Legislature(2007 - 2008)

04/16/2007 10:06 AM L&C


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10:06:20 AM Start
10:06:36 AM HB228
11:56:53 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 16, 2007                                                                                         
                           10:06 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Mark Neuman, Vice Chair                                                                                          
Representative Carl Gatto                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Jay Ramras                                                                                                       
Representative Robert L. "Bob" Buch                                                                                             
Representative Berta Gardner                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative John Coghill                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Les Gara                                                                                                         
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 228                                                                                                              
"An  Act  relating to  fees  for  certain medical  treatment  and                                                               
service  under   the  Alaska   Workers'  Compensation   Act;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSHB 228(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 65                                                                                                               
"An  Act  relating to  breaches  of  security involving  personal                                                               
information,  credit report  and credit  score security  freezes,                                                               
consumer  credit  monitoring,   credit  accuracy,  protection  of                                                               
social security  numbers, care of  records, disposal  of records,                                                               
identity  theft, furnishing  consumer credit  header information,                                                               
credit cards,  and debit  cards, and to  the jurisdiction  of the                                                               
office  of  administrative  hearings; amending  Rule  60,  Alaska                                                               
Rules of Civil Procedure; and providing for an effective date."                                                                 
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 228                                                                                                                  
SHORT TITLE: WORKERS' COMP. MEDICAL TREATMENT FEES                                                                              
SPONSOR(s): REPRESENTATIVE(s) KELLY                                                                                             
                                                                                                                                
03/29/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/29/07       (H)       L&C, FIN                                                                                               
04/16/07       (H)       L&C AT 10:00 AM CAPITOL 17                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DEREK MILLER, Staff                                                                                                             
to Representative Mike Kelly                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 228 on behalf of                                                                              
Representative Kelly, sponsor.                                                                                                  
                                                                                                                                
SALLIE STUVEK, Director                                                                                                         
Human Resources                                                                                                                 
Fairbanks Northstar Borough                                                                                                     
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 228.                                                                            
                                                                                                                                
MICHAEL HAUGEN, Executive Director                                                                                              
Alaska Physicians & Surgeons, Inc.                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of the bill as                                                                        
"another stop-gap measure" to use in figuring out what is                                                                       
driving the cost increases in the workers' compensation system.                                                                 
                                                                                                                                
LINDA HALL, Director                                                                                                            
Division of Insurance                                                                                                           
Department of Commerce, Community, & Economic Development                                                                       
(DCCED)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on behalf of the division in                                                                     
support of HB 228.                                                                                                              
                                                                                                                                
JAMES J. JORDAN, Executive Director                                                                                             
Alaska State Medical Association (ASMA)                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in favor of a balanced approach                                                                  
that will help meet physician recruiting goals.                                                                                 
                                                                                                                                
ROD BETIT, President                                                                                                            
Alaska State Hospital and Nursing Home Association (ASHNHA)                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 228.                                                                            
                                                                                                                                
PAUL F. LISANKIE, Director                                                                                                      
Division of Workers' Compensation                                                                                               
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Offered information  during the  hearing on                                                               
HB 228.                                                                                                                         
                                                                                                                                
WAYNE STEVENS, President/CEO                                                                                                    
Alaska State Chamber of Commerce                                                                                                
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Encouraged the  work of  the committee  in                                                               
moving HB 228 through the legislative process.                                                                                  
                                                                                                                                
BARBARA HUFF TUCKNESS, Director                                                                                                 
Governmental and Legislative Affairs                                                                                            
Teamsters Local 959                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 228.                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee  meeting  to order  at  10:06:20  AM.   Representatives                                                             
Buch,  Gatto, Gardner,  and Olson  were  present at  the call  to                                                               
order.   Representatives  LeDoux, Ramras,  and Neuman  arrived as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
HB 228-WORKERS' COMP. MEDICAL TREATMENT FEES                                                                                  
                                                                                                                                
10:06:36 AM                                                                                                                   
                                                                                                                                
CHAIR OLSON  announced that the  only order of business  would be                                                               
HOUSE BILL NO. 228, "An Act  relating to fees for certain medical                                                               
treatment  and service  under  the  Alaska Workers'  Compensation                                                               
Act; and providing for an effective date."                                                                                      
                                                                                                                                
10:06:53 AM                                                                                                                   
                                                                                                                                
DEREK MILLER,  Staff to Representative  Mike Kelly,  Alaska State                                                               
Legislature, presented HB 228 on  behalf of Representative Kelly,                                                               
prime sponsor.  He paraphrased  the sponsor statement, which read                                                               
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
     In  2005 the  Alaska Legislature  passed [Senate  Bill]                                                                    
     130  which was  a  rework of  the Workers  Compensation                                                                    
     statutes.  As part  of  this  rework, medical  payments                                                                    
     were frozen at  the 2004 fee schedule so  that a review                                                                    
     could  be done  of the  underlying reasons  for premium                                                                    
     increases.  This review  was to  be jointly  done by  a                                                                    
     special Workers  Compensation Legislative  Taskforce in                                                                    
     concert  with  the  Department  of  Labor  &  Workforce                                                                    
     Development  Medical [Services]  Review Committee.  Two                                                                    
     important  tasks  of  the committee  were  to  look  at                                                                    
     program  design problems  and to  study the  underlying                                                                    
     reasons for  medical cost increases experienced  in the                                                                    
     program. Following  this, the taskforce was  to develop                                                                    
     recommendations  to moderate  program increases  in the                                                                    
     future. As part  of the conditions of  the medical rate                                                                    
     freeze,  the  Taskforce  was to  have  completed  their                                                                    
     review by  February of 2006  and the rate  freeze would                                                                    
     sunset in August  of 2007 (to be replaced by  a new fee                                                                    
     schedule).                                                                                                                 
                                                                                                                                
     The Taskforce  did not complete its  report by February                                                                    
     of  last year  and  we  are facing  the  sunset of  the                                                                    
     medical rate  freeze in August  of this year.  There is                                                                    
     not yet a  plan for the post rate  freeze sunset period                                                                    
     and  that  is  why  this  legislation  was  introduced.                                                                    
                                                                                                                                
     Under  HB  228,  the  medical   rate  freeze  would  be                                                                    
     extended two  years to  allow time  for recommendations                                                                    
     to be developed. It implements  an annual rate increase                                                                    
     based  on the  CPI [Consumer  Price Index]  index. This                                                                    
     extension  of  the freeze  should  allow  time for  the                                                                    
     insurance  companies   to  compile  and   submit  their                                                                    
     analysis  and  recommendations   after  reviewing  care                                                                    
     costs for  injured workers so that  the Legislature can                                                                    
     address the underlying reasons for premium increases.                                                                      
                                                                                                                                
MR. MILLER directed attention to the sectional analysis for HB                                                                  
228, which read as follows [original punctuation provided]:                                                                     
                                                                                                                                
     Section 1.  Specifies that fees  and other  charges for                                                                
     medical treatment or service  provided before August 1,                                                                    
     2007  do  not  exceed  the fees  in  the  fee  schedule                                                                    
     specified  by the  Workers' Compensation  Board in  its                                                                    
     published bulletin  dated December 1, 2004.   Specifies                                                                    
     that fees  and other  charges for medical  treatment or                                                                    
     service  provided  after  August 1,  2007,  but  before                                                                    
     March 31,  2009 is  the percentage change  between 2004                                                                    
     and 2006 in the medical  care component of the Consumer                                                                    
     Price Index for the Anchorage metropolitan area.                                                                           
                                                                                                                                
     Section 2. Repeals  AS 23.30.097(a)(1), specifying fees                                                                
     and other charges for medical  treatment or service may                                                                    
     not exceed  the fees in  the fee schedule  specified by                                                                    
     the  Workers'  Compensation   Board  in  its  published                                                                    
     bulletin dated December 1, 2004.                                                                                           
                                                                                                                                
     Section 3.  Allows the Department of  Labor & Workforce                                                                
     Development   and   Workforce  Development   to   adopt                                                                    
     regulations necessary to implement this act.                                                                               
                                                                                                                                
     Section  4.   Section  3  of  this   act  takes  effect                                                                
     immediately.                                                                                                               
                                                                                                                                
     Section  5. Section  1 and  2 of  this act  take effect                                                                
     July 31, 2007.                                                                                                             
                                                                                                                                
