Legislature(1993 - 1994)
03/11/1994 01:37 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE
March 11, 1994
1:37 p.m.
MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Bert Sharp, Vice-Chairman
Senator Loren Leman
Senator Mike Miller
Senator Jim Duncan
Senator Johnny Ellis
Senator Judy Salo
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
SENATE BILL NO. 201
"An Act relating to coordination of insurance benefits and to
determination and disclosure of fees paid to an insured or a health
care provider; and providing for an effective date."
SENATE BILL NO. 270
"An Act creating the Alaska Health Commission; relating to the
delivery, quality, access, and financing of health care; relating
to review and approval of rates and charges of health insurers;
relating to certain civil actions against health care providers and
health insurers; repealing Alaska Rule of Civil Procedure 72.1; and
providing for an effective date."
SENATE BILL NO. 284
"An Act establishing the Alaska Health Insurance Corporation and
requiring licensed health care providers to comply with certain
statutes and regulations relating to the corporation; relating to
disability insurance claims processing and to approval of rates for
disability insurance, including health insurance; and providing for
an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 201 - No previous action to record.
SB 270 - See Health, Education & Social Services minutes dated
2/9/94, 2/18/94, 3/2/94 and 3/9/94.
SB 284 - See Health, Education & Social Services minutes dated
2/14/94, 2/18/94, 3/2/94 and 3/9/94.
WITNESS REGISTER
Frank Thomas-Mears
Multiple Risk Managers, Inc.
12541 Atherton
Anchorage, Alaska 99516
POSITION STATEMENT: Reviewed SB 201.
Rob Robinson, Chairman
Alaska Dental Board
P.O. Box 871687
Wasilla, Alaska 99687
POSITION STATEMENT: Reviewed SB 201.
Dan Pitts
Alaska Dental Society
155 Smith Way
Soldotna, Alaska 99669
POSITION STATEMENT: Supported SB 201.
David Walsh, Director
Division of Insurance
Juneau, Alaska
POSITION STATEMENT: Reviewed SB 201, SB 270, SB 284.
Barbara Thurston, Chief Actuary
Division of Insurance
Juneau, Alaska
POSITION STATEMENT: Reviewed the fiscal notes for SB 270, SB 284. .
Nancy Usera, Commissioner
Department of Administration
P.O. Box 110200
Juneau, Alaska 99811-0200
POSITION STATEMENT: Reviewed SB 270, SB 284.
ACTION NARRATIVE
TAPE 94-17, SIDE A
Number 005
CHAIRMAN RIEGER called the Senate Health, Education and Social
Services (HESS) Committee to order at 1:37 p.m. He introduced SB
201 (INSURANCE RATES & BENEFIT COORDINATION) as the first order of
business before the committee.
FRANK THOMAS-MEARS, Multiple Risk Managers, Inc., testified on
behalf of the prime sponsor, Senator Kelly. He stated that SB 201
addresses, in order for the public to understand, how a health care
insurer determines "usual, customary and reasonable fees" (U.C.R.)
and the meaning of that process. SB 201 also addresses how
insurance companies coordinate benefits between themselves when
more than one insurance policy applies to a claim. He suggested
that less ambiguous language would end many of the current
complaints. He also suggested that a more specific contractual
U.C.R. provision would help dismiss the common misconception that
a U.C.R. payment mechanism means claims settlement will be based on
the full amount charged by medical care providers for a certain
procedure. He noted a trend towards ambiguous language. He stated
that the attempts to correct these problems have not resolved them.
SB 201 would clearly communicate the meaning of the U.C.R.
provision to the purchaser and user of the insurance.
Mr. Mears referred to a 1990 report of nationally recognized
experts in insurance and actuarial science provided to the National
Association of Insurance Commissioners which addressed similar
abuses of the "usual, customary and reasonable fees" concept. The
report cited two specific inconsistencies: the purchaser cannot
ascertain that two programs identified as U.C.R. may produce
materially different levels of reimbursement for the same services,
and beneficiaries under these programs do not understand that a
reimbursement level identified as reasonable and customary is based
on the carriers definition of those terms which may differ
substantially from the common meaning or other carriers meanings of
those terms.
