What the committee is doing is creating another bureaucratic hoop that the shareholders, the circulators of the petitions, need to go through. Currently, they are only required to file those materials with the division. The amendment would require another hoop for them to go through and create another bureaucratic step upon which they could stumble. He explained that is his observation and noted he doesn't feel strongly about it. CHAIRMAN KOTT asked Representative Elton if he is removing his objection. REPRESENTATIVE ELTON said he is removing his objection. There being no objection, Amendment 3 was adopted. Number 499 REPRESENTATIVE KUBINA asked who makes the determination as to whether the information is valid or not. Somebody has to be a rule maker. He asked if the department would be doing that. MR. CARROLL said not for any corporations. He said the petition (indisc.) requests and materials for corporations less than 500 shareholders are not going to pass through the division's hands. They are not going to be in a position to adjudicate whether those things were filed timely with the corporation or whether they were not. With respect to the larger corporations, it would seem to him that the moving party will be the corporation that is going to make the allegation that these things didn't occur. So it would be their water to carry. Mr. Carroll said the statutory language is very clear in that the petitioner request is invalid, on its face. He said he doesn't know who does make that determination. Number 512 REPRESENTATIVE ROKEBERG suggested that it would be the courts. REPRESENTATIVE KUBINA said he thinks that Representative Rokeberg is right which is what bothers him. REPRESENTATIVE ROKEBERG said that is what they are for. REPRESENTATIVE ELTON said it probably would be the court. The 180 day provision was left in the bill. There is no provision that the 180 day clock stops ticking while somebody goes to court. He said it seems to him that what the committee is doing is not just giving a corporation a hammer, it is giving them an ax. Number 521 REPRESENTATIVE ELTON moved that the last sentence in paragraph (m) on page 2, line 11, beginning with "If a petition..." through line 13, be deleted. CHAIRMAN KOTT asked if there was an objection to Representative Elton's motion. REPRESENTATIVE ROKEBERG objected for the purpose of discussion. He said his concern is without the last sentence, the entirety of subsection (m) is not enforceable. He said he would like the sponsors opinion. MR. BENINTENDI said he thinks that the sponsor would support that motion. REPRESENTATIVE KUBINA said he doesn't think that this would stop them from going to court if the corporation still thinks that something was done illegally and the laws were (indisc.) He said the court still (indisc.) enforce the law. What it does do is say the whole thing is invalid. The court may say, "Well, this minor little fragment (indisc.) but that doesn't (indisc.) the whole thing." REPRESENTATIVE ROKEBERG withdrew his objection. CHAIRMAN KOTT asked if there was further objection in deleting the language. Hearing none, it was so ordered. Number 542 REPRESENTATIVE ROKEBERG moved that CSHB 251(L&C), Version O, as amended, be adopted with any accompanying fiscal notes, and individual recommendations, be passed out of the House Labor and Commerce Committee. Hearing no objection, it was so ordered. HB 266 - HEALTH CARE PREFERRED PROVIDER PROGRAMS Number 564 The next order of business was HB 266, "An Act relating to preferred provider agreements offered by hospital or medical service corporations." CHAIRMAN KOTT said the bill had been heard the previous Monday and there was quite a bit of testimony both for and against the bill. He noted there are a couple of people who have signed up to testify. ROBERTA COUGHNOUR, Employee Relations, Municipality of Anchorage, testified via teleconference from Anchorage. Ms. Coughnour explained that they have approximately 2,500 employees and about 250 retirees and their families who are covered under a group insurance plan. About 1,500 are covered by collective bargaining agreements. Under the group insurance plan for the municipality, they use preferred provider organizations (PPO) as a way to control costs rather than eliminating benefits. They use hospital PPOs and managemental health PPOs. MS. COUGHNOUR said in 1994, their PPO savings exceeded $1 million. Since the Municipality of Anchorage has a (indisc.) premium plan, that money stays with the municipality and doesn't go to the insurance company. Employees who have a co-pay, pay on the reduced amount and not on the full amount that they would normally pay (indisc.) PPO. MS. COUGHNOUR explained that during 1995, the municipality will be negotiating with their four bargaining units. A major part is that they are trying to negotiate PPO provisions into their plan. One represented group has approved a new agreement. It contains a PPO agreement and projections for future premiums which were based on the PPO provisions remaining in the plan. Savings from implementation of the PPOs were used in determining the amount of funds that would be available to fund increases in wages over the term of the contract. Similar strategies are being used with their other three bargaining units. MS. COUGHNOUR informed the committee if PPO requirements included any willing or (indisc.) provider provision, it would eliminate the ability of insurance (indisc.) to negotiate a passive discounts and allow (indisc.) by the municipality to control claims costs without (indisc.) benefits. She said she would be happy to answer any questions the committee may have. Number 601 CHARLIE MILLER, Lobbyist, Alaska Regional Hospital, said his clients position on the PPOs is that the mechanism is very effective at helping contain costs in certain markets, but they contend that the market requirements don't really fit in Anchorage or in Alaska. The basis is a small population both of providers and patients. Mr. Miller explained that most successful manage care markets contain large numbers of patient's insurance and large numbers of providers. So a healthy competitive atmosphere exists that if you were to lose one competitive bid, you could tighten your belt, sharpen your pencil on the next bid and still survive. Therefore, the competitive efficiencies would come into play. MR. MILLER explained that in a market where we have very few patients and providers, conditions exist that don't exactly enhance the competition, but (indisc.) adverse conditions for competition. Mr. Miller said in their particular area of the market, hospital care, there is only two in Anchorage and there is a negotiation between the parties involved and they're not invited to bid. What significance that could bring about as far as more reduced costs, they don't know. If it were a competitive bid, perhaps the rates would even be lower. That is not the case and hasn't been the case. The Alaska Regional Hospital has tried to address that and have never been invited