Legislature(2001 - 2002)

03/28/2001 09:09 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 28, 2001                                                                                      
                              9:09 AM                                                                                         
SFC-01 # 55, Side A                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:09 AM.                                                            
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
Also  Attending:    JANET  PARKER,  Deputy  Director,   Division  of                                                          
Retirement   and  Benefits,  Department   of  Administration;   MATT                                                            
ANDERSON,  Unit  Manager,  EMS,  Department  of  Health  and  Social                                                            
Services;   BILL  ROLFZEN,  Division   of  Community  and   Business                                                            
Development, Department of Community and Economic Development                                                                   
Attending  via Teleconference:    From  Anchorage:   CLYDE  SNIFFEN,                                                          
Department of Law                                                                                                               
SUMMARY INFORMATION                                                                                                         
SB 37 - PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE                                                                               
The Committee  heard from the Department  of Law and the  Department                                                            
of Administration and the bill was HELD in Committee.                                                                           
SB 143 - RIGHT-OF-WAY LEASING ACT:  APPLICATION COST                                                                            
After a brief discussion the bill was reported from Committee.                                                                  
SB 104 - AID TO VOLUNTEER SERVICES                                                                                              
After a brief discussion the bill was HELD in Committee.                                                                        
CS FOR SENATE BILL NO. 37(L&C)                                                                                                  
"An  Act relating  to  collective  negotiation  by  physicians  with                                                            
health  benefit  plans,  to  health  benefit   plan  contracts  with                                                            
individual  competing  physicians,   to  the  application  of  state                                                            
antitrust  laws to  agreements  involving  providers  and groups  of                                                            
providers affected by collective  negotiations, and to the effect of                                                            
the collective negotiation provisions on health care providers."                                                                
Co-Chair  Kelly explained  that essentially  SB 37 would create,  in                                                            
law, a structure by which  physicians could negotiate with insurance                                                            
companies  collectively without  violating  anti-trust laws  if they                                                            
had  the oversight  of a  state agency.    He noted  that the  state                                                            
action doctrine would create  the oversight of the negotiations by a                                                            
state agency;  in this case  they chose the  Department of Law.   He                                                            
referred to  a supreme court case  back in 1943, which accepted  the                                                            
fact  that  the  anti-trust  provisions  would  not  work  in  every                                                            
situation.  He  suggested that it would be a situation  where it was                                                            
not appropriate  to  apply strict  anti-trust  provisions and  where                                                            
there was a need  for state oversight.  He concluded  that what they                                                            
were creating  was the ability for  physicians to come together  and                                                            
negotiate with insurance companies on a voluntary basis.                                                                        
KRIS KNAUSS,  staff  to Senator  Pete Kelly,  explained that  within                                                            
geographical  service if there  were more than  40 physicians  in an                                                            
area then only  30 percent of them could negotiate  and if there was                                                            
less than 40 then  100 percent could negotiate, which  means that in                                                            
the more  urban areas,  such as  Anchorage, only  30 percent  of the                                                            
market would  be negotiating with  insurance companies.   He pointed                                                            
out that  in the  latest version  of SB  37 they  excluded the  self                                                            
insured from the  bill and changed some of the language  in the bill                                                            
with  regards to  a physician  negotiating  only  with an  insurance                                                            
agency  and those  negotiations  becoming confidential  rather  than                                                            
having a  public process  or hearing.  He  indicated that there  was                                                            
not a competitive  group of large  insurance companies in  the state                                                            
and what they  were trying to do was  open the door for the  smaller                                                            
insurance companies to negotiate with physicians.                                                                               
Co-Chair Kelly  explained that one  of the problems was in  the past                                                            
few years the number of  insurance companies went from 18 to six and                                                            
as they  continued to buy  each other up they  gained more  and more                                                            
market  power.   He noted  that with  the physicians  they have  had                                                            
nothing  of the like  happen to them  and they  also have the  anti-                                                            
trust laws  working  against them;  therefore, if  they were  to get                                                            
together  with a  colleague  to discuss  something  with regards  to                                                            
negotiations with  insurance companies the Federal  Trade Commission                                                            
(FTC) could  shut them  down and fine  them.  He  stated that  SB 37                                                            
would allow  the physicians  to come together  on a voluntary  basis                                                            
and negotiate  with the insurance  companies  and they would  not be                                                            
threatened with legal action because of it.                                                                                     
Senator  Olson wondered  why the  self-insured were  excluded  if it                                                            
meant solo-practitioners were being excluded.                                                                                   