Mr. Mears said that currently, the Division of Insurance only
enforces the birthday rule which is no longer sufficient. He noted
that the Division of Insurance have technical changes which he
believes are reasonable. He recognized the need to assist
consumers with filing and collection of insurance benefits,
although, that adds considerably to the cost of running the
insurance companies. That assistance would increase consumer
access to health care. He concluded that if SB 201 does not move
forward, it would probably result in physicians not accepting
insurance benefits and the consumer will have to pay for the
service and file the claim themselves.
Number 116
ROBERT ROBINSON, Chairman of the State Board of Dental Examiners,
viewed SB 201 as a freedom of information, a right to benefits and
access to health care necessary to the public. SB 201 is essential
to the consumer and the employer. He pointed out that SB 201 would
allow the public to know their coverage from the beginning. He
explained that the coordination of benefits of SB 201 establishes
rules for multiple coverage. Currently, the system practically
penalizes those who have multiple coverage. He expressed concern
that if SB 201 does not pass, some of the dentists would return to
a cash up front payment system which would leave the patient to
file and obtain their insurance. The coordination of benefits in
SB 201 would ease that problem and help increase the access of
public health care. He did not believe that SB 201 mandates
prices for insurance companies; SB 201 only requires public
disclosure, freedom of information to employees and employers
regarding their policies.
DAN PITTS, general dentist and Alaska Dental Society
representative, supported SB 201. SB 201 is an information bill
which should avoid a lot of confusion and streamline patient
treatment. He spoke to the coordination of benefits. He urged
passage of SB 201.
CHAIRMAN RIEGER held SB 201. He placed SB 270 (COMPREHENSIVE
HEALTH CARE) and SB 284 (COMPREHENSIVE HEALTH INSURANCE ACT) before re
the committee for discussion.
Number 194
DAVID WALSH, Director of the Division of Insurance, stated that he
did not have the final fiscal note on SB 201. The draft fiscal
note shows zero impact. He explained that he was not capable of
any further statements. He thanked everyone who was willing to sit
down with the division and work on SB 201.
CHAIRMAN RIEGER asked if SB 201 tied into review and approval of
rates. DAVID WALSH said that they do not tie in with SB 201.
SENATOR SHARP asked what was the Division of Insurance's policy or
state regulations regarding coordination of benefits and
determination of primary and secondary coverage; would it be
similar to what is in SB 201.
DAVID WALSH said that each policy could be different. If one has
two full coverage group policies, generally the primary coverage
would be the one in force the longest. He noted that sometimes
large employers will have a policy stating that they are to be the
primary coverage. That is often the result of a collective
bargaining agreement. He clarified that normally the policy in
effect the longest would be the primary coverage.
SENATOR SHARP mentioned the problem with the 90 day filing
expiration. An individual cannot hold claims in order to save the
expense of processing; they expire after 90 days. DAVID WALSH
agreed that was a problem for the insurance company and the
individual. The insurance companies would like the claims in a
timely manner so they can be processed and their reserves can be
paid. Mr. Walsh also acknowledged that there is a consumer
protection issue. Mr. Walsh explained the possibility of having
uncoordinated benefits between a group policy and an individual
policy, which could make money for an ill individual if both
policies were full coverage policies. That loophole is not good
for the system as a whole. Mr. Walsh stated that they would be
working towards a more global solution for the coordination of
benefits. He specified that the Division's efforts are not a
statement of pro or con regarding SB 201.
SENATOR SHARP pointed out the coordination of benefits problem when
both policies require that their individual deductibles be met.
CHAIRMAN RIEGER asked how would this work under the coordination of
benefits; would each policy have its own deductible as it does for
its reimbursement. DAVID WALSH said that it depends upon the
specific language of the policy and whether the policy speaks to
the deductible when that policy becomes the secondary coverage.
Number 274
CHAIRMAN RIEGER directed the committee to the issues of review and
approval of rates and charges regarding SB 270 and SB 284.
SENATOR DUNCAN said that under SB 284 the regulation of private
insurance rates is on page 4 of the bill.
