02/03/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB234 | |
| HB242 | |
| HB141 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 234 | TELECONFERENCED | |
| *+ | HB 242 | TELECONFERENCED | |
| *+ | HB 141 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 3, 2014
3:20 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Doug Isaacson
COMMITTEE CALENDAR
HOUSE BILL NO. 234
"An Act extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
- MOVED HB 234 OUT OF COMMITTEE
HOUSE BILL NO. 242
"An Act extending the termination date of the State Physical
Therapy and Occupational Therapy Board; and providing for an
effective date."
- MOVED HB 242 OUT OF COMMITTEE
HOUSE BILL NO. 141
"An Act setting the fee for medical treatment or services
performed outside the state under the Alaska Workers'
Compensation Act, requiring a provider of medical treatment or
services under the Alaska Workers' Compensation Act to submit
bills for treatment or services to employers within 180 days
after the date the treatment or services are rendered, and
limiting the time for appealing an employer's denial or
reduction of a bill; and providing for an effective date."
- MOVED HB 141 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 234
SHORT TITLE: EXTEND REGULATORY COMMISSION OF ALASKA
SPONSOR(s): REPRESENTATIVE(s) HAWKER, ISAACSON, SADDLER
01/21/14 (H) PREFILE RELEASED 1/10/14
01/21/14 (H) READ THE FIRST TIME - REFERRALS
01/21/14 (H) L&C, FIN
01/31/14 (H) L&C AT 3:15 PM BARNES 124
01/31/14 (H) -- MEETING CANCELED --
02/03/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 242
SHORT TITLE: EXTEND PT & OCCUPATIONAL THERAPY BOARD
SPONSOR(s): REPRESENTATIVE(s) REINBOLD
01/21/14 (H) PREFILE RELEASED 1/10/14
01/21/14 (H) READ THE FIRST TIME - REFERRALS
01/21/14 (H) L&C, FIN
01/31/14 (H) L&C AT 3:15 PM BARNES 124
01/31/14 (H) -- MEETING CANCELED --
02/03/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 141
SHORT TITLE: WORKERS' COMPENSATION MEDICAL FEES
SPONSOR(s): LABOR & COMMERCE
02/25/13 (H) READ THE FIRST TIME - REFERRALS
02/25/13 (H) L&C
01/31/14 (H) L&C AT 3:15 PM BARNES 124
01/31/14 (H) -- MEETING CANCELED --
02/03/14 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 234 as joint prime sponsor.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented auditor findings and
recommendations and answered questions during the discussion of
HB 234.
T. W. PATCH, Commissioner, Chair
Regulatory Commission of Alaska (RCA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 234.
TED MONINSKI, Attorney
Alaska Communications Systems (ACS)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 234.
MARK MODEROW, Senior Counsel
Legal & Regulatory Department
GCI
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 234.
CRYSTAL KOENEMAN, Staff
Representative Lora Reinbold
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 242 on behalf of the prime
sponsor.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented auditor findings and
recommendations and answered questions during the discussion of
HB 242.
LEANNE CARROTHERS, President
Alaska Physical Therapy Association
Las Vegas, Nevada
POSITION STATEMENT: Testified in support of HB 242.
KATHLEEN LIND, Chair
State Physical Therapy and Occupational Therapy Board
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 242.
ANNA LATHAM, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 141 on behalf of the sponsor,
the House Labor & Commerce Committee, Representative Kurt Olson,
Chair.
MICHAEL MONAGLE, Director
Central Office
Division of Workers' Compensation
Department of Labor & Workforce Development
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 141.
JULIE CISCO, Risk Manager
Kenai Peninsula Borough School District (KPBSD)
Soldotna, Alaska
POSITION STATEMENT: Testified during the discussion of HB 141.
SALLY STUVEK, Human Resources Director
Fairbanks North Star Borough (FNSB)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 141.
ACTION NARRATIVE
3:20:03 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:20 p.m. Representatives
Saddler, Josephson, Millett, Herron, Reinbold, and Olson were
present at the call to order. Representatives Chenault arrived
as the meeting was in progress. Representative Isaacson was
also in attendance.
HB 234-EXTEND REGULATORY COMMISSION OF ALASKA
3:20:25 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 234, "An Act extending the termination date of
the Regulatory Commission of Alaska; and providing for an
effective date."
3:20:29 PM
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, as joint
prime sponsor, stated that HB 234 proposes a reauthorization of
the Regulatory Commission of Alaska (RCA) for eight years,
consistent with the recommendations made by the legislative
auditor. The legislative auditor determined that the RCA has
met all the requirements for the extension. The scope of the
sunset audit is to determine demonstrated public need for the
RCA to continue and if it has been operating in an efficient and
effective manner. Obviously it has since the legislative
auditor has recommended extending the RCA for the maximum
extension time. Others have characterized the bill as being
complex, but it really is a straightforward reauthorization
bill. Differences exist between disagreeing with the outcomes
of a regulatory process, including a specific ruling, and a
dysfunctional agency that is not operating well in accordance
with statutes. He acknowledged that stakeholders often have
disagreements with the RCA's outcomes, although it is
universally recognized that the RCA is operating well in
accordance with statutes.