to the table. MR. MILLER said if you take the relatively small population and involve the patients, subtract Indian health care, federal CHAMPUS(Sp?) military programs, etc., the population becomes even smaller than it appears at first. Then we look at having a limited number of providers and if the providers aren't allowed to bid, then your fighting competition and you are not enhancing it. The possibility exists that you'll even have less providers in the future and there is absolutely no incentive to discount when you get to the point where there aren't enough providers to participate in active bidding if that were to occur later. MR. MILLER referred to volume discount and said it is a very valid argument, but once again in a large market it comes into play. In a smaller market where there hasn't been competitive bid to date, it does really seem to fit. The significance of any cost increases is in question because there hasn't been bids or competition. The speculation is that it would be a large increase in costs. He said Alaska Regional Hospital doesn't feel that is the case any more then they could say for sure that the price would go down if there were competitive bids. MR. MILLER said previous testimony seems to imply that if any willing provider was passed in this market, that it would be an all or nothing situation as far as cost containment. He said the Alaska Regional Hospital doesn't believe that would be the case. To say there was a PPO negotiated, it saved $1 million, and if any (indisc.) came in, there would be no savings... END OF TAPE TAPE 95-45, SIDE B Number 000 MR. MILLER continued ...and negotiation were to expand to include more providers, there would definitely be discounts. To say that there is all kinds of cost savings involved without this and there will be no cost savings involved if it passes, the Alaska Regional Hospital doesn't believe that to be true. Mr. Miller referred to his facility paying over $1 million a year in property taxes to the Municipality of Anchorage and they aren't allowed to sit at the table and bid the job to pay for the health care that their taxes help to provide. It seems awkward to have to come here and ask to be allowed to participate in something when they pay taxes and can't bid the jobs the municipality provides MR. MILLER explained another issue brought up was the control of quality providers. Alaska Regional Hospital decided that they needed to address that and when they went through their last accreditation, they made a sincere effort to show the quality of the facility. They received the highest qualification you can get from the accreditation people. Mr. Miller said there are other tools available to payers to keep out bad providers. He said he thinks mechanisms already exist to control (indisc.) bad positions in facilities if need be. MR. MILLER referred to the other cost containment measures and said all of those would stay in place. Utilization review is very well established in the industry. Preauthorization for surgical treatments for hospitals stays, utilization review to prevent self referral by patients to a higher level of care than necessary, etc., will still remain in place. It is always a dynamic situation. Sometimes people contest not being allowed to self refer, but these mechanisms are well established and will stay in place also. So there still will be cost containment. MR. MILLER said in previous testimony on mental health, it was mentioned that what could happen if the bill passed is that a patient could self refer him or her self to a psychiatrist. With utilization review, that just wouldn't happen. The patient wouldn't be reimbursed at full schedule because they would call and talk to the payer, the payer would inform them that they would have to go through perhaps a mental health counselor for assessment. MR. MILLER explained another aspect is whether or not there is a place for the legislature or for the law to get involved in this market. Actually, the government is very well involved in this market. Certificate of Need prevents facilities from (indisc.) capital expenses that would allow a facility, physicians clinic or a particular provider to provide services that the department feels are already provided and it would be unnecessary equipment. If you have certain programs, other people that want to just spend money to get into the market and compete with you, it is very difficult to achieve the approval to get these things. That is definitely government involvement. There is a tax exempt status for certain payers and facilities that others don't enjoy, regardless of their own charity care provision in the community. He said his facility provides a considerable amount of charity care and they also pay a considerable amount of taxes. If that isn't government intervention, he isn't sure how else it could be defined. MR. MILLER said his organization doesn't believe it is inappropriate for the legislature to address this. We have to keep focused on the real issue which is, "What market are we dealing with here?" We're not dealing with Southern California, Puget Sound, or some of the really large markets that these things work in. We're working in Alaska's market and Mr. Miller's client feels very strongly that this measure is appropriate for this market. He urged to the committee to consider the bill and move it through the process. Number 104 REPRESENTATIVE ROKEBERG referred to a proposed amendment that had been drafted and asked Mr. Miller if he has had the chance to review the amendment. MR. MILLER said he has reviewed the amendment. He said unfortunately he has been rather confused as far as last year when we tried to address the issue and a legislative attorney had the opinion that (indisc.) Aetna disability group plans were already under restrictions that didn't allow PPOs. There was further discussion this year in the Senate Labor and Commerce Committee on a related matter. There was a memorandum distributed in reference to that testimony that the Division of Insurance, at that time, felt that PPOs were allowed under 21.87, the medical and hospital service corporations, but not under the other types of health plans. He said before the Monday hearing, he was given a copy of the Attorney General's (AG) opinion which goes the other way. He said it would appear that the AG's opinion says that the bill, if it is going to have the effect intended, should address both major payers which is the medical and hospital service corporations and the other insurers. REPRESENTATIVE ROKEBERG said that is the intent of the amendment. He indicated he has concern. He said HB 266 is a very important piece of legislation that deserves a full review by all parties involved. Representative Rokeberg said he would prefer HB 266 go to a subcommittee to be reviewed. Number 143 REPRESENTATIVE ELTON asked Mr. Miller if he is saying that he doesn't expect that the savings will disappear under HB 266. He said Mr. Miller seems to be saying that savings within the health care