MR. MILLER described HB 228 as "a short-term solution to a long-                                                                
term fix  that we hope  will ... come  to fruition in  the coming                                                               
years."                                                                                                                         
                                                                                                                                
10:10:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARDNER inquired  as  to  whether information  is                                                               
available to injured workers seeking  medical care to direct them                                                               
to physicians who will treat them at the current rate.                                                                          
                                                                                                                                
MR.  MILLER said  he  does not  know, but  he  suggested that  an                                                               
upcoming testifier may be able to provide and answer.                                                                           
                                                                                                                                
10:10:47 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS stated  that  although ongoing  care is  a                                                               
different issue, immediate care often means emergency room care.                                                                
                                                                                                                                
10:11:38 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LeDOUX expressed  concern  regarding whether  the                                                               
issues currently affecting those  under Medicare are happening to                                                               
those covered by workers' compensation.                                                                                         
                                                                                                                                
MR. MILLER replied that the  sponsor's intention is to streamline                                                               
HB 228 to address the  medical component of workers' compensation                                                               
rates, with the hope that larger  issues will be addressed in the                                                               
future.                                                                                                                         
                                                                                                                                
REPRESENTATIVE LeDOUX  clarified that  she is  not trying  to fix                                                               
the national health  care problems in one bill,  but rather wants                                                               
to ensure  that HB 228  "or the  previous bill" didn't  cause the                                                               
same  problems  for  workers  as has  happened  for  those  under                                                               
Medicare.                                                                                                                       
                                                                                                                                
10:12:58 AM                                                                                                                   
                                                                                                                                
MR. MILLER, in response to  a question from Representative Gatto,                                                               
confirmed that medical fees currently  charged by medical doctors                                                               
are capped at the 2004 medical  rate fees, and HB 288 proposes to                                                               
adjust that cap  according to the rising cost  of providing those                                                               
services.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GATTO asked  if the hospital fees,  outside of the                                                               
physicians' fees, would also be adjusted.                                                                                       
                                                                                                                                
MR. MILLER said he does not know, but can find out.                                                                             
                                                                                                                                
10:14:32 AM                                                                                                                   
                                                                                                                                
SALLIE  STUVEK, Director,  Human  Resources, Fairbanks  Northstar                                                               
Borough,  said she  oversees the  workers' compensation  programs                                                               
for  both the  Fairbanks  North Star  Borough  and the  Fairbanks                                                               
North  Star  Borough  School  District.    She  stated  that  the                                                               
Fairbanks North Star  Borough supports HB 228.   She relayed that                                                               
the  borough was  concerned about  the sunset  provisions and  is                                                               
pleased  that legislation  has been  introduced  to address  that                                                               
issue.  She continued:                                                                                                          
                                                                                                                                
     The worst-case  scenario for us  would be to  allow the                                                                    
     fee schedule to lapse  without any consideration of its                                                                    
     impact.   We need  stability in establishing  costs for                                                                    
     provider  services,   and  an  extension  of   the  fee                                                                    
     schedule allows for that stability.                                                                                        
                                                                                                                                
     The adjustment  to the schedule also  seems reasonable,                                                                    
     as  it has  been frozen  at 2004  rates.   An inflation                                                                    
     factor  is  appropriate,  as costs  have  not  remained                                                                    
     stagnant  for  medical  services  during  that  period.                                                                    
     However, the  mechanism chosen in the  language may not                                                                    
     be available; I'm  not sure that ...  the Department of                                                                    
     Labor &  Workforce Development has  actually calculated                                                                    
     the medical CPI for Anchorage,  so you may want to take                                                                    
     a look at that.                                                                                                            
                                                                                                                                
     The  only   part  of   the  bill   ...  that   we  have                                                                    
     reservations   about  is   the   March,  2009,   sunset                                                                    
     language.  The extension basically  puts us back in the                                                                    
     same scenario that we're currently  in; it just extends                                                                    
     it.  And  so, we would propose that  consideration of a                                                                    
     long-term solution  be found so  that we don't  have to                                                                    
     continue to address this issue in the future.                                                                              
                                                                                                                                
     Having said  that, we are  ... supportive of  the bill,                                                                    
     as  is,  because  it  does  put us  in  a  much  better                                                                    
     position  in  the  interim than  just  having  the  fee                                                                    
     schedule lapse in August.                                                                                                  
                                                                                                                                
The committee took  a brief at-ease from 10:17:17  AM to 10:17:39                                                               
AM.                                                                                                                             
                                                                                                                                
10:17:45 AM                                                                                                                   
                                                                                                                                
MICHAEL   HAUGEN,  Executive   Director,   Alaska  Physicians   &                                                               
Surgeons,  Inc., testified  in support  of the  bill as  "another                                                               
stop-gap  measure" to  use in  figuring out  what is  driving the                                                               
cost increases  in the  workers' compensation  system.   He urged                                                               
the  committee  to put  pressure  on  the insurance  industry  to                                                               
produce data to  figure out "where these costs  are coming from."                                                               
He  said the  request for  that data  originated back  in October                                                               
2004, and it has still not been produced.                                                                                       
                                                                                                                                
10:18:41 AM                                                                                                                   
                                                                                                                                
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Commerce,  Community, &  Economic Development  (DCCED), testified                                                               
on behalf  of the division  in support of HB  228.  She  said the                                                               
bill  obviously affects  language in  the Department  of Labor  &                                                               
Workforce Development, but the actual  outcome of the cost of the                                                               
workers'   compensation   system    is   what   drives   workers'                                                               
compensation  premiums.   She agreed  that  some type  of cap  on                                                               
medical fees will be necessary  once the current freeze ends, and                                                               
she said she thinks  HB 288 seems reasonable in its  use of a CPI                                                               
adjustment.                                                                                                                     
                                                                                                                                
MS.  HALL said  some  of  the information  she  would present  is                                                               
available in  the committee  packet.  She  noted that  in Alaska,                                                               
[medical] fees have increased from 41  percent of the cost of the                                                               
system  in  1985 to  its  current  amount  of  69 percent.    She                                                               
predicted that without some type of  parameter on how much can be                                                               
charged  for medical  fees,  there  is likely  to  be a  dramatic                                                               
increase in  the cost of the  system.  She said  that system cost                                                               
drives  premium costs.   She  said one  type of  premium cost  is                                                               
called,  "lost cost,"  which is  the physical  dollars paid  out.                                                               
Ms.  Hall explained  that the  when the  division does  a premium                                                               
rate-making analysis,  it looks at historical  system cost, using                                                               
three  years of  system  cost  data, and  then  it  does what  is                                                               
called,  "trending," which  projects future  costs.   After that,                                                               
the division adds  a carrier component related to  expenses.  She                                                               
added, "So,  what we're  talking about today  is just  the actual                                                               
lost cost piece of a rate making."                                                                                              
                                                                                                                                
MS.  HALL  mentioned  a  couple of  premium  rate  rankings  from                                                               
Oregon.  She related that in  2004, Alaska had the second highest                                                               
rates in workers'  compensation in the country,  with its average                                                               
being $4.39, while  California's average was $6.08.   As of 2006,                                                               
Alaska  ranked number  one, with  approximately  a $5.00  average                                                               
rate index, exceeding California's rate  by nearly 80 cents.  She                                                               
stated, "I  don't think  this is  a number one  we ever  hoped to                                                               
reach."                                                                                                                         
                                                                                                                                
MS. HALL mentioned  a rate history going back to  1959.  She said                                                               
there was  a 10.2  percent rate  increase in  2002.   The largest                                                               
rate increase,  at 21.4  percent, was  in 2004.   She  noted that                                                               
that rate increase  has slowed and, as of 2007,  there has been a                                                               
rate decrease.  She stated, "I  would not presume to say that ...                                                               
that decrease  will continue;  I could  almost guarantee  that it                                                               
won't if we don't do something about medical fees."                                                                             
                                                                                                                                
MS. HALL directed attention to  a handout in the committee packet                                                               
compiled  by  the  National Council  on  Compensation  Insurance,                                                               
Inc., which suggests that if no  action is taken, the system cost                                                               
will increase  between 4.5-5.8 percent.   She said that  does not                                                               
include compensation premiums; it  reflects only the system cost.                                                               
If HB 228 is passed, the impact  on the system will be reduced to                                                               
between .8-1.2 percent.   Ms. Hall said any kind  of impact works                                                               
its way through  the workers' compensation rates for  a period of                                                               
years.  She  said the division has seen those  rate increases and                                                               
urges the legislature to pass HB 228.                                                                                           
                                                                                                                                