DAVID WALSH noted that both bills contain prior rate approval.
Under SB 270 the Division of Insurance would do the actuarial work,
but the Commission would give ultimate approval. Under SB 284 the
Division of Insurance would do the actuarial work and give the
final decision as well.
Mr. Walsh explained that currently, there is no rate approval
regarding rate filings by health insurers. Except for health
insurance rates, Alaska uses the prior approval mechanism for rate
approval which means that companies must file their rates with the
Division of Insurance. The Division of Insurance has thirty days
to review the rates and make a decision. He noted the extension
provision which allows another thirty days for the division to
review the rates. The prior approval mechanism is the most
stringent type of review from a consumer protection point of view.
Mr. Walsh discussed the various other rate approval mechanisms.
The file and use mechanism means that the rates must be filed with
the Regulatory Authority before one could use it. Then the thirty
day review begins and the rates can be recalled if they are not
approved. He explained the use and file mechanism which is the
opposite of the file and use mechanism. The last rate approval
mechanism is open rating which does not require any review by the
Regulatory Authority at all. He noted that health insurance in
Alaska does not have rate approval which is essentially classified
as an open rating while all other insurance uses the prior approval
mechanism.
Mr. Walsh stated that both SB 270 and SB 284 bring the approval of
health rates in Alaska in line with the regulatory review of other
forms of insurance. The mechanism proposed differs in each bill.
Under SB 270 the health rates would be filed with the Division of
Insurance who would do the actuarial and market work. They would
make a recommendation to the Health Commission who would then hold
public hearings and decide to approve or disapprove the rate
change. He explained that under SB 284, the method of review would
be the same as under SB 270; however, the Division of Insurance
would make the final decision.
SENATOR DUNCAN asked what difference there would be regarding the
work load for the Division of Insurance under these bills. DAVID
WALSH said there would not be a significant difference in the work
load under either of the bills.
Number 352
SENATOR DUNCAN restated Mr. Walsh's belief that the work load for
the Division of Insurance under both bills would be about the same
for rate review. He reviewed the components of the fiscal notes
for SB 270 and SB 284. He asked why the fiscal note for SB 284 was
higher than the fiscal note for SB 270 if the work load was the
same.
DAVID WALSH pointed out that the difference was the consumer
complaint positions. The fiscal note for SB 284 includes the
consumer complaint specialists due to the Division of Insurance's
additional requirements of handling consumer complaints which are
not present under SB 270.
SENATOR DUNCAN asked if the three consumer complaint specialists in
SB 284 deal with rate approval, why are those positions under the
rate approval section of the fiscal note for SB 284 and not SB 270.
He cited other discrepancies in the components of each fiscal note
when the work load was the same.
BARBARA THURSTON, Chief Actuary of the Division of Insurance,
explained that under SB 284 the Division of Insurance makes the
final decision of rate approval which means that consumer
complaints would be directed to the Division of Insurance. Under
SB 270 the consumer complaints would be directed to the Health
Commission since the Commission makes the final decision. She
acknowledged other contractual and equipment differences between
the fiscal notes. She said that those differences were due to the
number of people posed in each fiscal note; if more people are
added those costs increase.
SENATOR DUNCAN maintained that there would be complaints no matter
who makes the final decision, therefore, consumer complaint
specialists would be needed under either bill. He suggested that
the fiscal note for SB 270 should have three consumer complaint
specialists for the Health Commission; now SB 270 does not have any
consumer complaint specialists. He determined that the fiscal note
for SB 270 must be understated.
DAVID WALSH said that neither he nor Ms. Thurston could comment.
He clarified that they could only comment on their portion of the
fiscal note with regard to its effect on the Division of Insurance.
SENATOR DUNCAN expressed the need for the fiscal note on SB 270 to
ask the same questions that the Division of Insurance asked of
SB 284. He reiterated that the consumer complaint specialist would
have to be present in SB 270 under the Commission or the Division
of Insurance. He stated that the fiscal note for SB 270 lacks the
same intense scrutiny and credibility of the fiscal note for
SB 284. He asked if Mr. Walsh agreed that there should be consumer
complaint specialists.