system may be expanded because you're expanding the savings that are there for the preferred providers to other providers. MR. MILLER said what he was trying to say was in the hospital area of the market, if there was a competitive bid process, there could be savings that haven't yet been realized because no one knows what discounts are available if there isn't a competitive bid. If more facilities or providers are enfranchised into the system, he doesn't feel that it is an all or nothing savings as far as the savings from the PPOs. He said he doesn't anticipate prices going down or up significantly if both of those things come into play. He noted there are very limited major payers in the state and perhaps negotiations would lead to good discounts that were available to both facilities. That is a possibility. It is hard to say. If you don't have a competitive bid, you're not sure you have the best price. Mr. Miller said that is what he is trying to say. He said he doesn't mean to say that if any willing provider happens, you're going to see immediate expansions in the discount. Number 181 REPRESENTATIVE ELTON said he is interested in what the current process is when somebody goes out for a PPO agreement. He said he is trying to figure out what room full of animals could ever design a bid process in something as complex as the medical field. He said he doesn't see how you write a bid. MR. MILLER explained in most managed care markets that have PPO networks, and these sort of arrangements, they do bid. He said he'd be glad to tell Representative Elton he knows how that works, but his organization has never sat at the table to negotiate on or have been given a bid package. He said he doesn't know exactly how that would work. REPRESENTATIVE ELTON asked Mr. Miller if he is saying that he doesn't know the shape of the table because he has never been in the room. MR. MILLER said they have attempted, at different times, to speak with the major payers, but they haven't been allowed to negotiate at least a portion of the contracts. He said his client has been frustrated in those efforts. Number 206 CHAIRMAN KOTT said the bottom line is that Mr. Miller is suggesting that if the bill were to pass, it would instill greater competition and probably have an affect at lowering the prices. MR. MILLER said with out a doubt in the long run, that would be the case. In a small market, if you manipulate the market so that only certain players are allowed to play, soon you'll have a smaller number of players. Number 227 DOUGLAS BRUCE, Chief Executive Officer, Providence Health System in Alaska, was next to come before the committee to give his testimony. He explained his organization operates Providence Alaska Medical Center, formally Providence Hospital; and Providence Extended Care Center, formally Our Lady of Compassion. He noted they are in the development of Providence Horizon House which will be the first assisted living facility for Alaskans. MR. BRUCE said his organization is very concerned about the proposed bill. Approving the "any willing provider" legislation would have a very detrimental affect on the cost of health care in the state. Preferred provider contracting, that is an agreement between a provider of health care, a purchaser and individual company or insurance company has been the key tool to reduce or at least slow the spiraling cost of health care in Alaska. The provider in their case, Providence Alaska Medical Center, agrees to provide a discount in return for volume. Both insurance companies and employers came to them and asked, "If we send you all our Anchorage employees who need hospital care, will you provide us a discount in return for the volume?" Mr. Bruce said they have responded to those requests and he believes that the committee will find that it has benefitted all parties and has kept the cost of health reasonable, as evidenced by previous testimony. If any willing provider is allowed to come into the picture offering the same discounts, volume is disbursed. Without offsetting volume, those discounts are impossible to sustain. Nobody would offer the same price for a service if the volume is expected to be able to be disbursed to competitors. Therefore, instead of being competitive, it is an anticompetitive legislative move. MR. BRUCE said there have been questions about the ability of employers being able to choose their health care providers. In Alaska, the choice of hospital providers used to work where employers purchase insurance at the going rate for their employees, paying all or most of the premiums. There were no incentives for using a particular hospital. Now a number of employers, either through a select insurance plan or by direct contract in the case of self funded programs, are making these preferred provider arrangements to better manage their organizations health care costs. If these purchasers of health care desired and believed that it was in their interest to include Alaska Regional in their bidding processes, they would. They do not believe it is in their interest. Mr. Bruce noted he would explain why later. MR. BRUCE explained the employers usually pay all or a majority of the premium costs for the employee. As the purchasers feel they have the right to define the parameters of the benefit package, the employee subscriber still has a choice of which hospital to use but, of course, they have to be willing to pay the difference in deductibles to honor the plan. These PPO arrangements have not historically, in the state of Alaska, involved physicians. They have been strictly arrangements with hospitals. MR. BRUCE said several issues have been raised by the initiators of the bill say they are unable to compete on a level playing field because as a for profit organization, they have to pay taxes in Providence and a not for profit hospital does not have to pay taxes. He said to that, they have responded. They have the option of being a not for profit organization. (Indisc.) there is a very good reason they have decided not to be. They are in the business and they do. In contrast, the Sisters of Providence see the provision of health care as a ministry and not as a revenue generator. All earnings are kept in the state in the further development of services to Alaskans. Certainly, Providence must make sure their annual net revenue exceeds expenses and are to remain viable. All revenue goes either to provide charity care, community health care needs or to support capital needs. MR. BRUCE said we've also heard that this legislation is an attempt to even the playing field between the large and small hospitals. In response, he would like to remind the committee that their competitor, Columbia, is the largest health care corporation in the world. It is also the most profitable health corporation in the world. HB 266 has been introduced because Alaska Regional, which has earnings of about $4.5 million a year, has not been willing to reduce its non competitive rates to purchasers. Specifically, in the 1993 cost