MS. HALL  mentioned another  handout showing  "medical severity,"                                                               
which she  said includes  factors of  price and  utilization, and                                                               
which shows  the increase in medical  costs over the CPI  and how                                                               
complex the  issue actually is when  comparing varying treatments                                                               
and their related cost.  She  noted that there is a 25-page study                                                               
that  she  would  make  available  to  any  interested  committee                                                               
members.                                                                                                                        
                                                                                                                                
10:24:59 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LeDOUX  said the purpose of  changing the workers'                                                               
compensation law  in 2005  was to  allow a  task force  to create                                                               
ideas that would  be implemented to solve the problem.   She said                                                               
that does  not seem  to have happened,  thus, the  legislature is                                                               
"back here again with this kind  of band aid approach."  She said                                                               
she is not comfortable with that.                                                                                               
                                                                                                                                
MS. HALL replied  that she does not  disagree with Representative                                                               
LeDoux and would  like to see some  long-term solutions; however,                                                               
it  does not  appear that  those solutions  are forthcoming.   In                                                               
regard to  medical data, she  noted that  there has been  a half-                                                               
year debate over  "who requested what from whom, and  when."  She                                                               
stated that she  did not receive a request  for information until                                                               
one  and  a  half  years  ago.   Claims  data,  she  relayed,  is                                                               
sensitive; it  is personal information.   She said  the insurance                                                               
companies  are  willing to  provide  information  to one  of  two                                                               
sources:  herself, as the  director of the Division of Insurance;                                                               
or   the  National   Council  on   Compensation  Insurance,   the                                                               
statistical agent.  She continued:                                                                                              
                                                                                                                                
     In  December of  last year  there was  a meeting  where                                                                    
     there was finally a data  set described of what kind of                                                                    
     information  was being  requested;  what would  satisfy                                                                    
     the   medical   community,    in   terms   of   medical                                                                    
     information.   Also,  to put  together a  body of  data                                                                    
     that would  give us some  idea of  where we have,  as a                                                                    
     state, areas  that may  be out of  line or  are growing                                                                    
     faster than other areas.   That data took almost a year                                                                    
     to actually get at what is it you really want.                                                                             
                                                                                                                                
     At that time, the  National Council on Compensation has                                                                    
     done -  for lack of better  term - ... what's  called a                                                                    
     "data call."   They go  out to the  insurance companies                                                                    
     [and]  they ask  for  the information.   The  insurance                                                                    
     companies have  agreed to provide  it.  It is  a manual                                                                    
     task.   They did not keep  this level of detail  in the                                                                    
     data they collect.  It's  a ... gruesome, almost manual                                                                    
     task,  going back  to bill  providers, bill  reviewers,                                                                    
     and  actually putting  together  manually  the kind  of                                                                    
     information we're asking for them to provide.                                                                              
                                                                                                                                
     So, I  would suggest to  you that I'm  anticipating, at                                                                    
     some  point, still  this year  - I'm  not going  to say                                                                    
     when  - we  will have  the medical  data that  has been                                                                    
     asked for.                                                                                                                 
                                                                                                                                
     Meanwhile, there is  a national study -  I've given you                                                                    
     two pages of  it - that shows the same  kind of data on                                                                    
     a national  basis.   So, I  think we  will have  a good                                                                    
     body  of  information  analyzing the  cost  of  various                                                                    
     types of claims by various types of providers.                                                                             
                                                                                                                                
10:29:07 AM                                                                                                                   
                                                                                                                                
MS. HALL,  in response to  a request from  Representative Neuman,                                                               
explained that  without HB  228, there  would be  no cap  on "the                                                               
provider fees  that are charged to  treat Worker's Compensation."                                                               
She continued:                                                                                                                  
                                                                                                                                
     Up until  August 1, of  2007, there has been  a medical                                                                    
     fee schedule  promulgated by  the Division  of Workers'                                                                    
     Compensation -  the Workers' Compensation Board.   That                                                                    
     fee schedule still  dates to December of  2004, so that                                                                    
     the  fees have  been  frozen since  that  date.   There                                                                    
     would  be a  normal increase,  say, in  2006 and  2007,                                                                    
     because that  fee schedule would have  applied to 2005.                                                                    
     Even ...  if we had  continued the cap, there  would be                                                                    
     logical increase as  the medical fees go up.   So, this                                                                    
     is  saying [that]  without  any cap,  they  will go  up                                                                    
     reasonably to  5.8 percent [maximum], I  believe.  Even                                                                    
     with  this cap,  it's ...  moving the  cap forward.   I                                                                    
     don't think  anybody thought that  it was fair  to keep                                                                    
     that  freeze going  on at  that level  into perpetuity.                                                                    
     So,  there would  still be  ...  an increase,  although                                                                    
     much smaller.                                                                                                              
                                                                                                                                
REPRESENTATIVE NEUMAN asked Ms. Hall how an increase of 4.5 to                                                                  
5.8 percent in workers' compensation rates would affect small                                                                   
business owners.                                                                                                                
                                                                                                                                
MS. HALL emphasized that "this isn't premium rates," but rather                                                                 
is "a component."  She continued:                                                                                               
                                                                                                                                
     I think  that without this  bill, or something  of this                                                                    
     nature,  we will  likely see  an increase  immediately,                                                                    
     because ...  from the  analysis NCCI  [National Council                                                                    
     on  Compensation Insurance,  Inc.] does  - and  they do                                                                    
     the rate  filings for Alaska; they  are the statistical                                                                    
     agent  ...  -  I  think we  can  anticipate  seeing  an                                                                    
     increase immediately.  We will  also see an increase in                                                                    
     workers'  compensation  medical  care that  will  carry                                                                    
     forward for a number of years.                                                                                             
                                                                                                                                
10:32:38 AM                                                                                                                   
                                                                                                                                
MS.  HALL, in  response to  Representative Gatto,  confirmed that                                                               
the bill adjusts the CPI.                                                                                                       
                                                                                                                                
REPRESENTATIVE GATTO  asked if emergency room  and post-care fees                                                               
are also capped.                                                                                                                
                                                                                                                                
MS. HALL replied that that is her understanding.                                                                                
                                                                                                                                
REPRESENTATIVE  GATTO asked,  "If  ... a  physician  or a  person                                                               
involved in  long-term care simply  said, 'At that rate,  I'm not                                                               
interested,' would  we be  forced to  pay the  higher rate  if no                                                               
service was  available, or  would we send  a patient  outside, or                                                               
have we not reached that situation  where we simply had a refusal                                                               
for care?"                                                                                                                      
                                                                                                                                
MS.  HALL  offered her  understanding  that  there have  been  no                                                               
complaints regarding  the availability  of medical care  to date,                                                               
although she  indicated that that  could happen.  She  said, "The                                                               
complaints  we receive  from injured  workers are  not about  the                                                               
access to medical  care, but rather the way in  which their claim                                                               
has been handled."                                                                                                              
                                                                                                                                
REPRESENTATIVE LeDOUX  recalled that during her  first session as                                                               
a legislator,  the legislature changed  the medical  tort system,                                                               
capping punitive damages.  The  reason, she reviewed, was to make                                                               
Alaska more  "doctor friendly," in  order to solve a  shortage of                                                               
doctors.  This  year, she noted, the House has  voted to increase                                                               
the  number of  WAMI scholarships.    She questioned  how a  bill                                                               
designed  to  put  a  cap  on medical  fees  will  fit  into  the                                                               
philosophy of  making Alaska more  desirable for doctors  to come                                                               
live and practice.                                                                                                              
                                                                                                                                
MS. HALL responded  that that is not her area  of expertise.  She                                                               
offered her  understanding that   Mr.  Jordan had  indicated that                                                               
doctors do support [HB 228].                                                                                                    
                                                                                                                                
10:35:50 AM                                                                                                                   
                                                                                                                                
CHAIR  OLSON  said  he  has  spoken  with  many  members  of  the                                                               
aforementioned  task  force.   He  said  he  thinks part  of  the                                                               
problem is that Senators Seekins and  Guess were no longer on the                                                               
task force  as of  last November.   He offered  his understanding                                                               
that "the framework  for the task force" still  exist, but simply                                                               
has not been funded.                                                                                                            
                                                                                                                                