DAVID WALSH agreed that those positions are essential because any
time there is approval of rates some people will not be pleased.
CHAIRMAN RIEGER asked how the number of consumer complaint
specialists under SB 284 would compare to the number in the
Division of Insurance. DAVID WALSH informed the committee that
currently, the division has four full-time consumer complaint
specialists and a clerk. They are now handling more complaints
than ever. Mr. Walsh explained that the fiscal note was in draft
form because a significant amount of work needs to be done at all
levels. He recommended that the fiscal note stay in draft while
these problems are addressed.
Number 436
SENATOR DUNCAN asked Mr. Walsh if he was asked by the preparers of
the fiscal note for the Commission to prepare a fiscal note for the
Commission. DAVID WALSH said no. SENATOR DUNCAN asked if Mr.
Walsh had been asked by the Governor's office what effect rate
approval would have on the Commission activities. DAVID WALSH said
that he did not believe so.
CHAIRMAN RIEGER asked if Mr. Walsh favored rate approval and if so
which of the two approaches. DAVID WALSH favored rate approval.
Mr. Walsh supported SB 270. Mr. Walsh explained that there should
be some type of approval, but who makes that approval would
ultimately be the decision of the Governor and the Legislature.
CHAIRMAN RIEGER asked how other rate approval costs of the Division
of Insurance were paid. DAVID WALSH noted that Alaska was one of
the few states with no filing fee; however, there is an expensive
certificate of authority fee. Every year every company pays $2500
in order to do business in Alaska. Mr. Walsh indicated that the
lack of a filing fee is a bargain for companies who write a lot of
insurance in Alaska. Mr. Walsh explained that a filing fee would
become a costly administrative burden. The cost has been shifted
to those companies who want to be admitted in all fifty states
which would benefit companies who serve Alaskans. All of the
Division of Insurance's budget comes through license and
certificate of authority fees.
CHAIRMAN RIEGER asked if there are other aspects of the regulation
of insurers, besides rate approval, that the division has authority
over. DAVID WALSH stated that they have full sovereignty
regulation of the companies which would be essential to any
regulatory entity. He said that it was only a question of rate
approval.
SENATOR ELLIS inquired as to who would have more expertise in rate
approval issues; the Division of Insurance or the Commission. He
asked Mr. Walsh to characterize rate review in SB 270 and SB 284.
DAVID WALSH stated that the Division of Insurance employees do a
good job. He noted the difficulties in comparing the
qualifications of people he knew to those of the proposed
Commission. He asserted that the Legislature and the Governor
would have the ultimate decision. He explained that whatever the
Governor and the Legislature decide the Division of Insurance would
regulate.
Number 490
CHAIRMAN RIEGER expressed concern with giving regulatory powers of
the state to another commission. He said that he was inclined to
keep this in the Division of Insurance.
SENATOR SHARP asked how review and approval of rates would work if
the ability to approve rates was present while there would be no
control of expenditures.
DAVID WALSH clarified Senator Sharp's concerns. The regulation of
premiums that accompany charges should be part of the fees medical
communities charge. He did not have an answer. He explained that
from a regulatory view, insurance consumers are best protected with
rate review authority and approval. Most states now regulate
health premiums. He noted that due to Blue Cross' non profit
status the Division of Insurance has more rate authority than with
other providers.
CHAIRMAN RIEGER asked why health coverage is commonly excluded
while other types of insurance are included in rate review. DAVID
WALSH said that he did not know. A large portion of that response
could be due to the historical decisions made by the legislature at
the time.
SENATOR SHARP discussed the problems that California faced when
they required mandatory auto insurance; major auto insurance
companies pulled out of the market. He asked what would stop such
a situation in Alaska.
DAVID WALSH agreed that was a serious issue. In Alaska there are
three companies, AETNA, Blue Cross and Great West, who write
approximately 80 percent of the business. He noted the four auto
insurance companies who also have about 80 percent of that market.
He said the Division of Insurance's goal was to increase the number
of players in the market because the Division believes that would
lead to more stability and lower rates. There has been success
with such an approach. He did not know what effect rate approval
would have on the Alaskan market. He believed that rate approval
was needed and probably would not have a drastic effect on the
Alaskan market.