REPRESENTATIVE HAWKER summarized that this bill recognizes that
the RCA is functioning well and extends the commission for eight
years. He specifically referred to the appendixes on pages 23-
30 of the legislative audit [Audit Control Number 08-20079-13
dated July 19, 2013] in members' packets to the tariff survey
results. This survey provides ratings by the users affected by
the filings and dockets and user responses are very supportive.
More specifically, he turned to pages [18-19] and reported that
70 percent answered that the RCA is operating between "good" or
"very good" with only 8 percent answering "poor" or "very poor."
Again, he said that the RCA has come a long way in maturity,
personnel, and staffing, and its ability to meet the state's
needs. He referred to page 31 of the audit to the financial
analysis emphasizing that it is critical that the commission
operates in a solvent manner. This analysis shows that
regulatory cost charges are sufficient at this time to support
the RCA's operations, he said.
3:23:36 PM
REPRESENTATIVE HAWKER pointed out the legislative audit
identified two issues. He brought up audit recommendation 1,
which read: RCA's chair should improve and enforce written
procedures to ensure case management system data is accurate,
consistent, and complete. He responded that this has been an
ongoing recommendation. In fact, this recommendation identifies
a continuing process for every agency in the state. The
aforementioned audit point is about the paperwork process, not
about the functioning of the organization, how its rulings are
achieved, or a dysfunction in the organization. He acknowledged
that we can all improve, but this recommendation does not speak
to a critical point on the commission's ability to function.
3:24:50 PM
REPRESENTATIVE HAWKER brought up the second audit
recommendation, which read: The legislature should consider
clarifying AS 42.05.175(e) to ensure RCA fulfills legislative
intent when processing regulatory dockets. He offered his
belief that this recommendation represents an honest difference
of opinion between the RCA and its auditors on the
interpretation of the RCA's process. He highlighted the
legislature's prior issues with the RCA were related to the
length of time it took to resolve issues and dockets that come
before the RCA. He recalled in past years hearing constant
concerns on the length of time to process a docket; however, he
has not heard any concerns expressed from stakeholders in many
years. He suggested the commission and auditors should sort out
these details; however he argued that the aforementioned issues
should be considered separate from the reauthorization of the
commission. This audit recommendation raises the issue of
whether the legislature would like to add more statutory
guidance on how the commission operates. He concluded by urging
members to pass out a "clean reauthorization" of the RCA and
advised that any policy issues be addressed in a separate
vehicle.
3:26:25 PM
REPRESENTATIVE MILLETT referred to the second recommendation and
said the legislature has often debated the length of time it
takes the RCA to complete a docket. While she understood the
importance of timely decisions, it's also important to allow the
RCA sufficient time on dockets. She characterized the issue as
one of the toughest decisions for the commission to make, noting
the difficulty the RCA must face to determine the appropriate
time to spend. She said she somewhat disagrees with the
auditors on this recommendation since opinions vary with respect
to the time the RCA should take but, in fact, it's important
that the RCA have sufficient time to thoroughly review dockets
and arrive at the right decisions. She concluded by supporting
Representative Hawker's assessment of the second audit
recommendation.
3:28:34 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, reported that the division
conducted a sunset audit of the RCA, [Audit Control Number 08-
20079-13] dated July 19, 2013. The purpose of the audit was to
determine whether the commission was operating in the public's
interest and if the RCA's termination date should be extended.
Overall, the audit concluded that the RCA is operating in the
public's interest and the division determined the commission
fulfills a public need and is serving Alaskans. The legislative
audit recommended extending the RCA's termination date the
maximum eight years until June 30, 2022. The audit does include
two recommendations, but neither impacted the recommendation for
extension.
MS. CURTIS reviewed the two recommendations. First, the audit
found the commission only partially resolved a prior audit
recommendation the RCA improve its case management system data.
Essentially, auditors reviewed the data and found high error
rates, that the audit recommended improvements.