Co-Chair Kelly replied  that the solo-practitioner would not be able                                                            
to take  advantage  of the  bill; they  would be  excluded from  the                                                            
provisions of the bill.                                                                                                         
Senator  Olson wondered  if  the definition  of  self-insured  meant                                                            
covering malpractice.                                                                                                           
Co-Chair  Kelly   clarified  that   it  was  not  the  self-insured                                                             
physician,  but rather,  for example,  the State  of Alaska and  the                                                            
teamsters would be considered self-insured.                                                                                     
Senator Green  further clarified  that self-insured  had to  do with                                                            
groups of  people that had  chosen to be  self-insured, rather  than                                                            
have a third-party deal with the insurance companies.                                                                           
CLYDE SNIFFEN, Department  of Law, testified via teleconference from                                                            
Anchorage, expressed  that they continued to have  concerns with the                                                            
JANET PARKER, Deputy Director,  Division of Retirement and Benefits,                                                            
Department  of  Administration,  indicated  that  she was  there  to                                                            
answer any questions regarding the fiscal note.                                                                                 
Senator  Wilken wondered  if  she was speaking  to  the fiscal  note                                                            
dated March 15.                                                                                                                 
Ms. Parker yes.                                                                                                                 
Senator  Wilken  pointed  out that  it would  seem  that  SB 37,  by                                                            
increased competition,  would drive costs down, but according to the                                                            
fiscal note the cost is  being driven up by almost $9 million in the                                                            
state plan.   He said that he was  in favor of the bill,  because it                                                            
appeared to drive down costs.                                                                                                   
Ms. Parker explained that  what they were doing was giving providers                                                            
the opportunity to ban  together and negotiate.  She noted that they                                                            
were not going  to try and negotiate  their reimbursement  down, but                                                            
rather negotiate it up.                                                                                                         
Co-Chair Kelly  indicated that throughout  the course of  SB 37 they                                                            
heard many people testify  that it would drive costs up.  He pointed                                                            
out  that the  negotiations  were completely  voluntary  and if  the                                                            
insurance companies  do not want to negotiate than  they do not have                                                            
to.   He also pointed  out that  the provisions  of the bill  stated                                                            
that the physicians  could not act in a retaliatory  manner and they                                                            
could  not boycott.    He stressed  that  all SB  37  was doing  was                                                            
allowing  physicians  to act in  such a  manner that  they could  at                                                            
least come to a group to  decide whether they wanted to negotiate in                                                            
the first place and then  the insurance companies have the option of                                                            
saying "no."   He does not see how  there could be an increase  of 5                                                            
to 13 percent in healthcare costs.                                                                                              
Ms. Parker replied that  there really was no way of knowing, because                                                            
it had not  occurred yet.   She explained  that they have just  done                                                            
some studies based on federal legislation that were similar.                                                                    
Co-Chair  Kelly clarified,  "There  were some  studies  on that  and                                                            
there were also studies  that said the methodology on the study that                                                            
you're referring  to was completely out of wack and  it sounds to me                                                            
- and Ms.  Parker I certainly  don't mean  to criticize what  you've                                                            
said, because  I know these aren't  the numbers that you've  come up                                                            
with necessarily,  I mean I'm not holding you accountable  for these                                                            
exact  numbers in  here, but  they are  the numbers  that I've  been                                                            
hearing from  a number of organizations  and testifiers and  I think                                                            
it's a number that's just flat been pulled out of the air."                                                                     
Ms. Parker said, "I plead the fifth."                                                                                           
Co-Chair  Kelly commented  that  it brought  up a  good point,  that                                                            
being, how  could something  that is completely  voluntary  drive up                                                            
costs.  He  did  not  think  that  it would  drive  up  costs.    He                                                            
reiterated  that all SB 37 did was  provide some oversight  to allow                                                            
physicians  to come  together so that  they would  have some  market                                                            
power to deal with insurance  companies that were getting larger and                                                            
more powerful;  therefore, there would be some kind  of equality and                                                            
equity in the  bargaining position.  He stressed that  SB 37 was not                                                            
a "sky is falling" bill as had been presented.                                                                                  
Co-Chair Kelly  reported that the  bill would be HELD in  Committee.                                                            
AT EASE 9:27 AM/9:30 AM                                                                                                         
SENATE BILL NO. 143                                                                                                             
"An Act  authorizing the  Department of Natural  Resources  to enter                                                            
into agreements  with a person or persons desiring  to own an oil or                                                            