Number 554
NANCY USERA, Commissioner of the Department of Administration,
spoke to the differences in approach and cost of the two bills. SB
270 recognizes current fiscal constraints and attempts to do things
on an incremental basis. She explained that the rate approval
portion of SB 270 intended to address the lack of process for
verifying the rates that insurance companies present. As an
employer, she expressed interest in having an independent third
party review to verify and approve or disapprove the insurance
companies' rates. The Commission would not duplicate the Division
of Insurance's work. She said that the work of the Commission and
the Division should enhance each other because of the information
derived from the rate review process as well as enhancing the
public process through public hearings.
Ms. Usera maintained that SB 270 did not anticipate the consumer
complaint issue. She noted the key difference in the bills; one is
general and the other more explicit. She explained that they would
suggest amending SB 270 if that was necessary for rate approval to
be minimally effective. She reiterated that SB 270 wants to move
forward while recognizing financial constraints.
TAPE 94-17, SIDE B
Number 594
SENATOR DUNCAN stated that rate approval should be done whether
there is any reform at all. He asked if Ms. Usera supported rate
approval and was it something that must be in SB 270. NANCY USERA
said no. Without rate approval, there are still other good things
in this bill. Ms. Usera acknowledged that rate approval is an
important piece. Ms. Usera explained that SB 270 has pieces that
would stand alone to advance health care reform, unlike the package
approach of SB 284.
SENATOR DUNCAN pointed out that rate review and approval of charges
are very specific; however, the fiscal note of SB 270 does not
reflect the explicit charges to the Commission on this issue. He
asked if Ms. Usera had requested that the Division of Insurance
report what might be involved in rate review and approval. He
stated that the merits of a bill are nothing without funding to do
the tasks. He emphasized the need to treat the bills fairly
regarding the fiscal notes.
NANCY USERA noted that SB 270 uses "may" which is permissive
language. The permissive approach of SB 270 was built-in due to
the belief that a lot of latitude for growth must be in place. She
said that the Division of Insurance was asked what their piece
would be in the fiscal note; however she did not know the specific
instructions or assumptions. She asserted that the cautious
attitude of SB 270 was intended to provide various options and
still be financially responsible.
SENATOR DUNCAN scrutinized the permissive language of SB 270 and
pointed out that the Commission is charged with issuing a decision
on the filing which could be approved or disapproved. A decision
is made which does not seem to support Ms. Usera's interpretation
of the permissive language. He asked if the administration was
committed to rate approval.
NANCY USERA emphasized that every provision in SB 270 is important
and each of them could stand alone. She stated that if rate
approval was omitted from the bill, the Governor would continue to
support SB 270. She acknowledged that they believed SB 270 was a
better bill when rate review and approval were included.
SENATOR DUNCAN requested a legal opinion on the permissive language
of SB 270. He asserted that only the approval portion of the rate
review section was permissive, the other aspects use the word
"shall" which is mandatory language.
Number 523
SENATOR SALO asked if under rate approval, would the Commission
deal with "usual, customary and reasonable" fees. NANCY USERA
informed the committee that an amendment was adopted in House HESS
which provides for disclosure. That moves toward more consumer
interest. Ms. Usera said she would share the House CS.
SENATOR ELLIS asked if there is currently a problem with doctors
refusing to provide rates for their services. He did not feel that
was a problem.
NANCY USERA said that as a consumer, shopping for a procedure is
very difficult. The House Amendment requires rate disclosure of
normal procedures and a consumer estimate before an actual
procedure is conducted. She noted the fine placed on a provider
who does not follow the amendment which makes providers accountable
to their consumers.
SENATOR ELLIS recognized that informed consumerism is an incredible
force to be used in moderating the rates. He felt much more could
be done.
SENATOR DUNCAN asked how disclosure of rates would benefit a small
community such as Fairbanks. He inquired of the intent or of the
benefit of the House Amendment. NANCY USERA said knowing the
options would empower the consumer when making decisions.