MS. HALL said that's her understanding.                                                                                         
                                                                                                                                
10:36:26 AM                                                                                                                   
                                                                                                                                
JAMES  J.  JORDAN,  Executive   Director,  Alaska  State  Medical                                                               
Association  (ASMA),  in   response  to  Representative  LeDoux's                                                               
previously  stated  question,  said   the  Alaska  State  Medical                                                               
Association  represents physicians  across  the state.   He  said                                                               
there are many  members who are employers "no  different than any                                                               
other small  employer," and  there are members  for whom  a large                                                               
portion of their practice involves  dealing with injured workers.                                                               
He stated  that the Alaska  State Medical  Association's interest                                                               
in  HB  228 and  in  dealing  with  "any appropriate  and  timely                                                               
change" is  "a balancing act."   He posited that  the association                                                               
is interested in a balanced approach  - having a fair system that                                                               
will help meet physician recruiting goals.                                                                                      
                                                                                                                                
REPRESENTATIVE  LeDOUX  referred to  a  letter  [included in  the                                                               
committee packet]  from Roland Gower, M.D.,  [President of ASMA],                                                               
dated  April 13,  2007, which  she  said does  not seem  to be  a                                                               
"ringing  endorsement" of  the bill.    She asked  Mr. Jordan  to                                                               
respond.                                                                                                                        
                                                                                                                                
MR. JORDAN agreed  that the letter is not  a ringing endorsement;                                                               
however,  he indicated  that it  includes  a recommendation  that                                                               
[the bill] be  amended to "tie in some regular  provision of such                                                               
data" to  be reviewed  by the  Medical Services  Review Committee                                                               
(MSRC).   He  said that  frankly, ASMA  is guessing  at what  its                                                               
members' reactions will be to HB  228.  He stated that the reform                                                               
enacted in 2005  was supported by the medical  association on the                                                               
basis that there  would be an objective review  of data regarding                                                               
what  is driving  medical  costs, in  order  to determine  "which                                                               
areas  and  which surgery"  are  needed,  as  well as  to  ensure                                                               
doctors can  [perform procedures] "with  the scalpel and  not the                                                               
machete."                                                                                                                       
                                                                                                                                
REPRESENTATIVE  LeDOUX shared  her  understanding  that the  ASMA                                                               
does not  support HB 228  in its  present form, but  supports the                                                               
bill if amended.                                                                                                                
                                                                                                                                
MR. JORDON  confirmed that's  correct.   He said  the association                                                               
would like  to see a tie-in  to the production of  data, not only                                                               
related to the present, but also into the future.                                                                               
                                                                                                                                
10:41:51 AM                                                                                                                   
                                                                                                                                
CHAIR OLSON noted  that Mr. Jordan served as  the Deputy Director                                                               
of the  Division of Insurance  prior to his  moving to ASMA.   He                                                               
stated   that  he   has  found   Mr.  Jordan   to  be   extremely                                                               
knowledgeable  regarding workers'  compensation  issues over  the                                                               
years, among other insurance issues.                                                                                            
                                                                                                                                
REPRESENTATIVE  GARDNER  referred  to the  aforementioned  letter                                                               
from Dr.  Gower, and drew  attention to the last  sentence, which                                                               
read as follows:                                                                                                                
                                                                                                                                
     ASMA urges you to not take action that will adversely                                                                      
     impact an injured worker's access to care.                                                                                 
                                                                                                                                
REPRESENTATIVE  GARDNER  pointed out  that  the  letter does  not                                                               
specify whether, in  the opinion of ASMA, HB  228 would adversely                                                               
impact that access.   She said it is unclear  whether or not ASMA                                                               
supports or opposes the bill.                                                                                                   
                                                                                                                                
[Due to technical difficulties, there  is no sound recording from                                                               
10:43:00 to  10:54:25; that segment was  reconstructed from Gavel                                                               
to Gavel's recording.]                                                                                                          
                                                                                                                                
REPRESENTATIVE  GARDNER  referenced  the last  paragraph  on  the                                                               
first page of the letter from Mr. Gower, which read as follows:                                                                 
                                                                                                                                
     It must be pointed out that it is ASMA's understanding                                                                     
      that physicians do not have a different fee schedule                                                                      
     for injured workers than for other patients.                                                                               
                                                                                                                                
REPRESENTATIVE GARDNER said she would  like the record to reflect                                                               
whether  or not  that  is  a fact,  rather  than  just a  general                                                               
understanding.                                                                                                                  
                                                                                                                                
MR.  JORDAN  replied that  he  does  not  know  the answer.    He                                                               
explained  that fee  data is  not collected  by the  association.                                                               
Furthermore,  he  said  that  the   association  has  not  heard,                                                               
anecdotally, of physicians charging  different rates to attend to                                                               
an injury resulting in an accident  at work versus an accident on                                                               
the ski slopes.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  LeDOUX  questioned the  need  for  the freeze  if                                                               
physicians are not charging differently  for work versus non-work                                                               
injuries.                                                                                                                       
                                                                                                                                
10:44:50 AM                                                                                                                   
                                                                                                                                
MS.  HALL explained  that  the Department  of  Labor &  Workforce                                                               
Development  has  always  had  caps  on  provider  fees  and  fee                                                               
schedules.  She  said "we" have the ability  to negotiate between                                                               
payors  and providers  related to  medical fees.   She  mentioned                                                               
preferred  provider organizations  (PPOs) and  various discounted                                                               
plans.  She stated, "None of that  is a tool that is available to                                                               
the  payers  of workers'  compensation  claims,  whether they  be                                                               
insurance  companies or  self insured;  that is  prohibited under                                                               
statute today."                                                                                                                 
                                                                                                                                
REPRESENTATIVE LeDOUX  asked, "Why don't  we simply cap  the fees                                                               
that  the workers'  compensation  carriers can  charge, or  lower                                                               
those fees?"                                                                                                                    
                                                                                                                                
MS. HALL  replied that if  the fees that insurance  companies can                                                               
charge  are capped  below their  actual costs,  the carriers  are                                                               
going to be less willing to write fees in Alaska.                                                                               
                                                                                                                                
REPRESENTATIVE  LeDOUX questioned  why the  same logic  would not                                                               
apply to workers' compensation carriers and physicians.                                                                         
                                                                                                                                
MS. HALL replied that it is  her responsibility to look at claims                                                               
costs  and adjust  accordingly, and  she said  she does  not know                                                               
that anybody  has that kind of  oversight of the charges  and the                                                               
actual costs of medical providers.                                                                                              
                                                                                                                                
10:48:01 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARDNER  asked  for clarification  regarding  the                                                               
task force.   She said if  the task force has  not been effective                                                               
in the past,  perhaps there is different approach  that should be                                                               
taken.                                                                                                                          
                                                                                                                                
MS. HALL  responded that she thinks  the data and the  task force                                                               
are two different things.  The task  force met and came up with a                                                               
report.  She continued:                                                                                                         
                                                                                                                                
     The Medical  Services Review Committee was  supposed to                                                                    
     bring  back  recommendations  to that  group  regarding                                                                    
     what they felt might be  solutions to the problems that                                                                    
     we're encountering with the medical  costs.  That group                                                                    
     was looking  for data.  They  have come to me  for that                                                                    
     data at this  point, but not two and a  half years ago.                                                                    
     So, I  think the task  force did perform  the functions                                                                    
     as they  were set  out, and  I can't  tell you  that it                                                                    
     would or wouldn't be a good  idea to continued that.  I                                                                    
     think  that  was  a  legislative  call  on  legislative                                                                    
      members, as well as various stakeholders.  I mean, I                                                                      
       think it was an excellent exchange of ideas and an                                                                       
     attempt to get buy-in.                                                                                                     
                                                                                                                                
MS. HALL, in response to  a question from Representative Gardner,                                                               
explained that "severity" relates to cost of claims, not injury.                                                                
                                                                                                                                
REPRESENTATIVE NEUMAN  asked Ms. Hall  to give her opinion  as to                                                               
why the task force is taking longer to complete its job.                                                                        
                                                                                                                                