natural gas  pipeline proposed to  be located on state land  for the                                                            
purposes of providing  for payment of the reasonable  costs incurred                                                            
in preparing for  activities before receipt of an  application under                                                            
the Alaska Right-of- Way  Leasing Act and for activities relating to                                                            
the processing  of an application under that Act;  and providing for                                                            
an effective date."                                                                                                             
Senator John  Torgerson, sponsor  of SB 143,  indicated that  SB 143                                                            
would allow them,  specifically for gas lines, to  collect the costs                                                            
that were determined  to be reimbursable  on pre-applications  or on                                                            
the work  that occurred before  the application  was submitted.   He                                                            
noted  that  the  Senate   Finance  Committee  struggled   with  the                                                            
supplemental  budget where  there was a $4  million request  and $10                                                            
million for  application costs  next year.   He pointed out  that SB
143 would allow  the departments to start a memorandum  process with                                                            
applicants and start the reimbursement process immediately.                                                                     
Co-Chair  Kelly wondered  if  Senator  Torgerson was  sunseting  the                                                            
Senator  Torgerson replied  that there  was a sunset  clause  in the                                                            
bill for 2003.   He explained that  the thought process behind  that                                                            
was that there  would be an application  by the end of this  year or                                                            
the beginning  of next  year and  once the application  was  in they                                                            
would go  onto existing law.   He said that  they decided to  sunset                                                            
the bill so the  administration would not be able  to make deals all                                                            
the time, but if there  were not applications in and there was still                                                            
work to be done they would  extend the sunset date for a couple more                                                            
years.  He added that it would be an easy fix.                                                                                  
Co-Chair  Kelly indicated  that during the  capital budget  overview                                                            
they did  come across the  request for $10  million and wondered  if                                                            
that was adequately covered.                                                                                                    
Senator  Torgerson  responded  that  he  did look  through  the  $10                                                            
million request  and indicated  that there  were some expenses  that                                                            
would be  determined to not  be reimbursable.   He said that  he did                                                            
not agree with  the fiscal note, because they were  basically saying                                                            
that only $4  million of the $10 million  would be reimbursable  and                                                            
he felt that it would be higher.                                                                                                
Senator Green  wondered if the department  could arbitrarily  charge                                                            
someone who  they thought  was going to apply.   She asked  if there                                                            
was any safeguard against an over-zealous implementation.                                                                       
Co-Chair  Kelly pointed  out  that there  were other  statutes  that                                                            
determine what would be considered a reasonable cost.                                                                           
Senator Torgerson  agreed that most of it would be  covered under an                                                            
agreement.   He  noted  that  they currently  have  regulations  and                                                            
statutes  that cover reimbursable  expenditures.   He said  that the                                                            
$3.9 million  discussed  in the  fiscal note  would be reimbursable                                                             
upon receiving an application.                                                                                                  
Senator  Green  requested clarification   that the  applicant  would                                                            
trigger the process.                                                                                                            
Senator Torgerson replied yes.                                                                                                  
Co-Chair Kelly  requested clarification that the applicant  would be                                                            
paying fees  before actually receiving  the permit, whereas,  in the                                                            
past those fees would be paid after they received the permit.                                                                   
Senator Torgerson replied,  "That's correct."  He explained that the                                                            
ones that were reimbursable  could be backed up in the beginning and                                                            
they would be reimbursed  sometime in the future.  He clarified that                                                            
SB  143   would  implement   it  now  instead   of  waiting   for  a                                                            
reimbursement.    He  referred  to  Senator   Green's  question  and                                                            
indicated  that SB 143 stated  that there  could not be any  charges                                                            
until  an actual agreement  was  signed; therefore,  they could  not                                                            
just send a bill.                                                                                                               
Co-Chair  Donley  moved SB  143, 22-LS0667\J,  from  Committee  with                                                            
accompanying fiscal note and individual recommendations.                                                                        
There was no objection and SB 143 was reported from Committee.                                                                  
SENATE BILL NO. 104                                                                                                             
"An Act relating to state  aid for volunteer services; and providing                                                            
for an effective date."                                                                                                         
Senator Torgerson,  sponsor of SB 104, indicated that  SB 104 simply                                                            
would  pay volunteer  fire  departments  and  EMS services  $10  per                                                            
capita for the  areas that they served.  He noted  that it was a big                                                            
issue for areas such as  Cooper Landing.  He said that SB 104 was an                                                            