report, Alaska Regional's average charge per adjusted discharge was $14,241. That is the charge to the purchaser. MR. BRUCE said, "Providence was $11,838 with costs to Alaska Regional, do to having a lesser case mix index, and when I say lesser case mix index Providence does more difficult cases like open heart surgery and other things which raises the cost up, of more than $15,000 per average discharge less than Providence." Mr. Bruce said insurance companies look at statistics and if your average charge, per discharge, to an insurance company is $14,000, a competitors is $11,000, one of the factors is why would you invite that person to negotiate with you if it is not in your interest. Mr. Bruce said insurance companies, as do businesses, do what is in their interest, in the public interest and in the interest of what is going to further the fulfillment of their business needs. MR. BRUCE said Providence feels this issue is one which should be worked out in the market place and not in the legislature. He said they are not crazy about the way the health system works in this country. They would much prefer collaboration rather than confrontation in delivery of health care, but because they must respond to the proposed legislation, they ask the legislators to not interfere with one of the few tools to make health care affordable in this state. Both hospitals have been very successful serving Alaskans. Number 343 REPRESENTATIVE KUBINA referred to Mr. Bruce saying all his organization's earnings are kept in the state. He said he has heard otherwise. He has heard that where they don't have profits, the extra funds they do have over and above operating costs, are shipped out. MR. BRUCE said that is very inaccurate. All earnings and net income is plowed back into local services and expansion of their facilities. He noted the Sisters of Providence keep that commitment in every state and community that they're in because it is what they are all about. They don't personally gain from this endeavor. Number 353 REPRESENTATIVE ELTON said he thinks the most compelling part of Mr. Bruce's testimony was the discharge cost and the comparisons between Columbia and Sisters of Providence. He said there has been a suggestion that perhaps a part of the difference in discharge cost may be overhead. He asked how much of the difference in discharge costs could be attributed to difference in overhead because of taxation and other differences between a nonprofit and a for profit corporation. MR. BRUCE said it is a very small amount, it is in the 4 percent range for that specific item when you're talking about total revenues. However, as a not for profit, Providence Health System in Alaska is community benefit services way in excess of what we would pay in property taxes. REPRESENTATIVE ELTON asked if that was charity work. MR. BRUCE said it is charity work and the range is usually $6 million to $8 million a year. One of the services that is a service to the state of Alaska is their thermal unit for burn patients. They are the only ones who provide that service. It is a loser but it does contribute overall. That loss is in lieu of paying taxes. Number 392 REPRESENTATIVE SANDERS said when he first saw the bill he was under the impression that this contract had been bid and that the other hospital had lost the bid and now they were coming back trying to get in on it. Then he understood this was not bided but was negotiated. He asked why it wasn't bid. He asked Mr. Bruce if he would mind if it was bid. He asked how it could be bid. MR. BRUCE referred to previous testimony that bid prices would automatically lower the cost that is (indisc.) itself, particularly for the reason that he stated. In a small confined market, as in all businesses, if you're in the trucking business and two trucking companies each have a price for five units of trucking and one of the shippers says, "By the way, if I could give you seven of the units instead of five and the other one would get three of my shipping cartons, could you give me a better price?" Mr. Bruce said you could do it because it is units, unit cost and units equals the price where you are able to do it. REPRESENTATIVE SANDERS asked why it is not bid. He said he missed that part. MR. BRUCE said it is not necessary. If the insurance companies, Carrs, BP Exploration, etc., can right now through Aetna and Blue Cross say we choose to have it bid. They can do that but they don't because in their judgement, the costs would be greater if it was bid than if it wasn't bid. Number 440 REPRESENTATIVE ROKEBERG indicated he had a letter from the Alaska State Medical Association that he had received today and said he would give a copy to Mr. Bruce. The letter was from Doctor Donald R. Layman(Sp.?). It said the State Medical Association is in favor of this particular bill. He said in prior testimony, many physicians support the bill because they are concerned about the relationship between the doctor and the patient, and also the matter of choice among patients. He asked Mr. Bruce cares to comment. MR. BRUCE said under any willing provider, it is a different aspect for physicians than it is for the institutions. Mr. Bruce stated the most expensive thing in health care is a thing called choice. If you have ultimate choice in purchase, you will pay more than if you have restricted choice, adequate choice of physicians, adequate choice of hospitals. Any time you can choose whoever you want to go to in the case of doctors, you will not necessarily get the best quality or the best choice. In any of deliver of health care there is what is called "outcome variance." For the exact same kidney operation, open heart, etc., you have what is called the "outcome variance." What you want is a very narrow variance of what occurs to you and at what price. The more you don't have managed care and the more you have of the individual's choice, you have larger variances which is more costly. He said that doesn't make it good or bad. You do have to give up a little freedom for a lot of cost differences. REPRESENTATIVE ROKEBERG asked that it be put on the record that he is a long time supporter of Providence Hospital. He had his tonsils out in 1953, at Ninth and "L" street. Number 475 REPRESENTATIVE PORTER referred to having spent a short period of time in business in the private sector and he has spent a long time in the public sector and said he knows the difference between bidding in the public and private sectors. He said you have all sorts of options in the private sector for constructing the type of bid you want to put out. He asked Mr. Bruce what, in his mind, is the reason that an insurance company is not structuring a bid so as to say, "Please give me a quote in these areas with these confined restrictions," and then allowing the winner of that bid to sit down and negotiate a final contract. MR. BRUCE said they make judgements on what is the average cost and what is the out come. They do consumer referral pattern studies. In other words, they