MS. CURTIS informed members that the sunset audit made a new
recommendation to clarify statutory timelines on rulemaking
proceedings. Currently, the statutes require the RCA to issue a
final order on a rulemaking docket no later than 730 days after
complete petition for a regulatory change is filed or after the
commission issues an initiating order for such proceedings. The
statutes contain a provision for one 90-day extension for good
cause; however, the statutes prohibit the RCA from terminating a
proceeding and a docket and subsequently opening a proceeding in
another docket on essentially the same matter. Auditors used
statutory criteria to provide guidance when conducting the
audit. The legislative auditors found that at times the RCA
will split rulemaking proceedings into two dockets. First, the
RCA will open a docket and consider whether a need for
regulation exists in an area of interest and then close the
docket after receiving testimony and comments. In instances in
which the RCA determines regulations are needed, the RCA will
open a second docket to consider adopting regulations. The
auditors found this practice allows the RCA to take up to 4.5
years to complete its proceedings. However, the RCA's
management has argued that including intent language in a
regulatory docket's initiating order makes the process
transparent and complies with statutes. Granted, the
legislative audit confirmed that the RCA included intent
language as part of its dockets, which provides transparency;
however, the sunset audit raises this issue for legislative
consideration because it appears this practice evades the
statutory timelines; however, it does not appear to serve the
regulated community or the public's interest. She paraphrased
the audit's second recommendation, which read: The legislature
should consider clarifying AS 42.05.175(e) to ensure RCA
fulfills legislative intent when processing regulatory dockets.
3:31:40 PM
REPRESENTATIVE HERRON asked whether the legislature has tried to
clarify this provision.
MS. CURTIS answered that she did not know.
3:32:02 PM
REPRESENTATIVE REINBOLD acknowledged that exceeding the 720 days
by taking up to 4.5 years on dockets could potentially be
excessive. She asked whether this needs to be addressed by the
legislature immediately or if the review could wait.
MS. CURTIS responded that the timing is up to the legislature to
decide. She clarified that the legislative auditor raised the
issue since during the audit the auditors test the RCA's dockets
for compliance with statutes. In this regard, the statutes are
open to interpretation, which highlights an area to further
consider, she said.
3:33:02 PM
CHAIR OLSON remarked that the RCA's timeline was adjusted
several years ago. He recognized that representatives of
several regulated utilities are present today, as well as the
RCA's chair. He deferred to the RCA's users and the RCA to
testify on whether the process is working. He recalled
complaints that were registered a number of years ago, in
particular, one docket continued for a considerable time,
somewhere between six and eight years. He further recalled a
new timeline was started when each action taken on the
aforementioned dockets; however, he has not received any recent
complaints. He asked whether the audit would capture any
complaints.
MS. CURTIS answered that a survey is conducted with stakeholders
as part of the sunset audit and the results were overwhelmingly
positive, which was reflected in the eight-year recommendation
for the RCA's extension.
3:34:11 PM
REPRESENTATIVE JOSEPHSON asked whether the legislative auditor
has any sense on whether rulings are typically issued within 18
months, which then lead to a second phase that subsequently
results from facts.
MS. CURTIS reiterated that the RCA will open a docket to
consider whether there is a need for regulation and once
testimony is taken and reviewed, that docket is closed. At
times, if regulations are needed the RCA will open a subsequent
docket, she said.
3:34:59 PM
REPRESENTATIVE JOSEPHSON remarked that it appears as if the
parties had a resolution on the dispute and the question is
whether some regulation should be adopted to apply to all
parties, which is the reason for the second docket.
MS. CURTIS elaborated that the RCA has four types of dockets,
including complaints and regulatory dockets. She clarified that
the second audit recommendation is solely related to regulatory
dockets.
3:35:35 PM
REPRESENTATIVE MILLETT questioned the need for the second audit
recommendation since there haven't been any recent complaints on
lengthy decisions.
MS. CURTIS explained that the audit recommended extending the
RCA for eight years, which definitely reflects the positive
responses. She explained the process, such that auditors are
required to determine whether the commission is serving the
public's interest. The sunset audits typically accomplish this
in different ways, and testing compliance with the statutory
timeline is one. She pointed out that timelines are an
important part of the RCA's statutes. More specifically, the
aforementioned audit recommendation is not addressed to the
commission but to the legislature. It highlighted the issue so
the body can decide if it wants to clarify the timeline based on
legislative intent. If the legislative intent was for a docket
to be completed within 730 days with one 90-day extension from
beginning to end, well, that is not happening. However, if
policymakers are satisfied with the RCA's interpretation of the
statutes then no action will need to be taken.
REPRESENTATIVE MILLETT reiterated her point that there isn't any
complaint and the process seems to be working so the matter
doesn't seem to need to be addressed.
MS. CURTIS emphasized that the legislative audits will always
highlight instances in which legislative intent does not appear
to be met.
3:37:57 PM
T. W. PATCH, Commissioner, Chair, Regulatory Commission of
Alaska (RCA), Department of Commerce, Community & Economic
Development (DCCED), commended Ms. Curtis on the audit team's
rigor and fairness. The first finding is simple and the RCA's
response is included in members' packets. He said, "We can all
do better." In fact, the RCA has been editing, revising, and
cross training its staff on policies and procedures.