SENATOR SALO was concerned that often consumers do not find out
until afterwards that their insurance does not consider a procedure
"usual, customary and reasonable." For some this would be a
problem. She asked if there is any enforcement for a provider to
come close to an estimate given when there is prior approval.
DAVID WALSH agreed that was a problem. Currently, the insurance
company and the health care provider work that out. He explained
that companies use prior approval in order to get an estimate that
hopefully the provider would stay with that target. On the other
hand, sometimes there are complications that would raise costs from
the original estimate. He stated that part of the problem was
making the estimates stick, which is beyond the division's ability.
SENATOR SALO suggested that health care providers should be made
more accountable for their estimates.
Number 446
CHAIRMAN RIEGER referred to page 5, lines 23 & 24, when addressing
the community rates provision of SB 284. He inquired as to how
prudent a policy that would be or should there be a differentiation
of rates at least for those things in the control of the
individual. He emphasized that the community rates provision seems
to eliminate a lot of individual responsibility. He asked why that
provision was present and if that provision was a good policy.
SENATOR ELLIS suggested that Mr. Walsh explain community ratings
and experience ratings.
DAVID WALSH explained that experience ratings break down the
different segments of the population based upon activities,
lifestyles, etcetera. The theory of experience ratings is that an
individual should pay related to that individual's demographics.
He posed auto insurance as an example of successful experience
rating. From a public policy view of experience ratings, an
individual should only pay for the risk they are incurring. He did
recognize that experience ratings could lead to reverse
discrimination because companies would tend to write policies for
only safe risks. A pool of individuals who do not fit a
demographic profile are left without coverage. He informed the
committee that fiscal restraints lead to tighter demographic
profiles which also leads companies to cover only the best risks.
Mr. Walsh stated that community rating has been limited to the
health insurance field. If one believes that health care access is
a public policy right and some type of insurance system would be a
good vehicle, then because everyone pays for individual lifestyle
risks, community ratings would be suitable. He explained that the
theory behind community ratings is that there is a cost for health
care which would be divided on a per capita basis. That would even
out marketplace fluctuations and take care of those at the bottom.
He emphasized that the issue of uncompensated health care must be
addressed.
Mr. Walsh discussed a Fairbanks example someone had testified on at
a previous hearing. A 3 1/2 percent bad debt ratio in a retail
service provider would not be considered bad. He asserted that in
handling uncompensated care, realizable goals should be reviewed.
Historically the experience rating has been proven inadequate for
a major portion of the population, which leaves the Legislature and
the Governor to determine how best to handle the situation. He
recognized some progress with the small employer and high risk
pools. He stated that both bills attempt to address the issue, but
they begin with different points of view regarding how, when, and
in what manner it would be done.
Number 349
CHAIRMAN RIEGER asked if SB 284 used a community rating approach
and SB 270 used an experience rating point of view. DAVID WALSH
did not believe that SB 270 took a position on the type of rating
approach.
CHAIRMAN RIEGER questioned the merit of the community rating point
of view which does not create incentives or penalties for health
factors within the control of the individual.
SENATOR SALO pointed out that accounting for those factors is
almost impossible. There is no way to police people regarding
those health risks.
CHAIRMAN RIEGER asked what would happen if someone who had checked
the non smoker box on a life insurance policy layer died of lung
cancer. DAVID WALSH said that if it can be proven that the person
smoked two or three packs a day, then the insurance would be
negated because that would amount to lying.
SENATOR ELLIS asked for an example of those at the bottom of the
pool.
DAVID WALSH described the first type of individual as one with a
genetic condition which would omit them from the demographics
through no fault of their own. The second type of individual at
the bottom of the pool would be an individual who chose an
inherently dangerous consequence or lifestyle. He stated that it
is difficult to design a system acceptable to the general
population while the system takes in dangerous activities and
lifestyles with no premium for healthy lifestyles. He described
the third type of individual in this category as children of
families without coverage or individuals who do not take out
coverage.
Number 275
SENATOR ELLIS asked for examples of businesses who pay
disproportional rates based on occupations. DAVID WALSH pointed
out the timber industry, some health care providers and the fishing
industry as examples.