MS. HALL  stated that the task  force is having a  difficult time                                                               
completing its job for the same  reason the legislature has had a                                                               
difficult time wresting  with issues:  there are  so many diverse                                                               
stakeholders  with  varying  opinions  regarding  what  needs  to                                                               
change  and what  does not.    She said  she thinks  there is  an                                                               
overall  thought  that  anything  done to  help  one  stakeholder                                                               
automatically penalizes  another stakeholder.  She  said she does                                                               
not think there  was adequate time and discussion to  arrive at a                                                               
solution acceptable to all the stakeholders.                                                                                    
                                                                                                                                
CHAIR OLSON  asked if  stakeholders are  being treated  as sacred                                                               
cows.                                                                                                                           
                                                                                                                                
MS. HALL said she cannot answer that question.                                                                                  
                                                                                                                                
10:52:50 AM                                                                                                                   
                                                                                                                                
ROD  BETIT, President,  Alaska State  Hospital  and Nursing  Home                                                               
Association (ASHNHA), testified  in support of HB 228.   He noted                                                               
that  there is  a statement  from  the ASHNHA  membership in  the                                                               
committee packet.   He  said ASHNHA began  the process  some time                                                               
ago of trying to  head off what it sees as  a serious problem for                                                               
small and medium employers should HB  288 not be passed, which is                                                               
that  there is  no administrative  method  in place  to take  the                                                               
place  of the  cap when  it  is repealed.   Without  the cap,  he                                                               
related, insurers would  be forced to pay  charges for physicians                                                               
in  the hospitals,  which would  result in  25-30 percent  higher                                                               
payments  for services  rendered.   He  explained,  "We give  big                                                               
discounts currently under this program."                                                                                        
                                                                                                                                
MR. BETIT  reminded the committee  that he is talking  only about                                                               
medical  claims  related  to   injured  workers'  treatments  for                                                               
injuries.   He  said, "There's  a cap  that's being  extended and                                                               
then increased  by the CPI.   It's only  a cap in  those injuries                                                               
themselves.   It  isn't a  cap on  everything that  physicians in                                                               
hospitals do;  it's specific to  that population of  patients and                                                               
their specific injury."                                                                                                         
                                                                                                                                
MR. BETIT  said ASHNHA approached  the bill sponsor to  warn that                                                               
without timely legislation,  the cap would be  repealed in August                                                               
[2007], "the  charges are then  what they  pay ... by,"  and "the                                                               
reserves that  insurers have been collecting  through premiums to                                                               
pay for that medical care won't be  enough to cover it."  He said                                                               
there will  be future adjustments  and premiums,  and principally                                                               
the  small employers  or  medium  employers -  because  a lot  of                                                               
larger  employers self-insure  - will  see some  very significant                                                               
changes to  their premium  structure.  He  said he  doesn't think                                                               
anyone wants that to happen.                                                                                                    
                                                                                                                                
MR.  BETIT  stated,  "The  thing  that  has  been  holding  up  a                                                               
solution, in my view, is the  medical cost analysis."  He said he                                                               
served on the task force where  no one wanted to "drill down into                                                               
making finite  recommendations for permanent solutions  'til they                                                               
understood what  the medical cost increases  were attributed to."                                                               
He said, "We  have some suspicions, but nobody had  any hard data                                                               
to be able to  decide what to do ...."  Mr.  Betit said a general                                                               
rate adjustment across the entire  community was not appropriate,                                                               
because  there were  "specific  areas we  thought  were going  up                                                               
faster  than others."    The  data that  would  help decide  what                                                               
action  is  needed,  originally  due by  summer  [2007],  is  now                                                               
expected  to  be available  at  a  later  date.   He  stated  his                                                               
understanding that the  task force is "sunsetted"  - the original                                                               
extension period  having expired already.   Mr. Betit recommended                                                               
that   the  Medical   Services  Review   Committee,  within   the                                                               
Department of  Labor & Workforce  Development, be given  the task                                                               
of  coming  up  with  recommendations,   hopefully  by  the  next                                                               
legislative session, at  which point there could  be a meaningful                                                               
discussion  regarding  the present  and  future  of the  workers'                                                               
compensation program in Alaska.                                                                                                 
                                                                                                                                
MR. BETIT  said it is  both his and his  membership's perspective                                                               
that HB 228  is "critical to head off a  particular problem."  He                                                               
stated that  ASHNHA does not  like extending the cap,  because it                                                               
does not think  that is the best way to  do business; however, he                                                               
said he thinks  there could be some serious  repercussions in the                                                               
future if  there's nothing to take  the place of the  cap that is                                                               
being repealed.                                                                                                                 
                                                                                                                                
10:56:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  BUCH requested  clarification regarding  workers'                                                               
compensation care costs.                                                                                                        
                                                                                                                                
MR.  BETIT   replied  that   there  are   multiple  reimbursement                                                               
arrangements  agreed  to by  hospitals.    He  said there  was  a                                                               
reimbursement  methodology  used by  the  Department  of Labor  &                                                               
Workforce  Development in  workers' compensation  up until  2004,                                                               
whereby it would  take charges from all the  hospitals and arrive                                                               
at  a  per day  rate  for  any  worker-related care  provided  by                                                               
hospitals.  Senate  Bill 130 extended that plan for  two years in                                                               
order to allow  more time to come  up with a better  system.  The                                                               
proposed  legislation would  once again  extend that  plan, while                                                               
also giving  "a CPI adjustment" for  two years, which would  be a                                                               
slight improvement over using the rates from 2004.                                                                              
                                                                                                                                
REPRESENTATIVE   BUCH stated his  concern that the level  of care                                                               
"is the same for that particular  type of injury and that type of                                                               
payment as it is for any other type of injury."                                                                                 
                                                                                                                                
MR. BETIT confirmed  that the care remains the same;  there is no                                                               
difference   in  care   provided   based  on   the  agreed   upon                                                               
reimbursement arrangements.                                                                                                     
                                                                                                                                
10:59:00 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN   asked  Mr.  Betit  to   share  with  the                                                               
committee  the problems  he has  addressed,  what solutions  were                                                               
found, and why he feels more time is needed.                                                                                    
                                                                                                                                
MR. BETIT  responded that  two groups were  working on  the issue                                                               
simultaneously:  the Medical [Services]  Review Committee, in the                                                               
Department of Labor  & Workforce Development, and  the task force                                                               
created by the legislature.  He  indicated that the focus [of the                                                               
legislative  task  force] was  on  the  underlying cause  of  the                                                               
health care  costs and  possible solutions.   He said  there were                                                               
small  steps  taken  initially,  but  until  the  cost  data  was                                                               
available, no one felt comfortable  moving forward with permanent                                                               
recommendations.  He  said he personally has  never seen specific                                                               
recommendations come out of any  of the legislative leadership of                                                               
that  task force.    In  response to  a  follow-up question  from                                                               
Representative  Neuman,   offered  his  understanding   that  the                                                               
primary  reason  for  the extension  was  that  Senator  Seekins,                                                               
chairing the task  force, had noted at its last  meeting that the                                                               
earliest [the  data] would  be available would  be in  July 2007.                                                               
He  said  he  heard  that   through  third-party  means,  and  he                                                               
understands that  there may be additional  complications to delay                                                               
the data.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GARDNER   offered  her  understanding   that  the                                                               
hospital  association is  not  subject to  the  rate freeze,  but                                                               
rather, it has a rate negotiated with the state.                                                                                
                                                                                                                                
MR. BETIT replied as follows:                                                                                                   
                                                                                                                                
     We  would  be  subject  to  this  bill.    What  I  was                                                                    
     referring to is that  ... the reimbursement arrangement                                                                    
     between the  workers' compensation program and  each of                                                                    
     our  hospitals ...  wasn't so  much negotiated,  but it                                                                    
     was  arrived  at by  the  board  and [its]  process  of                                                                    
     setting those  rates over the  years.  And it's  a per-                                                                    
     day rate, and it's different  for each hospital.  We do                                                                    
     negotiate   lots  of   rates,  obviously,   with  other                                                                    
     entities,  like employers;  but we  don't have  as much                                                                    
     individual  negotiation  authority when  we're  working                                                                    
     with the state on [its]  programs [as] we do with other                                                                    
     entities.                                                                                                                  
                                                                                                                                
11:01:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARDNER asked, "If  you operate under a negotiated                                                               
rate  with ...  other organizations,  ... and  you're subject  to                                                               
this  2004 rate  freeze,  what ...  was the  rate  used for  your                                                               
base?"                                                                                                                          
                                                                                                                                