Additionally, the RCA has been working on a new manual that will
allow the RCA to accept tariff filings electronically, which
should be completed later this year or early next year. He
acknowledged that the change will save the regulated utilities
time and money, as well as aid the RCA in the processing of its
documents. He stated the electronic filing change has been more
troublesome than he thought it would be; however, it is in
process.
3:40:30 PM
MR. PATCH agreed that the second recommendation is made to the
legislature; still, the RCA takes note of it. The enabling
statutory provision dealing with timelines for the processing of
dockets and AS 42.05.175(l) reads, "The commission may not evade
the requirement of this section by terminating a proceeding in a
docket and opening a proceeding in another docket on
substantially the same matter." He contended that the
consideration of a docket as to whether the need exists for
additional regulation is one matter; whereas the consideration
of the specific regulations to achieve an objective is another
matter. He offered his belief that the RCA has not done
anything to evade the legislative intent. He highlighted the
specific case that led to this recommendation. He related a
scenario in which Representative Gruenberg once remarked that
the discovery process made it easier for everyone. He agreed
with Representative Gruenberg so the RCA subsequently opened a
docket to consider whether the commission should adopt written
regulations to set forth the RCA's discovery process. He
recalled that the regulatory institution prior to the RCA, the
Alaska Public Utilities Commission (APUC), also had discovery
rules, but its rules were not written in regulation. The RCA
responded to a subsequent legislative audit recommendation and
opened a docket to consider whether the RCA should adopt
regulations and if the commission should codify its existing
practices in regulation or if it should identify the regulatory
language. The RCA obtained public comment and the regulated
utilities, and for purposes of clarity, terminated the first
docket timely, and opened a new docket to adopt specific
regulations.
3:44:11 PM
MR. PATCH concluded that the RCA and the Department of Law
agreed that the RCA did not evade the legislature's intent. He
further reported that the RCA ultimately adopted its regulations
well within the timeline for the second docket. Certainly the
process the RCA uses for its timeline could exceed the limits,
but the RCA strives for appropriate timeliness. He
characterized this issue as something the legislature doesn't
need to worry about. Additionally, the RCA has adopted its own
regulation that allows the RCA to gather information. He
assured members that the RCA's record speaks for itself and the
public is served.
3:46:49 PM
MR. PATCH detailed that reports to the legislature highlight
that the timeline was cut to less than 300 days without the need
for additional funding, staff, or authority. He offered his
belief that there has not been any adverse impact to present a
rate case, nor has there been any deterioration of the RCA's
protection obligation for consumer impact. Therefore, for the
most part, the RCA has reduced any regulatory risk. The
consequences have resulted in improved credit ratings for larger
public utilities, which in turn have improved the borrowing
power for every business in Alaska. He encouraged members to
review the report. He concluded that he hoped members would
recognize the RCA's progress and vote to extend the RCA for
eight years.
3:49:49 PM
REPRESENTATIVE HERRON asked whether Mr. Patch would object to
clarification of "Recommendation No. 2."
MR. PATCH answered that he does object.
3:50:49 PM
TED MONINSKI, Attorney, Alaska Communications Systems (ACS),
provided his background, noting he spent 10 years serving on the
Alaska Public Utilities Commission - five as executive director
- with an additional 22 years spent representing
telecommunication companies including Alascom, the Anchorage
Telephone Utility, and ACS before state and federal regulators.
He offered Alaska Communications qualified support for HB 234.
He offered two specific recommendations. First, given the
importance of the RCA's work and the dynamics of utility
regulation, it is imperative that the legislature review the
performance of the commission at least every four years.
MR. MONINSKI stated the second recommendation is driven by the
highly competitive nature of telecommunications markets in
Alaska. He urged the legislature to take a meaningful step and
relieve a significant paperwork burden on the RCA and regulated
utilities by removing mandatory written tariffs and special
contracts. He said that utilities require some level of
government oversight, in particular, since monopolies have
dissolved, the need for regulation has lessened and eventually
will be eliminated. He provided background information on
telephone markets, such that even the Federal Communications
Commission (FCC) recognizes that Alaska has robust local
competition. In response to the changing circumstances, the RCA
has made limited procedural modifications to its regulations
governing tariff filings, which became effective in 2005, he
said.