SENATOR ELLIS reiterated the question clarifying that he was
referring to unexplainably high rates for certain occupations such
as ministers. DAVID WALSH noted a fencing company with this
difficulty as well as small transportation companies. SENATOR
DUNCAN informed the committee of the list of such industries.
Senator Duncan explained that most of these businesses were low
paid, high turnover jobs with a high administrative cost with which
the insurance companies do not want to bother.
SENATOR SALO believed that this discussion was time well spent.
She stated that many things under an experience rating system seem
inherently unfair and the decisions would be difficult. She stated
that we all pay in the end and she would rather start with the
community rating philosophy.
CHAIRMAN RIEGER noted that at the national level individual
responsibility is high on the list. He expressed reluctance to
give anyone a free ride when they engage in a lifestyle that
increases health costs. He read lines 23 & 24, on page 5 of SB 284
as saying that people with dangerous lifestyles are not dealt with
separately, they receive the same premium as everyone else. That
would be poor public policy in his opinion.
SENATOR SALO stated that there are other ways besides the insurance
rate to compensate or not compensate for lifestyle choices. She
indicated that the Clinton plan's individual payment for doctor's
visits could be a way to penalize those who chose a dangerous
lifestyle since such lifestyles often result in more doctor visits.
SENATOR ELLIS agreed that community rating made sense in order to
capture everyone; however, risk factors can be taken into account.
There should be incentives for healthy lifestyles and Senator Ellis
noted that those incentives are not precluded in SB 284. He
welcomed discussion on SB 284 becoming more specific on healthy
lifestyles.
Number 161
NANCY USERA corrected her previous testimony on insurance rate
approval. She explained that rate approval was required with
"shall" language. She asserted that her other testimony was
consistent. SB 270 is based on incremental steps. She reiterated
that if SB 270 has miscalculated due to an inherent assumption that
they had not included in their process they could review the issue.
SB 270 does not intend to design elaborate bureaucracies.
SENATOR ELLIS said that rate review authority was the most
important portion of the data collection of SB 270. Rate review
acquires the data on health insurance that the Department of Health
and Social Services needs. He believed that rate review would be
the quickest thing that could be done for consumers.
NANCY USERA felt that rate review or a portion of it could be done
without consumer complaint specialists. She did not believe that
rate review and consumer complaint specialists have to go together.
SENATOR ELLIS clarified that the consumer complaint specialists of
SB 284 would not create an elaborate bureaucracy. NANCY USERA said
that she was not being comparative.
SENATOR DUNCAN observed that if the consumer complaint specialists
were not needed then those positions could be eliminated in SB 284.
SENATOR SALO asked if Ms. Usera meant that without consumer
complaint specialists, the appeal process would be in the courts.
NANCY USERA explained that appeal for an insurance company
provision places the appeal in the courts.
SENATOR DUNCAN noted that Ms. Usera had said she would re-evaluate
the rate review language. NANCY USERA stated that she would review
that language and the fiscal note.
Number 073
CHAIRMAN RIEGER referred to page 5, lines 27-31 of SB 284 when
asking how the claims processing section would fall under
regulations or laws governing other forms of insurance. DAVID
WALSH believed that the section was similar, except for the time
period. In response to Chairman Rieger, Mr. Walsh clarified that
other forms of insurance process claims by regulations and laws.
CHAIRMAN RIEGER asked for a description of the standardized claims
form and how the form would work under SB 270.
NANCY USERA pointed out that section 44.19.628 on page 5 of SB 270
addresses this issue. SB 270 directs the Division of Insurance to
consult with the Commission in order to determine the type of
information necessary to aid the data collection process. The
Division would provide regulations which adopts that and all the
health insurers should comply with the use of the universal claims
form. CHAIRMAN RIEGER asked if the standardized claims form
already exists. NANCY USERA noted that many providers use fairly
standard claims forms through an electronic system. She explained
that a uniform claims form would contain useful information
regarding the collection of data. The same approach is anticipated
in the public health sector. Ms. Usera stated that they do not
anticipate the Commission collecting data from individual claims
forms nor that the forms would be sent directly to the Commission.