MR.  BETIT answered  that  the Department  of  Labor &  Workforce                                                               
Development  compiled  a  history  of the  claims  submitted  for                                                               
injured workers and what the  charges for those claims were, from                                                               
which the  board and the  department produced  a daily rate.   He                                                               
said [ASHNHA] accepts that rate  as payment in full for services.                                                               
That is  the rate  that was  in place in  2004 and  has continued                                                               
under the freeze for the last two years.                                                                                        
                                                                                                                                
REPRESENTATIVE GARDNER suggested that  since ASHNHA is accustomed                                                               
to negotiating  rates, if HB  228 did  not pass, it  could simply                                                               
negotiate  a rate  that would  not greatly  increase the  state's                                                               
cost.                                                                                                                           
                                                                                                                                
MR.  BETIT  said  he  cannot   speak  for  ASHNHA's  37  members.                                                               
Notwithstanding  that, he  surmised that  "whatever they  come up                                                               
[with]   would  not   be  consistent   throughout  the   system."                                                               
Furthermore, he said he does  not know what the instructions from                                                               
the Department of  Labor & Workforce Development would  be to the                                                               
insurers,  in terms  of what  they  should pay  toward claims  of                                                               
injured workers.                                                                                                                
                                                                                                                                
REPRESENTATIVE GARDNER  posited that if the  association supports                                                               
HB 228,  but the bill does  not pass, then the  association could                                                               
still choose  to "implement it in  terms of [its] own  coding for                                                               
Workers' [Compensation]."                                                                                                       
                                                                                                                                
MR.  BETIT reiterated  that the  association does  not make  that                                                               
decision -  its individual members  do, and  he said he  does not                                                               
know how those members would  handle that situation.  In response                                                               
to  a   follow-up  question   from  Representative   Gardner,  he                                                               
confirmed  that  those  individuals  have made  the  decision  to                                                               
support the  bill, because they  believe it is the  best solution                                                               
"to get  the time  needed to  make some  permanent change  to the                                                               
program, without creating a financial crisis for anyone."                                                                       
                                                                                                                                
REPRESENTATIVE  LeDOUX questioned  why the  workers' compensation                                                               
carriers don't  negotiate rates with physicians  and hospitals as                                                               
healthcare insurers do.                                                                                                         
                                                                                                                                
MR.  BETIT suggested  that the  Department of  Labor &  Workforce                                                               
Development would be better equipped to answer that question.                                                                   
                                                                                                                                
11:05:22 AM                                                                                                                   
                                                                                                                                
MS. HALL stated that one of the  reasons it does not work to have                                                               
negotiated  rates for  workers' compensation  is that  "you can't                                                               
direct care."  She continued:                                                                                                   
                                                                                                                                
     We  don't  regulate  their fee  arrangements  with  any                                                                    
     provider;  that's something  the  insurance company  is                                                                    
     able  to do  with the  provider.   You then,  in health                                                                    
        insurance, have in-network providers and out-of-                                                                        
     network  providers,  for  which  the  health  insurance                                                                    
     carriers  pay different  amounts.   But ...  that is  a                                                                    
     choice that  you can  go to an  in-network or  not, and                                                                    
     there may be a difference in cost.                                                                                         
                                                                                                                                
REPRESENTATIVE LeDOUX,  regarding the  state health  care system,                                                               
offered her understanding  that there are no  places where people                                                               
are directed to go, but she said  she knows the rate is lower for                                                               
those with health care insurance than for those without it.                                                                     
                                                                                                                                
MS.  HALL said  even with  state  insurance, there  are both  in-                                                               
network  and  out-of-network  providers.    Those  providers  are                                                               
reimbursed, and the  insured may be subject to  a different level                                                               
of co-payment.   She reminded  the committee that  [the division]                                                               
doesn't regulate  the state's health insurance  program, nor does                                                               
it  regulate any  self-insured  program, "so  there  may be  some                                                               
differences in that also."                                                                                                      
                                                                                                                                
11:07:46 AM                                                                                                                   
                                                                                                                                
PAUL F.  LISANKIE, Director,  Division of  Workers' Compensation,                                                               
Department of  Labor & Workforce  Development, stated  that under                                                               
current law, it  is illegal to interfere with the  selection of a                                                               
health care  provider; the  injured worker  has control  over the                                                               
selection.   He  concurred  with Ms.  Hall  that typically,  when                                                               
there is some negotiation, the quid pro  quo is:  "If you give us                                                               
a lower  volume rate, we  can guarantee  you that you'll  get the                                                               
volume  of  people seeking  your  services,  and ...  a  workers'                                                               
compensation insurer doesn't have  any control over that process,                                                               
other than the pay up to the required amount."                                                                                  
                                                                                                                                
11:08:38 AM                                                                                                                   
                                                                                                                                
MR.  BETIT, in  response  to Representative  Buch, confirmed  his                                                               
understanding  is that  the aforementioned  task  force has  been                                                               
discontinued,  as it  has  not met  since  September [2006],  and                                                               
there is no money appropriated  for its continuance.  In response                                                               
to a  follow-up question from Representative  Buch, he reiterated                                                               
that  July  2007  was  the estimated  date  provided  at  Senator                                                               
Seekins' last  task force meeting  on which the  anticipated data                                                               
would be made  available; however, since then that  date has been                                                               
postponed, possibly by four to  five months.  He recommended that                                                               
the Medical Services Review Committee  in the Department of Labor                                                               
& Workforce Development  be the entity to finish the  work of the                                                               
task force regarding the presentation of the data.                                                                              
                                                                                                                                
11:10:15 AM                                                                                                                   
                                                                                                                                
MR. BETIT,  in response to  Representative Gatto,  confirmed that                                                               
medical charges are  specific to each hospital,  thus there could                                                               
be ten  different charges for  the same treatment  code depending                                                               
on which hospital provides the  treatment.  He explained that the                                                               
discount  percentage he  had used  during his  previous testimony                                                               
was  a  best estimate  based  upon  the  daily  rate set  by  the                                                               
Department of  Labor & Workforce  Development for  that facility,                                                               
versus the charges at the time.  He continued:                                                                                  
                                                                                                                                
     ... It  isn't really  just a flat  25 percent;  it's an                                                                    
     estimate on  my part,  and it varies  by facility  - it                                                                    
     could  be a  little less,  it could  be a  little more.                                                                    
     But, no,  they couldn't raise  their rates and  see any                                                                    
     improvement  in  what  they're  getting  paid  for  the                                                                    
     services that they're providing, because that's set by                                                                     
     the Department of Labor & Workforce Development.                                                                           
                                                                                                                                
     ...  What   [the]  Department  of  Labor   &  Workforce                                                                    
     Development  sets is  a daily  rate, per  facility, for                                                                    
     each  day of  care that  they provide  to that  injured                                                                    
     worker.                                                                                                                    
                                                                                                                                
11:12:03 AM                                                                                                                   
                                                                                                                                
WAYNE STEVENS,  President/CEO, Alaska  State Chamber  of Commerce                                                               
("the chamber"),  testified that  the chamber has  long advocated                                                               
to  lower the  high  cost associated  with workers'  compensation                                                               
insurance.  He reviewed the history  of the medical rates and the                                                               
freeze.    He  stated  that substantive  reforms  are  needed  to                                                               
address  the quality  of medical  utilization, as  well as  other                                                               
factors, such as frequency and  [severity] of costs.  Mr. Stevens                                                               
reviewed  that the  task force  work  was supposed  to result  in                                                               
recommendations to  ease rate increases  going forward,  and that                                                               
work was  to result in a  newly recommended rate fee  by the time                                                               
the medical  rate freeze sunsets in  August 2007.  That  work has                                                               
not been  completed and the  report has  not been submitted.   He                                                               
said  the extension  of the  medical rate  freeze to  March 2008,                                                               
proposed  by  HB 228,  will  allow  time  for "the  committee  to                                                               
complete  its  data  gathering   and  analysis  and  develop  its                                                               
recommendations,"  and   will  allow  sufficient  time   for  the                                                               
legislature  to  address  the   underlying  reasons  for  premium                                                               
increases.   He stated  that the chamber  encourages the  work of                                                               
the committee in moving HB 228 through the legislative process.                                                                 
                                                                                                                                
