Legislature(1997 - 1998)
01/14/1998 09:00 AM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE January 14, 1998 9:00 a.m. MEMBERS PRESENT Senator Gary Wilken, Chairman Senator Loren Leman, Vice-Chairman Senator Lyda Green Senator Jerry Ward Senator Johnny Ellis MEMBERS ABSENT None COMMITTEE CALENDAR SENATE BILL NO. 197 "An Act relating to health care services provided by, and practices of, a health maintenance organization; and prohibiting health maintenance organizations from limiting free speech of health care providers." HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION No previous Senate committee action. WITNESS REGISTER Senator Dave Donley Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SB 197. Dr. Robert H. Banks Alaska Chiropractic Society 401 E. 36th Ave. Anchorage, Alaska 99503 POSITION STATEMENT: Supports SB 197. Katie Campbell Division of Insurance Dept. of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0805 POSITION STATEMENT: Answered questions regarding the Division of Insurance. Gordon Evans Health Insurance Association of America 318 4th Street Juneau, AK 99801 POSITION STATEMENT: HIAA believes SB 197 is unnecessary but Theresa Obermeyer 3000 Dartmouth Drive Anchorage, AK POSITION STATEMENT: No stated position on SB 197. ACTION NARRATIVE TAPE 98-1, SIDE A Number 001 SB 197 - REGULATING HEALTH MAINTENANCE ORGS. CHAIRMAN WILKEN called the Senate Health, Education and Social Services (HESS) Committee to order at 9:02 a.m. and announced the presence of Senators Leman and Ellis. Senator Green arrived at 9:15 a.m. and Senator Ward arrived at 9:25 a.m. SENATOR DAVE DONLEY, sponsor of SB 197, gave the following overview of the measure. Alaska has not experienced the difficulties states in the Lower 48 have with the emergence of HMOs. SB 197 is a preemptive strike requiring HMOs to follow certain rules that benefit the public when they do arrive in Alaska. HMOs have been controversial and have inspired many successful initiative drives nationwide requiring them to follow some of the provisions contained in SB 197, especially the provision related to gag orders. SENATOR DONLEY described each section of the bill. Section 1 requires that HMOs and health insurers establish guidelines explaining when treatment can be denied to ensure that patients understand the circumstances under which they will not receive health care. Section 2 guarantees members' access to chiropractic health care services. HMOs currently use a "gatekeeper" to approve or disapprove the use of chiropractic services as a treatment option. The "gatekeeper" can be a nurse or physician who is trained in a different discipline and may be biased against chiropractic care. Section 2 allows the patient to select chiropractic care and visit a chiropractor during the first 30 days of an injury, after which a review process will occur to analyze whether or not continued chiropractic care is appropriate. Section 3 pertains to the limitations HMOs can impose on the communication between physicians and patients. In the Lower 48, some HMOs may prohibit doctors from informing patients of certain alternative treatments when those treatments are not available through the HMO plan, even when those treatments are the most appropriate. SENATOR DONLEY emphasized that health care providers should always be free to talk to patients about their medical conditions. The gag order provision has inspired all but 14 states to enact a similar prohibition on gag orders. Section 3 also requires an HMO to give written notice of cause before terminating an employee. Number 126 SENATOR ELLIS asked why Senator Taylor's name was listed as the sponsor on the fiscal note. SENATOR DONLEY answered that error was made by the department. SENATOR ELLIS noted that former Senator Jay Kerttula sponsored legislation in 1990 to eliminate any barriers in statute to the establishment of HMOs in Alaska, since they are considered the free market approach to providing more people with less expensive health care. The bill passed overwhelmingly, however no HMOs have been established. He questioned why that is and asked whether SB 197 might deter the establishment of HMOs in Alaska. SENATOR DONLEY replied that even in a free market, governments prohibit cartels and illegal activities to protect consumers from unscrupulous and unfair practices. SB 197 sets basic guidelines to ensure HMOs provide a fair, economic alternative. Number 194 SENATOR ELLIS commented that he strongly supports consumer protection, but repeated his question as to whether SB 197 will discourage HMOs from establishing businesses in Alaska. SENATOR DONLEY replied that his past experience with insurance companies makes it very difficult to predict how they will act because their reasons for their actions are sometimes untrue. He explained that the provisions contained in SB 197 should not inhibit any fair HMO from practicing in Alaska. Number 232 SENATOR LEMAN referred to the provision that requires two doctors to make a determination and asked whether it will create an unnecessary barrier in some cases. SENATOR DONLEY stated that the Alaska Medical Association specifically endorsed that section of the bill. He explained it would be unnecessary if one could guarantee that the physician who acts as the "gatekeeper" in the HMO is always straightforward and has no undue pressure to make an inaccurate evaluation but there is no way to guarantee that will be the situation in all cases. SENATOR LEMAN agreed there are complex cases where two diagnoses would be sensible, but he questioned whether SB 197 will add to the cost of health care when the diagnosis is simple and straightforward. SENATOR DONLEY thought two diagnoses probably are unnecessary in every case, but believed there is no way to draw the line to ensure that in those problem cases consumers get protection. An organization