find out who would be the provider of your choice. They go to their customers and say, "If I'm going to be signing up and answered your question around the table," one of the factors is they say, "Which provider in this community, consumer, would you like us to have a relationship with?" In Anchorage, more people choose Providence. Number 530 REPRESENTATIVE KUBINA referred to Mr. Bruce saying that his organization provides open heart surgery but the other institution doesn't. He asked if there are things that the other institution provides that Mr. Bruce's organization doesn't. MR. BRUCE said the answer is no. He noted the other organization is active in trying to get into doing open heart surgery. Mr. Bruce said he is strongly opposed to. He said they are the only open heart program in Alaska and they do about 300 hearts a year. Anytime that you get less than 175 hearts in any program, the quality, due to the need for the frequency of the numbers and the training of the nurses and physicians, is reduced. He indicated Alaska Regional Hospital has just announced that they are going to start up a competing open heart program, but the number of hearts in this state are not sufficient to have two programs. MR. BRUCE discussed how Alaska Regional Hospital got the contract for the Veterans Administration (VA). He noted that his organization was slightly under them on the bidding, however, the VA built the facility on their campus. They were given the contract based on other criteria other than cost. MR. MILLER said his organization recently announced that they are going to start a heart unit. Number 543 REPRESENTATIVE ELTON said he wants to make sure he understands the essence of the argument. He said Mr. Bruce is saying that under any willing provider system, if it is open to a completely free and competitive bid, there is no real incentive to do a low bid. He said, "Simply because so what if the competition gets it, if you're allowed to match it..." MR. BRUCE interjected, "...or lose money." REPRESENTATIVE ELTON said there is no real incentive under that kind of a system for somebody to come in with a low bid. MR. BRUCE indicated that is correct. REPRESENTATIVE ELTON referred to the competitive situation with hospitals and said he has recently received some phone calls from Human Affairs. He referred to the argument of why come in with a low bid if you can just match later on, and asked if that works in the Human Affairs agreement that they have with the state or is the logic somewhat different. MR. BRUCE referred to Human Affairs and said he assumes Representative Elton is talking about he mental health portion. He said Human Affairs is a form of "gatekeeper" or "certification program," so that patients in mental health don't self refer to physicians and have bills. That program is attachable to any PPO or any non PPO. It is an independent thing. REPRESENTATIVE ELTON said there would be no reason that anybody could be a provider at that point as long as that person had the appropriate professional certification. MR. BRUCE said no matter who is going to be providing the service, the first gatekeeper will ask is, "Do you need the service." If you get by that, whatever negotiated price you have negotiated - that is what happens. Where Human Affairs makes the savings for its purchasers, it prevents unnecessary usage of at whatever rate you've negotiated. Number 583 MS. COUGHNOUR said they contracted with Human Affairs for their employees. This is a managemental health program. They do have a select group of providers and that is how they get volume discounts for their referrals. In a sense, they are a PPO of mental health professionals. She said she also wanted to make it clear that municipality does spread their insurance program and their PPO is contracted through their insurance carrier. If Alaska Regional or any other hospital wanted to bid on the municipality's business and they were partners with an insurance carrier, they would have the opportunity to bid. She said as far as the municipality is concerned, they have not eliminated anybody from bidding on their business. Number 614 CHAIRMAN KOTT said he has a proposed CS for HB 266. He said it is language that was suggested to him by the Division of Insurance. It is CS "F," dated 4-26-95. Number 635 MARIANNE K. BURKE, Director, Division of Insurance, Department of Commerce and Economic Development, said she was provided a copy of the amendment. She said on Monday, Don Koch did provide some suggested language which was included in the amendment. CHAIRMAN KOTT informed Ms. Burke that the committee was dealing with the CS and not the amendment. TAPE 95-46, SIDE A Number 000 CHAIRMAN KOTT said page 1 is the same as the original bill, but subparagraphs 1, 2 and 3 have been added. MS. BURKE said the CS does agree with her division's recommendations on some proposed compromised language. CHAIRMAN KOTT asked MS. BURKE to explain the affect of the new language. MS. BURKE said the affect is to say that if a provider is willing to meet the terms and conditions of a preferred provider agreement, and the terms cannot be denied to a willing provider. She referred to testimony that has already been given that the contractual relationship that is entered into by the provider includes not only the discount for volume but it also imposes on that provider as part of the contractual relationship. The financial responsibility that is in lieu of the solvency of a regulator (indisc.). She continued to give an example. REPRESENTATIVE KUBINA asked if the state of Alaska goes out to bid with Aetna, Blue Cross, etc. MS. BURKE said the placement of the state of Alaska insurance is done through the Division of Retirement and Benefits, Department of Administration and she isn't familiar with their process. She noted it is her understanding that it does go out to bid. Number 078 REPRESENTATIVE PORTER asked if she is saying, "If hospital A bids or is awarded a PPO and hospital B agrees to meet the prices and specifications of that contract, then hospital B may receive patients from the provider or from the group. But that if it does, it must main -- it must -- hospital B must maintain that services regardless of whether they are making money or not on it or hospital A." MS. BURKE said, "If the contractual arrangement, lets say that -- choose the state of Alaska because I can't imagine it running out of money. Lets just say employer A has entered into a PPO arrangement with hospital A. This language would then say `If hospital B is willing to meet the terms and conditions of this contract then they would not be denied the ability to receive patients.' And what I am suggesting, it is important to keep in mind, it is not only the upside of this contract which means the volume that you're going to get in exchange for the discount, it is also the potential downside. If employer A does not have sufficient funds or for some reason this contractual arrangement does not have the sufficient funds to provide that level of