Legislature(2001 - 2002)
03/28/2001 09:09 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 28, 2001
9:09 AM
TAPES
SFC-01 # 55, Side A
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:09 AM.
PRESENT
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
bill.
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
bill.
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
information.
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
audit.
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.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 09:48 AM
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