3:53:46 PM
MR. MONINSKI explained that by allowing tariffs and contracts to
go into effect more quickly, the regulations continued the
requirement, that virtually every aspect of local exchange
operations and pricing be supported by a currently effective
tariff. In addition to preparing and filing these special
contracts, the RCA and regulated companies must maintain
virtually "thousands of pages of tariff documents" and update
them each time a change is made. However, in the ten years
since regulations were modified there hasn't been any consumer
complaint on tariff filings and only limited request for
clarification from the RCA's staff. He asked, "What's the
problem?" He answered the aforementioned question by stating
that in highly competitive markets with satisfied consumers,
companies must document every aspect of their businesses and
spend countless hours of unnecessary preparation time. Further,
the RCA must use its scarce resources and also maintain its
tariff documents. He urged the legislature to alleviate this
issue and modify the RCA's enabling statute to remove tariff
requirements in instances in which market forces are at work
through competition. He concluded that with these qualifiers,
the Alaska Communications supports the reauthorization of the
RCA.
3:56:14 PM
MARK MODEROW, Senior Counsel, Legal & Regulatory Department,
GCI, indicated that the RCA has built a solid record of
performance and responsiveness under the timelines adopted. He
testified in support of HB 234 as written. He said the new
issue raised by ACS of an apparent de-tariffing seems premature.
He highlighted that ACS hasn't brought this issue to any
industry discussion nor has it availed itself of any agency
process. Based on his 23 years of working within this industry,
the level of competition varies greatly by geographic and
project market, even within Alaska. He asserted that in terms
of telecommunications, Alaska does not have a uniform playing
field. He further said that determinations and assessments are
based on facts, appropriately made by the RCA, which is a
process that is functioning quite well.
MR. MODEROW noted that de-tariffing at the state level is not
entirely covered by the state jurisdiction and depending on the
issue may still be directed by the federal jurisdiction, which
would take the RCA out of this equation. In those instances,
the companies would lose local control and be guided by the
federal jurisdiction. He concluded that the RCA has built a
solid record and performance; thus, GCI supports "a clean
extension" bill.
CHAIR OLSON reiterated that the committee has established a
record by keeping sunset bills clean. He said he plans to
continue do so. Other issues are best placed on "stand alone"
bills.
4:00:12 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 235.
REPRESENTATIVE REINBOLD indicated the ACS testified and
requested reducing unnecessary paperwork. She asked whether
there is any way to streamline this process.
MR. PATCH answered that he did not come prepared to discuss the
ACS tariff today. He offered that Mr. Moninski could bring
petition to the RCA to deregulate any specific market that was
adequately competitive, on the basis of fact determination. He
recalled an instance of the RCA deregulating competitive refuse
collection utility services, which has worked well. He
anticipated the same for deregulated telecommunication markets.
He further anticipated that handling tariff filings
electronically will also help, but that effort is still in
testing. He hoped to move towards electronic filings, which may
not eliminate the concern, but will be a positive step.
4:04:09 PM
MR. PATCH offered to further consider how to reduce unnecessary
paperwork.
REPRESENTATIVE REINBOLD remarked that anything that can be done
to modernize the process and not burden businesses would be
appreciated.
MR. PATCH responded that one benefit of written tariff books is
that it is informs the RCA and the public. It provides a
promise to ratepayers and customers how business will operate.
He assured members that having rules in writing provides
business clarity and customer protection; however, that doesn't
mean additional improvements can't be made.
4:05:51 PM
REPRESENTATIVE REINBOLD remarked that she enjoyed visiting the
RCA and thanked Mr. Patch.
MR. PATCH responded that he could not do anything without his
tremendously dedicated staff.
4:06:47 PM
REPRESENTATIVE REINBOLD moved to report HB 234 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 234 was reported from the
House Labor and Commerce Standing Committee.
The committee took an at-ease from 4:06 p.m. to 4:10 p.m.
HB 242-EXTEND PT & OCCUPATIONAL THERAPY BOARD
4:10:20 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 243, "An Act disapproving all recommendations of
the State Officers Compensation Commission relating to the
salaries of state officers; and providing for an effective
date."
4:10:37 PM
CRYSTAL KOENEMAN, Staff, Representative Lora Reinbold, Alaska
State Legislature, stated that HB 242 would extend the state
Physical Therapy and Occupational Therapy Board and the
Legislative Audit Division recommended full eight-year extension
until June 30, 2022. The audit determined that the Physical
Therapy and Occupational Therapy Board is operating in the
public's interest by licensing and regulating physical
therapists, physical therapy assistants, occupational
therapists, and occupational therapy assistants. The audit
recommended that the Division of Corporations, Business &
Professional Licensing within the Department of Commerce,
Community & Economic Development (DCCED) continue efforts to
improve the integrity and confidentiality of the division's
investigative case management system.