payment, then hospital B has agreed to provide this service even if the cost is higher at that -- on the agreed upon rate. Hospital C also agrees to the same terms and conditions of the contract." REPRESENTATIVE PORTER asked who is running out of money. MS. BURKE said, "Lets say hospital B's cost of doing this procedure increases 45 percent. They're still stuck with providing the procedure at the same price. They are a party to the contract. They can't back out of it." Number 140 REPRESENTATIVE ELTON said he would like to know whether Ms. Burke thinks that the approach taken in HB 266 will affect the cost of health care delivered in the state of Alaska. He also asked whether that cost would go up or down if the bill is passed. MS. BURKE said in the lower 48 where preferred provider arrangements have been put into place, there have been decreases in cost. The testimony offered at the meeting today is quite valid. She said we are not Southern California. We do not have a unlimited number of providers. We do not have the same competitive environment that is enjoyed in other areas. Ms. Burke said from a economic point of view, it would appear that if you can take it to the free market and bid on providing a service, you are also on the hook for providing that service whether you can make money on it or not. It would seem to her that the free market would very carefully evaluate and come in at a price that they felt they could make a profit. Ms. Burke said she believes that the PPO concept will save money. REPRESENTATIVE ELTON asked if the adoption of HB 266 would mean that we would no longer have a PPO environment in the state of Alaska. MS. BURKE said she doesn't think so. Number 188 REPRESENTATIVE ROKEBERG referred to the amendment that was brought forward and asked Ms. Burke to comment in terms of the intent to cover the insurance companies and not just the other portion of the insurance sector MS. BURKE said she isn't sure she understands the question. REPRESENTATIVE ROKEBERG said because of the AG's opinion, the intent was to bring in premium paying companies, stock and mutual companies. MS. BURKE said the AG's opinion did state that although there is no enabling legislation currently on the books. A stock company or other indemnity companies can form PPOs. REPRESENTATIVE ROKEBERG asked if that was the intent of the amendment and if that is what has caused confusion. MS. BURKE said the legislation that is currently in place permits PPOs. What the amendment does is it says that if a provider is willing to meet the terms and conditions, then it is open. She noted she is referring to the CS. Ms. Burke said she would like to point out that this is in AS 87, which is specific to the hospital and medical service corporations. She said as she has mentioned, the AG's opinion does state that any provider can enter into a preferred provider arrangement. Number 223 REPRESENTATIVE ROKEBERG made a motion to adopt CSHB 266(L&C), Ford, 3-26-95. Hearing no objection, it was so ordered. REPRESENTATIVE ROKEBERG said he has given the committee a proposed amendment which clearly causes confusion. He said he hasn't seen the AG's opinion and, therefore, he would recommend that the bill be moved to a subcommittee which he would be willing to chair. CHAIRMAN KOTT said he believes the recommendation by Representative Rokeberg is appropriate. He said the amendment Representative Rokeberg is offering goes beyond the far reaches of the original intent of the bill. Chairman Kott said it would be his recommendation that the CS and the proposed amendment be forwarded to a subcommittee of three consisting of Representatives Rokeberg, Elton and Masek. REPRESENTATIVE ELTON OBJECTED for the purpose of a comment. He referred to the provision of the Human Affairs contract and said he may need the mental health services afterwards. REPRESENTATIVE KOTT said the bill would be referred to a subcommittee. HB 243 - LICENSING OF LANDSCAPE ARCHITECTS Number 271 The last order of business was HB 243, "An Act relating to licensure of landscape architects." CHAIRMAN KOTT asked Mr. Dozier to come before the committee to explain the bill. Number 286 GEORGE DOZIER, Legislative Assistant to Representative Pete Kott, said currently, under state law architects, land surveyors and engineers are regulated by the State Board of Registration for Architects, Engineers and Land Surveyors. That means that this board is in charge of admitting individuals to practice those professions. The board is responsible for setting standards for the safe practice of those professions. It disciplines individuals that violates regulations and those who are not safely practicing those professions, thereby, serves the public safety. MR. DOZIER said currently there is no board, including this board, that regulates landscape architects. He said it is the chairman's position that landscape architecture is a separate and distinct profession. It calls for specialized knowledge in scientific, engineering, and biological principles. He referred to individuals that practice this profession and said if it isn't done in a safe manner it could harm public safety. HB 243 does just that. It brings, within the scope of coverage of the state board, the practice of landscape architecture. Mr. Dozier said the bill is a large bill containing concept which is that landscape architecture should be regulated by the state. The remainder of the bill, 99 percent of it, consists of conforming amendments to existing statutes. Number 316 CHAIRMAN KOTT informed the committee members that there is a proposed CS. REPRESENTATIVE ELTON moved that CSHB 243(L&C), 9-LS0858C, Lauterbach, dated 4-12-95. Hearing no objection, CSHB 243(L&C) was adopted. CHAIRMAN KOTT asked Mr. Dozier to explain the CS. MR. DOZIER said the principle change is in Section 29 which adds subsections 10 and 11, which are not included in the original bill. He said Section 11 was added for the purpose of making it clear that individuals who have small business, and quite often teenagers that do lawn and yard work, aren't included in the coverage of the bill. He referred to Section 10 and said people from the profession are available to testify and he would defer it to them. REPRESENTATIVE ELTON said he just got "beat up" by a person from the Alliance for all the unnecessary regulations that get into the way of Alaska businesses. He said he wanted the record to reflect that here are Alaska businesses coming to the legislature asking for regulation, and he is going to throw it back into their face the next time the Alliance comes down here because every piece of legislation is not being generated by a bunch of legislators saying, "O.K., how can we over regulate." He said every statute that leads to regulation that he has seen is (indisc.) business. He said he wanted the record to reflect very very clearly that he is going to be business friendly by passing this business request out of committee, but he going to throw it back at them the next time they come down here and