can easily create a system where two diagnoses automatically occur, if that is the standard required by statute. He added two diagnoses will only occur if a consumer complains and is dissatisfied with the first diagnosis. Number 266 CHAIRMAN WILKEN asked if there were other disciplines, such as midwifery, that might want the same availability afforded to chiropractors in SB 197. SENATOR DONLEY thought there probably were but was not familiar with any at this time. SENATOR WILKEN asked if Section 2 requires that a report be written after the initial 30 day period of chiropractic care, and that a second chiropractor then evaluate and treat the patient. He also asked where the physician enters into this process. SENATOR DONLEY answered that chiropractors have traditionally had problems with review of their work by physicians with a different area of expertise because many doctors are biased toward their own discipline. Chiropractors want to be reviewed by others in their profession, which is what Section 2 requires. He supports that approach because it is the consumer who has made the choice to get chiropractic treatment. Number 311 SENATOR WILKEN asked if the first chiropractor's report is given to both a second chiropractor and the HMO, at which point the HMO can demand or recommend treatment by a physician. SENATOR DONLEY said that according to lines 27-29, the HMO can send the patient to its chiropractor after it reviews the report. SENATOR WILKEN questioned whether the patient must go to the HMO's chiropractor at that point. SENATOR DONLEY explained that the patient can continue to go to his/her own chiropractor but, under the terms of the service agreement, must check for cost containment and be checked by the HMO chiropractor to ensure that the treatment is appropriate. CHAIRMAN WILKEN announced that Senators Green and Ward had joined the committee. Number 332 SENATOR ELLIS asked how the provisions in SB 197 would be enforced. SENATOR DONLEY said enforcement would occur through complaints to the Division of Insurance and Attorney General's Office. He offered to get more information from the Division of Insurance on that mechanism. SENATOR DONLEY commented that when he was first elected 12 years ago, the Division of Insurance's mission statement said nothing about consumer protection. Now the division's latest mission statement, produced in the last year, emphasizes consumer protection. He believed the division has made a lot of progress in that area over the last decade. SENATOR DONLEY also noted that he has collected petitions in support of SB 197 containing over 3,000 names. Number 360 DR. ROBERT H. BANKS, representing the Alaska Chiropractic Society, testified via teleconference from Anchorage. Dr. Banks stated that HMOs have grown to become a dominant force in health care in the last ten years, however along with unprecedented growth has come unprecedented consumer abuse. The sad reality of HMOs is not that it is managed care, but that it is rationed care. The American Chiropractic Association has created an internet site to try to document health care abuses; he provided three examples from 170 cases that have been formally substantiated. Many of the cases demonstrate a complete lack of morality and professional ethics. SB 197 mandates chiropractic care as the treatment for low back pain, and eliminates the use of gag clauses. The gag clause, simply stated, is an agreement, by the doctor, to not reveal treatment options to the patient if the insurance company has deemed them to be too expensive or otherwise logistically or financially undesirable. Dr. Banks urged committee members to support SB 197. Number 413 KATIE CAMPBELL, Division of Insurance, informed the committee that she was available to relay questions to Stan Gallington of the division, who was unable to attend. SENATOR ELLIS asked how the Division of Insurance will enforce the provisions of SB 197 and handle complaints. MS. CAMPBELL responded they would be handled through the division's consumer service area complaint process. SENATOR ELLIS stated SB 197 has a zero fiscal note because no HMOs are currently located in Alaska. He asked what the division projects the cost of processing complaints to be if one or two HMOs existed. MS. CAMPBELL offered to provide Senator Ellis with that information at a later date. SENATOR LEMAN asked if the division has calculated how SB 197 might increase or decrease the costs of health care in Alaska. MS. CAMPBELL replied the division has not done any research specific to SB 197 and very little on HMOs overall since there have been no applications to date. Number 448 GORDON EVANS, representing the Health Insurance Association of America (HIAA), a trade association representing about 225 commercial health insurance companies, gave the following testimony. HIAA has a mixed reaction toward SB 197. It believes SB 197 is unnecessary since no HMOs currently exist, or are likely to be established in Alaska because it does not have a large enough population to support one. HIAA does support Sections 1 and 3, because it does not support inhibiting doctor-patient communication but objects to Section 2, as it creates a special privilege for one type of provider over others. Section 2 is unnecessary because Alaska already has an anti-discrimination statute for medical providers. CHAIRMAN WILKEN asked Mr. Evans to submit HIAA's position to the committee in writing. MR. EVANS questioned whether SB 197 had an additional referral to the Senate Labor and Commerce Committee. CHAIRMAN WILKEN noted the only referral is to the Senate HESS committee. Number 488 THERESA OBERMEYER, representing herself, expressed several opinions on various topics but had no stated opinion on SB 197. CHAIRMAN WILKEN announced SB 197 would be held in committee until Friday, January 16, and adjourned the meeting at 9:45 a.m.