attempt to try to get the  fire department a little bit of money and                                                            
help offset their operating expenses.                                                                                           
Co-Chair Kelly wondered if it was a redistribution of money.                                                                    
Senator Torgerson believed it was new money.                                                                                    
Co-Chair  Kelly requested  clarification that  the $863,000  was all                                                            
new money.                                                                                                                      
Co-Chair Donley clarified that they were general fund dollars.                                                                  
Co-Chair Kelly agreed.                                                                                                          
Senator Torgerson agreed.                                                                                                       
Senator   Wilken  wondered   if  there  were   any  volunteer   fire                                                            
departments  or emergency medical  services (EMS) that served  areas                                                            
with populations greater than 2,500.                                                                                            
Senator Olson answered yes.                                                                                                     
Senator  Green indicated  that  Chugiak and  Eagle  River both  have                                                            
volunteer fire departments.                                                                                                     
Co-Chair Donley agreed.                                                                                                         
Co-Chair  Donley wondered  what  the thought  was  behind the  2,500                                                            
population limit.                                                                                                               
Senator Torgerson replied that it was in current law.                                                                           
Co-Chair  Donley believed  that the  current  law addressed  whether                                                            
they were unorganized or organized.                                                                                             
Senator  Torgerson  explained  that  the  2,500  opened  it  up  for                                                            
unorganized or organized.                                                                                                       
MATT ANDERSON,  Unit Manager, EMS,  Department of Health  and Social                                                            
Services, indicated  that over the  past decade or so the  amount of                                                            
financial resources  available to small rural services  had declined                                                            
dramatically.   He pointed  out that in 2001  they were seeing  some                                                            
dynamics, which included,  an increase in the cost of operation, the                                                            
run volume had increased  and much of the capital equipment that the                                                            
services have owned were  nearing the end of their useful lives.  He                                                            
added that there  were some changes in communication  technology and                                                            
the  standards  of  care  have  increased  the  cost as  well.    He                                                            
concluded  that they  were  supportive of  efforts  to increase  the                                                            
amount of financial  resources available to rural  emergency medical                                                            
services.   He  said that  they believed  that this  kind of  system                                                            
would be  an excellent  adjunct to the  well-developed EMS  regional                                                            
system that they  have today.  He added that there  were a number of                                                            
services  that  they certify  as  EMS that  operate  in communities                                                             
greater  than  2,500.   For  example, he  listed  Anchorage,  Kenai,                                                            
Sitka, Ketchikan.                                                                                                               
Senator  Wilken  wondered  if  he picked  a  community  like  Esther                                                            
volunteer  fire department  if there would  be a tab that showed  to                                                            
what extent the local borough  or the local people supported each of                                                            
the volunteer fire departments.                                                                                                 
Mr.  Anderson  replied   that  they  did  not  have   that  kind  of                                                            
Senator Wilken wondered who would know.                                                                                         
Mr. Anderson answered that  the Department of Community and Economic                                                            
Development would possibly know.                                                                                                
BILL  ROLFZEN,  Division  of  Community  and Business  Development,                                                             
Department of  Community and Economic Development,  regarded Senator                                                            
Wilken's  question  and  indicated  that the  information  would  be                                                            
available  through  the  borough's  budget  and  year-end  financial                                                            
Senator  Wilken  wondered  if  they  tracked  the  amount  of  local                                                            
participation   that  was   matched  with   the  state  funding   in                                                            
unorganized Alaska to support their fire department.                                                                            
Mr.  Rolfzen  indicated  that  currently  under  the  state  revenue                                                            
program the only accounting  as far as volunteer fire departments in                                                            
the unorganized boroughs  were reported in the revenue sharing fund.                                                            
Senator  Wilken wondered  if  Mr. Rolfzen  was aware  of some  local                                                            
participation in all volunteer fire departments.                                                                                
Mr. Rolfzen responded  all of them contributed local  money, whether                                                            
it was through bake sales or raffles.                                                                                           
Senator Wilken wondered  if the existing program only served 21 fire                                                            
departments in the state.                                                                                                       
Mr. Rolfzen responded that was how many were funded in FY01.                                                                    
Co-Chair Kelly  reported that the  bill would be HELD in  Committee.                                                            
Co-Chair Pete Kelly adjourned the meeting at 09:48 AM                                                                           

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