tell him that he is over regulating them. Number 465 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development, said the department doesn't support the legislation because of the danger to public health and safety posed by poor quality landscape architecture seems low to the department. She said it is possible that more testimony on the bill will clarify and convince the department that there is danger. At this point, the department doesn't see danger that merits limitation of Alaskan's opportunity to perform the work of their choice. Ms. Reardon explained construction contractors who do the actual moving of earth and plant material are currently licensed by the division. It is a specialty contractor license that would not involve the design of landscaping which the bill deals with. All the landscape architects and architecture firms must currently have business licenses. She said that is how they regulate, only with business licenses or through construction contractor licenses for the actual landscape work. Ms. Reardon said she agrees with Mr. Dozier that landscape architecture is a separate and distinct profession from architecture and engineering which the department currently licenses. The question is a policy question as to whether the regulation is necessary to protect the public. She said the bill would certify people has having certain qualifications in landscape architecture so that it may benefit consumers that the person they hire has some training in that area. However, the restriction of the practice of landscape architecture for folks that don't have a license seems unnecessary or excessive at this time. If supporters of the bill do demonstrate that public health and safety concerns are involved, she would suggest that the licensing program be modified and made a bit more modest so that anyone who has passed the national landscape architecture course could submit proof of that and the division would license them. Ms. Reardon said perhaps the use of the term "landscape architect" would be limited to those folks, but perhaps people who did not call themselves licensed landscape architects could do the same work without going through the licensing. MS. REARDON said the bill adds a nonvoting landscape architect to the board. She said she believes this was an effort to hold down costs as the sponsors may have felt that having the member be nonvoting would somehow make the costs less. She said she doesn't really think that will turn out to be the case because the nonvoting member will still need to travel or participate in meetings, although she supposes the nonvoting member could choose to only participate by teleconference. She said her suggestion is to go a head and give that landscape architect the power to vote as it would be a smoother way of operating the board since everyone else who participates in meetings would be voting. MS. REARDON said if the committee does decide that there is public interest in restricting this profession to people with certain qualifications, she would suggest that Section 25 and 32 be clarified so that the definition of the practice of landscape architecture does not overlap with engineering. Those two sections point out that the definition of landscape architecture does include some things which engineers do which landscape architects shouldn't be permitted to do. Section 25 says, "This chapter does not prohibit the practice of landscape architecture by an engineer." It also says that even if you are a landscape and the definition of landscape architecture covers a certain procedure, if that procedure is really an engineering activity you can't do it. She said it seems that there needs to be more thought put into exactly where the boarder is between engineering and landscape architecture to eliminate some of the overlapping. She stated Section 25 needs clarification and work on the definitions. MS. REARDON said there needs to be a technical amendment needed in Section 24. It appears a subsection "A" needs to be added at the beginning of Section 24 because Section 25 says, "Notwithstanding A of this section." REPRESENTATIVE ELTON referred to making the nonvoting member a voting member and said we would then end up with a board that has ten members. He said most boards have odd numbers. He asked Ms. Reardon if she recommends that two be added or replace one of the others. MS. REARDON said she would not recommend removing one of the engineers or architects without having discussed that with those boards. She said adding another public member would increase the overall number of people and would increase the cost of the board. REPRESENTATIVE PORTER said Section 5 seems to say that the nonvoting member wouldn't be entitled to per diem and travel expenses. MS. REARDON said that is true, but it seems that for the person to participate on the board, they would need to participate in the meetings. Therefore, she assumes there would be teleconference costs. She noted the meetings seem to be two day meetings. It will not necessarily be a savings over just flying to Anchorage or Juneau and participating. CHAIRMAN KOTT said he would take testimony from Anchorage. Number 492 DWAYNE ADAMS testified from Anchorage. He said he is (indisc.) in a landscape architecture firm of many people. Mr. Adams referred to the items Ms. Reardon brought up and said most of them were worked out with the Occupational Licensing Division about a year ago. It came to his attention about three weeks ago that were some concerns in the department. Mr. Adams referred to the public health and safety issues and said, for example, there is nobody licensed for the design of playground equipment. He said there are liability and safety issues involving the design of playground equipment. He pointed out playground equipment structures, the height a child could fall, the type of equipment, etc., are unlicensed in the state of Alaska, but are licensed in 45 other states. MR. ADAMS said the universal design standards for accessibility is one of the things that landscape architects deal with on a daily basis. It is in the public heath and the safety concerns that landscape architects be licensed and the people designing walkways and the facilities should be knowledgeable of these. It is important that landscape architects be licensed for the design of (indisc.) structures, simple walls and foundations that go into landscape architectural designs. He said the relationship of civil engineers is (indisc.) of architects and structural engineers. MR. ADAMS said landscape architects need to be licensed. As the owner of an eight person firm, he finds that he loses a significant amounts of (indisc.) to landscape architects. Approximately 50 percent of the work in the state in the realm of landscape architect is done by out of state landscape architects. The Alaska Native Hospital their (indisc.) designs all by out of state landscape architects. He continued to give more examples of organizations using out of state landscape architectures. MR. ADAMS