4:11:41 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, reported that the division
conducted a sunset audit of the State Physical Therapy and
Occupational Therapy Board [Audit Control Number 08-20083-13]
dated June 17, 2013. Ms. Koeneman accurately summarized the
results of the audit. The legislative audit made one
recommendation, that the Division of Corporations, Business &
Professional Licensing (DCBPL) within the Department of
Commerce, Community & Economic Development (DCCED) continue
efforts to improve the integrity and confidentiality of the
division's investigative case management system and the
division's investigative support to the board. She acknowledged
that the system has some problems; however, the DCBPL has been
working at addressing them. She related that the division has
made the same recommendation to all five occupational sunset
audits conducted in 2013.
4:13:11 PM
LEANNE CARROTHERS, President, Alaska Physical Therapy
Association, said she would like to testify in support of the
bill and the extension of the State Physical Therapy and
Occupational Therapy Board, which serves efficiently and
effectively in its role of providing public protection.
4:14:17 PM
KATHLEEN LIND, Chair, State Physical Therapy and Occupational
Therapy Board, thanked the audit team for the fairness of its
audit. She concluded by saying she appreciated the auditor's
recommendation.
4:15:05 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 242.
REPRESENTATIVE REINBOLD moved to report HB 242 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 242 was reported from the
House Labor and Commerce Standing Committee.
4:15:39 PM
The committee took an at-ease from 4:15 p.m. to 4:18 p.m.
HB 141-WORKERS' COMPENSATION MEDICAL FEES
4:18:29 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 141, "An Act setting the fee for medical
treatment or services performed outside the state under the
Alaska Workers' Compensation Act, requiring a provider of
medical treatment or services under the Alaska Workers'
Compensation Act to submit bills for treatment or services to
employers within 180 days after the date the treatment or
services are rendered, and limiting the time for appealing an
employer's denial or reduction of a bill; and providing for an
effective date."
4:18:54 PM
REPRESENTATIVE JOSEPHSON declared a conflict of interest. He
stated that he has an ongoing workers' compensation claim that
is unresolved.
CHAIR OLSON asked whether the case is an out-of-state claim.
REPRESENTATIVE JOSEPHSON answered yes.
CHAIR OLSON responded that he did not think any conflict of
interest exists.
4:19:20 PM
CHAIR OLSON stated that the committee will be reviewing the
original bill rather than a proposed amendment [not offered, but
in members' packets]. The bill contains "180 days versus 45 or
90 days," which will make sense to some public members listening
today. He explained that the difference in that breakdown was
not significant to the overall goal of the bill and the proposed
changes could have further complicated matters which might have
adversely impacted Alaska's hospitals more than out-of-state
hospitals.
4:19:53 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, read the bill title, as follows:
An Act setting the fee for medical treatment or
services performed outside the state under the Alaska
Workers' Compensation Act, requiring a provider of
medical treatment or services under the Alaska
Workers' Compensation Act to submit bills for
treatment or services to employers within 180 days
after the date the treatment or services are rendered,
and limiting the time for appealing an employer's
denial or reduction of a bill; and providing for an
effective date.
MS. LATHAM explained that HB 141 does two things. First, the
bill will set the fee schedule for workers' compensation claims
treated outside Alaska. Second, the bill establishes workers'
compensation billing timelines. She provided background
information, including that in 2011, the legislature passed
House Bill 13, which established a comprehensive workers'
compensation fee schedule. The schedule couldn't exceed usual,
customary, and reasonable (UCR) rates, based on the UCR fee
schedule and was reflective of the geographical areas for the
services rendered at the 90th percentile. However, the
aforementioned bill failed to identify any parameters for
locations for which the fee schedule could be used. She
reported that Alaska has the highest workers' compensation rates
in the nation. Since 1986, the Oregon Department of Business
and Consumer Services has conducted a biennial study that is
considered the industry standard. Unfortunately, for the past
ten years, Alaska has been ranked in the first or second place
for the highest workers' compensation insurance premium rates in
the nation.
4:21:44 PM
MS. LATHAM provided some discrepancies between Alaska's rates
and those in the Lower 48. She drew attention to the top 25
procedure codes in members' packets entitled, "Top 25 Surgery
Procedure Codes Ranked by Paid Amounts (47% of total surgical
payments)" and asked members to compare Alaska's workers'
compensation fee schedule to Washington, Oregon, and Idaho's fee
schedules. While rates vary somewhat, Alaska's rates are
extremely high. She referred to page 40 of the report entitled,
"Medical Data Report for the state of Alaska dated September
2013." She explained that this chart ranks the top ten
diagnostic codes by total claim payments and the International
Classification of Diseases (ICD-9) codes by total claim
payments. She specifically referred to the ICD-9 code 722.10
for displacement of lumbar intervertebral disc without
myelopathy [at the bottom of page 40], and pointed out that the
National Council on Compensation Insurance (NCCI) indicated that
the average payment in Alaska at $31,177 compared to $17,049
nationwide. She reported that this represents a $14,128 cost
difference for only one procedure, noting Alaska's rates are 182
percent higher than the national average. Further, nothing in
Alaska's statutes prevents a claim treated outside Alaska from
being billed at Alaska's rates; however, HB 141 would change
that practice. Medical services treated in Alaska would be
charged using the UCR fee schedule established in 2001. Any
medical services treated outside Alaska couldn't exceed the
charges set by the workers' compensation statutes of the state
where services were rendered.