TAPE 94-18, SIDE A
Number 002
DAVID WALSH said, in response to Chairman Rieger, that whether
there is a commission or not there is a national push to have a
universal claims form. He suggested that the form would exist in
a few years probably using the Medicare, Medicaid form as a
template; however, with some changes. He believed that this
universal form could be achieved in a finite time.
SENATOR DUNCAN stated that both bills essentially do the same
thing, create and implement a uniform claims form. DAVID WALSH
agreed. SENATOR DUNCAN asked why the difference in costs of the
claims form in the fiscal notes; SB 270 does not have costs listed
for the claims form. DAVID WALSH did not know the answer. Mr.
Walsh said that their fiscal note on SB 284, assuming the Division
of Insurance would do such things as the claims forms, was prepared
on their experience and the experience of other states who were
facing the same issues.
SENATOR DUNCAN pointed out that the Division of Insurance was
charged under SB 270 to do the claims form; why then would the
creation of this uniform claims form not cost them anything under
SB 270. DAVID WALSH said that he would have to review the draft.
Mr. Walsh noted that there probably were different priorities
considered regarding SB 270 and SB 284.
SENATOR DUNCAN asserted that the uniform claims form was yet
another example that SB 270 would cost more than the draft fiscal
note projects.
Number 077
SENATOR SALO suggested that part of the problem was that the fiscal
notes were done in two different places at two different times by
two different people. DAVID WALSH agreed with Senator Salo. He
said that he would review the fiscal notes and inform the committee
of the results. SENATOR SALO requested that the fiscal note
drafters get together and review both the fiscal notes.
NANCY USERA expressed the importance to clearly state the
assumptions of each bill when dealing with the fiscal notes. She
believed that the major difference was the assumptions applied to
each bill and their fiscal note.
SENATOR DUNCAN did not understand how there could be different
assumptions present if both bills require establishment of a
uniform claims form within a specified time. He agreed with
Senator Salo and suggested that SB 270 should have the same in
depth fiscal note that SB 284 has now.
CHAIRMAN RIEGER asked if the uniform claims form provision of
SB 270 was also the data collection section or is data collection
a separate section.
NANCY USERA noted that page 2, line 13, addresses the purpose of
the Commission. She explained that SB 270 considers the uniform
claims form a tool, but not necessarily the source of the
information that the Commission collects and analyzes. SB 270 uses
the uniform claims form as a processing convenience, an
administrative streamlining of the process, and also requires
certain information that could be collected in aggregate. She said
that the data collection is not specifically set out as to how that
would be done under the Commission.
SENATOR DUNCAN was impressed with the detail of the fiscal note.
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CHAIRMAN RIEGER noted that the last issue before the committee
regarding SB 270 and SB 284 was the fiscal notes of each.
SENATOR DUNCAN agreed that the data of the universal claims form
may be used for two different purposes under SB 270 and SB 284;
however, the development of the claims form will still cost. He
pointed out that the fiscal note for SB 284 dealt with the cost of
development of the form and the use of its data separately.
SENATOR ELLIS asked if Ms. Usera's previous point was that the
universal claims form would be developed because it was easy to
use, but that the form would not be used for data collection and
analysis to better health care.
NANCY USERA said no. The use of the universal claims form has a
duo-fold purpose: assist in the more efficient processing of
claims, and certain information on the form can be used as a tool
for getting information. She explained that if she were filing a
claim with her provider on this universal claim form, she nor her
provider would have to send a copy to the Commission. She said
that they anticipated that the provider would aggregate the
information and provide it in a periodic report. The universal
claims form would be a vehicle for acquiring information.
SENATOR ELLIS indicated that SB 270 stops short and does not
specify what would be done with the data collected while SB 284
goes further to state what would be done with the data and
therefore would be more expensive.
NANCY USERA said that she understood that SB 284 would require the
individual to file the claims form which the Corporation would
receive. SENATOR ELLIS clarified that the process was electronic.
Number 229
CHAIRMAN RIEGER said that on Monday he planned to review data
collection, publication of fees and anti-trust provisions, and also
the claims clearinghouse at Senator Duncan's request.
There being no further business before the committee, the meeting
was adjourned at 3:25 p.m.
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