explained that people who do this work should understand the Arctic conditions, the fundamentals of snow removal, salt, sand, plant materials, walking surfaces. Those are the fundamentals that landscape architects need to know. A component of the licensing requirement still should require that arctic engineering be a fundamental part of the training of landscape architects licensed in this state. He thanked the committee for listening to him. Number 524 LINDA CYRA-KORSGGARD, Landscape Architect, testified from Anchorage. She said she is licensed as a landscape architect both in Washington and Maine. The contribution of this profession to the health, safety and welfare of Alaskans warrants registration of the practice. The SOA(?) members are currently employed in Alaska's private landscape architectural offices and are publicly employed by federal offices of the Forest Service, the National Park Service, Fish and Wildlife Service and the Bureau of Land Management. In addition, they are employed in state offices of the Department of Natural Resources and the Department of Environmental Conservation. Municipalities employ landscape architects in park and recreation departments. Professional qualifications for landscape architects include a professional four or five year degree from one of over 40 accredited colleges or university programs. Landscape architecture is a profession licensed in 45 out of 50 states. Ms. Cyra-Korsggard explained the Alaska Professional Design Council, which is made up of (indisc.) land surveyors has taken a vote and has agreed to support them in their efforts to become a licensed profession. The AELS has also made that same determination. MS. CYRA-KORSGGARD said some the areas of expertise that (indisc.) are laws and regulations protecting the environment are signage and scenic road and trail pull out designs, official analysis of impacts of roadway and utility corridors, trail alignment, geometry and user conflicts, erosion control principals, relationship of recreational activities, fertilizers, insecticides, etc. Ms. Cyra-Korsggard continued to inform the committee of laws and regulations protecting the environment. She thanked the committee for listening to her. Number 559 LEE WYATT testified from the Mat-Su teleconference site. He said he is a 21 year resident of Alaska. When he first came to Alaska, it was to work on the pipeline and he came as a landscape architect. He said Aleyska called him a visual impact engineer. MR. WYATT explained he earned a five year professional degree in landscape architecture from the University of Washington in 1968. In 1972, he took a four day 36 hour exam to receive a national (indisc.) which allowed him to become a registered certified landscape architect in the state of Washington. He has been registered and has practiced in the states of Oregon, Montana, Colorado and Nebraska. He is currently licensed in the state of Idaho. MR. WYATT said he personally believes that in one form or another, the basic principles and (indisc.) of the practice of Alaska architecture, on a daily basis, are utilized in his position as the City Administrator/Public Works Director for the City of Wasilla. Landscape architects are normally trained and educated to be knowledgeable in almost all the professional design disciplines, as we know them, that are addressed in the other portions of this particular statute. Licensing would test knowledge and capability and would ensure competence in the market place. It would also allow people who are in the current practice to compete against those people who come from out of state to practice in this state, not knowing about the special considerations of Alaska. Some of the considerations relate to arctic engineering, climate, plant materials, frost, etc. Landscape architecture is an honorable profession. HB 243 is not over regulation. It would protect the citizens rights and all those who visit. He urged passage of HB 243. Number 584 BURDETT LENT, Landscape Architect, was next to testify from the Mat-Su teleconference site. He said he has been a landscape architect for about 34 years. He informed the committee that the types of projects he has been involved in since he has been in Alaska include residential planed unit development, site planning, planning and zoning, commercial and office building landscaping, highway landscaping, health care facilities, local parks, etc. He said these were done for a variety of clients from small residents up to projects involving land use. MR. LENT said to hire people from out of state to do some of the projects is not in the state's best interest. He said he has worked on projects where there are large amounts of funds being invested in infrastructure for health care facilities. He said a lot has already been mentioned about health, safety and welfare issues. He noted a landscape sprinkler system that is not properly designed can poison a domestic water system. Mr. Lent said 45 of 50 states have registered landscape architects, and therefore, provides a source of income for those landscape architects. In Alaska, we have an unequal footing with other professions where they are asked to do work of equal statute, but they are not protected from people coming in from out of state to do that same type of work. It is inconsistent. Another inconsistency in state law is the fact that landscape contractors are licensed and are controlled with insurance requirements. They carry far less responsibility than landscape architects do. MR. LENT said by licensing landscape architects, it will help familiarize the profession to other Alaskans who do not understand the profession. Local communities will adopt landscape standards as the large cities in Alaska have done. Mr. Lent said the benefits will accrue to all residents of Alaska in the proper planning of the development of our natural resources. Number 635 CHAIRMAN KOTT announced the committee would recess until further notice as the committee members have been summoned to the House Chambers. TAPE 95-46, SIDE B HB 260 - MARINE PILOTS Number 000 CHAIRMAN KOTT reconvened the meeting. He said the committee would address HB 260, "An Act relating to marine pilots and the Board of Marine Pilots; extending the termination date of the Board of Marine Pilots; and providing for an effective date." Chairman Kott referred to the last meeting on the bill and said Representative Kubina was going to offer an amendment. REPRESENTATIVE KUBINA said he had asked all the groups involved to try to come to an agreement amongst themselves. He said he isn't comfortable in moving any amendment to which they can't come to an agreement on. He said he doesn't believe they have done so. Representative Kubina asked if the committee had adopted a CS at the previous meeting. An unidentified speaker said the committee had adopted two amendments at the previous meeting. ADJOURNMENT There being a call on the House floor, CHAIRMAN KOTT promptly adjourned the House Labor and Commerce Committee meeting.