MS. LATHAM said the bill would also set billing timelines and
require a provider submit bills for treatment to employers
within 180 days after the date the treatment is rendered. It
would also limit time to appeal an employer's denial of a
reduction of a bill to 60 days. The bill has an immediate
effective date and contains a retroactivity clause, as well as
transition language. The transition language allows medical
providers to submit bills for service within 180 days of the
effective date, irrespective of the date of service, and allows
providers to submit an appeal for denied payment within 60 days
of the effective date. She summarized that HB 141 will set
reasonable timelines for billings, provides certainty for
employers and insurers, fixes some loopholes in House Bill 13,
and makes incremental changes to existing statutes. These
changes should provide stability and prevent further increases
to workers' compensation insurance rates.
4:24:39 PM
REPRESENTATIVE JOSEPHSON pointed out that the high cost of
medicine and the 182 percent disparity goes far to address
Alaska's high premium rates.
MS. LATHAM agreed premium rates are an issue.
CHAIR OLSON said medical costs are approximately 80 percent of
the amount paid on workers' compensation cases. The costs are
significant. He informed members that the committee will
consider three additional workers' compensation bills that could
impact workers' compensation laws. This bill provides the
"first leg" of the stool. He offered his belief that when the
bills are considered in their entirety, they could provide
consumers some reasonable savings. He advised members that he
has held discussions with the national organization that sets
rates, NCCI, and if the bills pass the state will move in the
right direction. He said he would be happy with a 15-20 percent
reduction in insurance rates, which has happened in other states
that have implemented serious reform. Again, he cautioned that
this bill is only one segment. He reported that about 20
percent of the workers' compensation injuries are treated
outside Alaska. He explained that this issue arose when an
original billing used a lower rate [based on the Lower 48
state's rate], but once an audit was done, the claim was
subsequently rebilled [using Alaska's higher rate]. However,
the Alaskans were treated in the Lower 48 state and not in
Alaska.
4:27:10 PM
REPRESENTATIVE JOSEPHSON appreciated the explanation. He asked
whether the medical providers find 60 days to be sufficient to
appeal or reject a bill. He added that he represents the
business interests of most of the medical community in his
district.
MS. LATHAM said the sponsor has not received any letters from
the medical community.
CHAIR OLSON remarked that the bill was introduced last
legislative session.
4:28:14 PM
REPRESENTATIVE HERRON asked how many states have a provision
that allows them to bill at the Alaska rate rather than using
their own workers' compensation rates.
MS. LATHAM answered none. She explained that states use one of
two fee schedules, either the UCR or else a Resource Based
Relative Value Scale (RBRVS), noting 43 states have adopted one
of the two schedules. Additionally, some states have reciprocal
agreements with other states, but to her knowledge no other
state has adopted this approach.
4:29:02 PM
REPRESENTATIVE HERRON asked how much money the state has lost in
the past few years because of the workers' compensation billing
practices used by other states.
MS. LATHAM answered that she did not have any quantifiable data;
however, she offered to provide data on cases that have been
"back billed." She reported that about 24 percent of workers'
compensation cases seek treatment outside Alaska.
CHAIR OLSON estimated the companies impacted probably represent
approximately 80 percent of the workers' compensation premiums
in the state. He characterized this as a "right and wrong"
issue since the claims are initially billed out for an Alaska
patient being treated outside Alaska. This bill attempts to try
to fix an "abuse" of the system issue.
REPRESENTATIVE HERRON agreed. He thought it was appropriate and
also characterized the current practice as "a matter of right
and wrong."
4:30:40 PM
MICHAEL MONAGLE, Director, Central Office, Division of Workers'
Compensation, Department of Labor & Workforce Development, in
response to Chair Olson's question, on whether the division
tracks the percentage of claims being treated outside Alaska,
answered no. He explained that the National Council on
Compensation Insurance (NCCI) began a medical data call several
years ago. The NCCI released its first data cut for Alaska in
January 2013, with a follow-up report in September 2013. He
reported that the NCCI's figures show that 24 percent bills are
out-of-state billings. He stated that the division performs a
cost of living adjustment every three years. Additionally, the
division extracts the numbers of people living outside Alaska
and he reported that approximately 300 claimants are currently
receiving ongoing benefits out-of-state, but in most instances
people are treated out-of-state and return to Alaska. He did
not believe that the aforementioned Alaska residents are
permanently residing outside Alaska.