REPRESENTATIVE  GARDNER, referring  to the  statistics previously                                                               
stated by Representative Neuman  regarding Alaska's poor standing                                                               
among other  states when  comparing Worker's  Compensation rates,                                                               
asked Mr. Stevens if his  membership believes it is medical costs                                                               
that are  to blame for  the state's  continued decline -  even in                                                               
the face of a rate freeze  - and whether another rate freeze will                                                               
remedy the situation.                                                                                                           
                                                                                                                                
Mr.  Stevens replied,  "It's our  belief that  ... absent  a rate                                                               
freeze,  the  rates will  escalate,  presumably  to make  up  for                                                               
whatever  perceived  difference  would   have  occurred  in  that                                                               
ensuing  two-year period  and whatever  CPI adjustments  may very                                                               
well be made."  He said there  are a number of costs; however, he                                                               
stated that  it is  the understanding of  [the Alaska  Chamber of                                                               
Commerce] that  medical costs are  singularly the  largest driver                                                               
of Worker's Compensation.                                                                                                       
                                                                                                                                
CHAIR OLSON  noted that the  workers' compensation  rates dropped                                                               
approximately  11 percent  in [2007]  - the  first time  in seven                                                               
years  there  has been  a  reduction.    He indicated  that  [the                                                               
freeze] may have had an impact.                                                                                                 
                                                                                                                                
11:15:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN said  he  interprets one  of Mr.  Stevens'                                                               
prior remarks  to mean that although  there is a rate  freeze, it                                                               
allows for CPI  increases; therefore, "it's not like  a doctor or                                                               
anybody  in the  medical  field is  going to  be  going into  the                                                               
negative on this."                                                                                                              
                                                                                                                                
MR. STEVENS  responded, "That's not  my understanding.   Consumer                                                               
Price Index is calculated by  the Department of Labor & Workforce                                                               
Development at the  national level on a number of  factors ... to                                                               
rate the  level of  inflation annually,  and that  would -  as it                                                               
[is] captured  in this bill  - ...  allow the rates  to increase,                                                               
based on that index."                                                                                                           
                                                                                                                                
11:17:08 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  BUCH  shared  his   understanding  that  a  major                                                               
component has  been lost with  the [discontinuation of]  the task                                                               
force.   He questioned whether  there is  a way to  reinstate the                                                               
task force and reliably complete the job that was started.                                                                      
                                                                                                                                
MR. LISANKIE replied  that he agrees with  the previous testimony                                                               
of  Mr. Betit  that  the Medical  Services  Review Committee  was                                                               
established  as  an  ongoing  entity.     He  posited  that  that                                                               
committee  has   struck  a  good  balance   between  health  care                                                               
providers  and other  stakeholders in  the workers'  compensation                                                               
system;  therefore,   when  the  data  becomes   available,  that                                                               
committee would certainly  be willing to pick the  issues up once                                                               
more.  He stated:                                                                                                               
                                                                                                                                
     If it was  a decision of the body that  there should be                                                                    
     a new workers' compensation  task force, you would have                                                                    
     time to  institute one  to receive  the recommendations                                                                    
     from the Medical Services Review  Committee, or, in the                                                                    
     absence of such a task  force, my advice for the review                                                                    
     committee  would   be  to  submit  it   to  the  entire                                                                    
     legislature or, you know, through that methodology.                                                                        
                                                                                                                                
11:19:06 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  BUCH expressed  concern that  the information  be                                                               
received.                                                                                                                       
                                                                                                                                
MR. LISANKIE offered his understanding  that the on-going efforts                                                               
to get that data into the  system are being made independently of                                                               
the existence of  the task force.  He stated  that he understands                                                               
Representative Buch's concern.                                                                                                  
                                                                                                                                
MR.  LISANKIE,  in response  to  a  question from  Representative                                                               
LeDoux, said the  price of prescription drugs is not  capped.  In                                                               
response  to a  follow-up question,  he said  the price  of those                                                               
drugs has a significant impact to  medical costs.  He said he has                                                               
no personal  opinion regarding whether the  price of prescription                                                               
drugs should  be regulated, other than  to say he thinks  that is                                                               
an issue that the  MSRC is free to take up.   He concluded, "If I                                                               
continue to  have input on  that committee, I certainly  think it                                                               
would be of interest."                                                                                                          
                                                                                                                                
REPRESENTATIVE NEUMAN  observed that  the testimony of  those who                                                               
support  the bill  seems  to  show that  they  want the  extended                                                               
freeze in  order to  have time for  a solution to  be found.   He                                                               
inquired  as   to  how  that   solution  would   affect  workers'                                                               
compensation  in  the  future,  particularly  as  it  relates  to                                                               
competition in  the market place.   He said he thinks  one of the                                                               
major  reasons  for  the  large increase  in  medical  costs  for                                                               
workers'  compensation  is due  to  the  lack of  competition  in                                                               
Alaska, which  he said is a  result of the state's  high incident                                                               
rate, low population, and expansive state.                                                                                      
                                                                                                                                
MR. LISANKIE responded as follows:                                                                                              
                                                                                                                                
     I  think that's  actually  what's  driving the  various                                                                    
     concerns of  the various stakeholders,  that we  not do                                                                    
     something that  appears logical on  its face,  based on                                                                    
     some experience in, say, a  more urbanized setting, and                                                                    
     then end up inflicting  something on the less urbanized                                                                    
     state  of Alaska,  which wouldn't  work.   And I'd  say                                                                    
     that the  challenge that's before the  Medical Services                                                                    
     Review Committee or a task  force or you, as individual                                                                    
     members of the legislature,  is that in many instances,                                                                    
     one  person's  unacceptable  cost  is  somebody  else's                                                                    
     revenue stream or their benefit.                                                                                           
                                                                                                                                
     We're talking about  medical costs as ...  more than 50                                                                    
     percent  of workers'  compensation  benefits, but  that                                                                    
     certainly is  going to  affect the  next time  the cash                                                                    
     benefits are increased.  People  are going to weigh the                                                                    
     overall impact  on the system.   So,  that is a  bit of                                                                    
     [a] conundrum; it  is difficult for us to  do things in                                                                    
     a setting where we have  a huge geographical area and a                                                                    
     total population  that's the size of  ... a medium-size                                                                    
     city.    And  I  know   that  Director  Hall  is  doing                                                                    
     everything  she  can to  try  and  have more  insurance                                                                    
     companies  compete  for  the  business,  but  certainly                                                                    
     everybody  else  that's  a stakeholder  in  a  process,                                                                    
     whether they're  a health care  provider or  a provider                                                                    
     of prescription  drugs or  durable medical  equipment -                                                                    
     all  these   things  go  into  this   very  complicated                                                                    
     question that you're asked to address.                                                                                     
                                                                                                                                
11:24:37 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RAMRAS asked whether there  are plans to work with                                                               
the attorney  general (AG)  to do a  significant overhaul  of the                                                               
Worker's  Compensation  system,  because  he  said  the  attorney                                                               
general has the expertise to offer help.                                                                                        
                                                                                                                                
MR. LISANKIE  replied that he  has worked with the  AG previously                                                               
in various capacities and would be happy to work with him.                                                                      
                                                                                                                                
REPRESENTATIVE  RAMRAS   suggested  that  the  overhaul   of  the                                                               
workers'  compensation  system  might be  considered  in  January                                                               
2008.                                                                                                                           
                                                                                                                                
REPRESENTATIVE BUCH  expressed appreciation for the  work done by                                                               
Mr. Lisankie and Ms. Hall.  He  stated, "The one good thing we do                                                               
have is  ... a  carrier now that  is in the  black for  the first                                                               
time in a long time, and ...  if, by increments, we can make some                                                               
positive changes, I  think that we're perhaps on  the right track                                                               
here."                                                                                                                          
                                                                                                                                
11:28:46 AM                                                                                                                   
                                                                                                                                
BARBARA  HUFF TUCKNESS,  Director,  Governmental and  Legislative                                                               
Affairs, Teamsters  Local 959,  testified in  support of  HB 228.                                                               
She  confirmed that  she was  a  member of  the labor  management                                                               
workers' compensation coalition groups  that worked for about one                                                               
and  a half  years  and presented  recommended changes  regarding                                                               
workers'  compensation.   Regarding  the  medical component,  she                                                               
said injuries relate to medical  costs.  The coalition task force                                                               
was  somewhat  disappointed  when recommendations  that  it  gave                                                               
regarding workers'  compensation changes were set  aside in favor                                                               
of then  Governor Frank Murkowski's  own legislation.   She said,                                                               
however,  that  some of  the  task  force's recommendations  were                                                               
incorporated into  that legislation.   She stated for  the record                                                               
that  the   coalition  did   discuss  medical   costs,  including                                                               
pharmaceutical costs.   She stated  that while  it was not  a big                                                               
change, the coalition  did look at utilization  of generic drugs.                                                               
She  said  she  does  not   know  any  workers'  compensation  in                                                               
existence in  which an injured  worker has had trouble  finding a                                                               
physician and appropriate treatment.                                                                                            
                                                                                                                                
MS. HUFF  TUCKNESS emphasized  that one big  issue is  related to                                                               
the controversion  with the insurance  companies, which  she said                                                               
is  a distinctly  different situation  than that  of the  medical                                                               
costs.                                                                                                                          
                                                                                                                                
MS. HUFF TUCKNESS  stated that Teamsters Local  959 believes that                                                               
HB 228  is an important  piece of legislation, and  while members                                                               
of the  Local 959  do not believe  the proposed  legislation will                                                               
fix the problem, it will  hopefully give an opportunity "for some                                                               
folks  to  get  back  together  again and  to  start  looking  at                                                               
hopefully making some  changes out there that  are ... beneficial                                                               
to the injured workers."  Ms.  Huff Tuckness said Alaska does not                                                               
have a  system set up whereby  an injured worker is  "directed to                                                               
go to a  physician," and she said the Local  959 believes that is                                                               
a good  factor, not  a bad  one.  Because  of that  scenario, she                                                               
explained,  "you  don't  have  PPOs out  there  in  the  workers'                                                               
compensation program."                                                                                                          
                                                                                                                                
11:32:27 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RAMRAS concurred that  two key points are reducing                                                               
costs  to  employers,  while  providing  the  best  benefits  for                                                               
injured workers.   He asked  Ms. Huff Tuckness to  speculate what                                                               
the   situation   would  be   like   now   if  the   task   force                                                               
recommendations she spoke  of had been adopted  into the workers'                                                               
compensation legislation.                                                                                                       
                                                                                                                                
MS.   HUFF    TUCKNESS   responded   that   those    task   force                                                               
recommendations were actually two-fold.   She said the task force                                                               
had a bill that it would  have liked to see introduced that would                                                               
have addressed some  of the existing cost issues.   Another piece                                                               
of  legislation  the  following year  would  have  addressed  the                                                               
medical and more contentious issues  that she said the task force                                                               
was  not   able  to   encompass.    She   said  she   thinks  the                                                               
aforementioned  Medical Services  Review  Committee  is having  a                                                               
similar problem in getting information.   She said a medical cost                                                               
is the  thread that  runs through everything  that the  Local 959                                                               
deals with.  For example,  when negotiation labor agreements, the                                                               
issue is the medical costs and  how they will be covered, through                                                               
wages or  other areas in the  contracts.  She indicated  the need                                                               
to  find a  fair  and balanced  perspective  that recognizes  the                                                               
point of physicians as well as workers.                                                                                         
                                                                                                                                
CHAIR OLSON asked  Ms. Huff Tuckness if she thinks  MSRC would be                                                               
the  vehicle to  use  to  analyze the  anticipated  data once  it                                                               
becomes available.                                                                                                              
                                                                                                                                
MS. HUFF TUCKNESS answered yes.                                                                                                 
                                                                                                                                
MS.  HUFF   TUCKNESS,  in  response  to   Representative  Neuman,                                                               
clarified that she had not  been a participant on the legislative                                                               
task force  [during the hearing  of Senate  Bill 130].   She said                                                               
her  involvement   was  with  the  Workers'   Compensation  Labor                                                               
Management  Ad   Hoc  Committee,  which  she   said  ensured  the                                                               
implementation   of  legislation   enacted  to   change  workers'                                                               
compensation.    She  reiterated  that the  Teamsters  Local  959                                                               
supports HB 228 and hopes to comment  on the data once it is made                                                               
available.                                                                                                                      
                                                                                                                                
MS. HUFF  TUCKNESS, in response  to Representative  Buch, offered                                                               
further  clarification regarding  her involvement  in the  ad hoc                                                               
committee.   She mentioned a  letter written in January  by Vince                                                               
Beltrami,   American  Federation   of  Labor   and  Congress   of                                                               
Industrial  Organizations (AFL/CIO),  to  Dick  Cattanach of  the                                                               
Association  of General  Contractors  of  Alaska, suggesting  the                                                               
reinstitution  of  the  ad  hoc   committee.    She  offered  her                                                               
understanding  that there  has been  no response  to the  letter.                                                               
She concluded,  "The task force  is something that's been  out of                                                               
our ... hands."                                                                                                                 
                                                                                                                                
11:39:42 AM                                                                                                                   
                                                                                                                                
CHAIR OLSON,  after ascertaining  that there was  no one  else to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
MR.  MILLER drew  attention  to [Amendment  1]  in the  committee                                                               
packet,  which he  said would  allow for  the adjusted  change to                                                               
match the national CPI.                                                                                                         
                                                                                                                                
11:40:59 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN moved  to adopt Amendment 1,  which read as                                                               
follows [original punctuation provided]:                                                                                        
                                                                                                                                
     Page 2, line 3,                                                                                                            
                                                                                                                                
     Delete: "for the Anchorage metropolitan area"                                                                              
                                                                                                                                
REPRESENTATIVE  LeDOUX objected  for  discussion  purposes.   She                                                               
asked:                                                                                                                          
                                                                                                                                
     What  would   be  the  difference  between   all  urban                                                                    
     consumers - a  consumer price index - or if  you did it                                                                    
     on a  totally ... statewide basis,  which would include                                                                    
     all   consumers,   whether    they're   in   Anchorage,                                                                    
     Fairbanks, Juneau, or in the Bush?                                                                                         
                                                                                                                                
MR. MILLER said he does not know.                                                                                               
                                                                                                                                
11:43:04 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS  said  he shares  Representative  LeDoux's                                                               
concern  regarding the  reflection  of  a different  inflationary                                                               
schedule  in  the  Bush;  however,  he  said  as  it  relates  to                                                               
Amendment 1, there is not a  great deal of difference between the                                                               
CPI for Anchorage and the national CPI.                                                                                         
                                                                                                                                
REPRESENTATIVE  NEUMAN  said  he  thinks  Amendment  1  addresses                                                               
Representative LeDoux's  concern that  there be a  broader scope.                                                               
He  said he  sees  Amendment 1  as encompassing  the  state as  a                                                               
whole.                                                                                                                          
                                                                                                                                
11:44:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LeDOUX questioned  the choice  of "doing  this on                                                               
[an]  increase in  the  consumer price  index  for everybody  all                                                               
across the country,"  rather than using the CPI for  the State of                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  MILLER offered  his understanding  that other  states use  a                                                               
similar adjustment to their workers'  compensation rates, thus he                                                               
thinks it  is appropriate  to use  for the State  of Alaska.   In                                                               
response to  Chair Olson,  he confirmed  that the  conformity was                                                               
the intent of the bill drafter.                                                                                                 
                                                                                                                                
MR. MILLER, in response to  Representative LeDoux, confirmed that                                                               
data regarding  the medical care  component is not  available for                                                               
2003-2004, so  for those  years, the state  is conforming  to the                                                               
national CPI.                                                                                                                   
                                                                                                                                
11:47:00 AM                                                                                                                   
                                                                                                                                
MR.  MILLER,  in response  to  Representative  Gatto, stated  his                                                               
belief that  Amendment 1  would benefit everyone.   He  said, "If                                                               
the  committee chose  not  to  adopt it,  I'm  not  sure how  the                                                               
Division  of  Insurance  would  be   able  to  adjust  the  rates                                                               
accordingly."                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LeDOUX  removed  her objection  to  Amendment  1.                                                               
There being no further objection, Amendment 1 was adopted.                                                                      
                                                                                                                                
11:47:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN moved to report  HB 288, as amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  228(L&C)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
The committee took an at-ease from 11:48:31 to 11:56:12.                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
11:56:53 AM.                                                                                                                  

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