4:32:51 PM
REPRESENTATIVE JOSEPHSON asked whether the department is
concerned about bills that may be lost due to clerical errors or
third-party payer systems, relative to the 60-day deadline. For
example, part of the HB 141 is designed to respond to a recent
Seattle decision in which the courts ordered that a $199,000
workers' compensation bill be paid. He remarked that is a big
bill to have "lost in the mail." He wondered if the provider
should receive certified mail.
MR. MONAGLE said the division rarely reviews medical records
since the billing is between the provider and the payer. The
division receives medical records when there is a dispute
between the provider and the payer, either through a reduction
or a denial of the bill. In those instances the provider will
come before the Workers' Compensation board to file a claim.
4:34:32 PM
REPRESENTATIVE JOSEPHSON characterized the division as serving
as a referee in disputes.
MR. MONAGLE answered yes; that the division serves as a records'
custodian and keep case files for the 19,000 reports of workers'
compensation injuries and the subsequent reports as well as
administering the adjudication process when disputes occur.
4:35:06 PM
JULIE CISCO, Risk Manager, Kenai Peninsula Borough School
District (KPBSD), referred to a letter in members' packets from
Dave Jones, Assistant Superintendent of the KPBSD. She reported
that the KPBSD's per claim costs have increased approximately
400 percent in the past four years, of which approximately 80
percent is for medical cost. The school district needs some way
to contain costs. In the past, one option was to send people
out-of-state for treatment and pay the lower state fees. That
option vanished several years ago when a Lower 48 hospital
discovered a loophole and re-billed the KPBSD for several years'
worth of procedures. She urged members to support HB 141.
CHAIR OLSON asked whether the KPBSD is a member of a pool or if
the borough is a qualified self-insurer.
4:36:48 PM
MS. CISCO answered that the KPBSD is self-insured for the first
$250,000 per claim, but above that the district buys excess
insurance through the Alaska Municipal League's (AML) pool.
CHAIR OLSON said that explains why the KPBSD has been tracking
the claims so closely.
MS. CISCO agreed; noting that this represents "first dollar" for
the first $250,000, without any aggregate limit. Thus, the
KPBSD could have 100 claims breach that limit.
4:37:14 PM
CHAIR OLSON highlighted that in the past couple of weeks that
his office has been contacted by a number of self-insurers or
pool members with a large retention who have been "hit" by
outside hospitals so it is not just primary insurers who have
been adversely affected.
4:37:39 PM
SALLY STUVEK, Human Resources Director, Fairbanks North Star
Borough (FNSB), said she oversees risk management, which handles
workers' compensation for the FNSB and the FNSB School District
(FNSBSD). The combined plans for the FNSB and the school
district's workers' compensation plan is a self-funded program.
She reported that the FNSB spends approximately $1 million on
workers' compensation benefits. The FNSB continues to see
medical costs increase. The regulation of fees and charges for
medical treatment, medical equipment, and prescription drugs
would reduce overall workers' compensation costs. She stated
that assuring a schedule for out-of-state provided service would
have a positive impact on the overall costs for workers'
compensation. She said the administration of the FNSB fully
supports the components listed in HB 141. She concluded her
testimony by reporting that the FNSB assembly will consider a
resolution on February 13, 2014. She offered her belief that
this bill creates a reasonable timelines for billing services
and for the appeal period.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 141.
4:39:39 PM
REPRESENTATIVE JOSEPHSON offered his sense that HB 141 makes
positive adjustments to existing practice. He noted that
subsection (f) of the aforementioned statute, makes it clear
that if something is a covered event under the workers'
compensation law, such that any delay by the provider submitting
the bill can't fall on the worker.
CHAIR OLSON indicated Mr. Monagle has nodded yes.
4:40:39 PM
REPRESENTATIVE JOSEPHSON referred to decision he previously read
the Barrington decision [Alaska Workers' Compensation Appeals
Commission - Dr. Edward Barrington, Appellant, vs. Final
Decision February 12, 2007] that makes it a little murky, but
ultimately reaches that conclusion. He said that sometimes a
provider doesn't know a settlement has occurred. He remarked
that HB 141 is simple enough; however, the law of workers'
compensation, including regulations and procedures is "utterly
complicated." Thus, even though HB 141 looks straightforward,
it isn't clear how the bill will ultimately affect the outcome;
although it seemed reasonable that six months will allow
sufficient time for providers to submit a bill. He further
noted that a worker is still allowed to go to the nearest point
for adequate help even if it is in California. He offered his
belief that Alaska is improving [in providing all types of
medical procedures], especially in Anchorage.
4:42:04 PM
REPRESENTATIVE REINBOLD moved to report HB 141 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 141 was reported from the
House Labor and Commerce Standing Committee.
4:42:27 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:42 p.m.