Legislature(1995 - 1996)
03/16/1995 01:40 PM Senate L&C
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* first hearing in first committee of referral
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SENATE LABOR AND COMMERCE COMMITTEE
March 16, 1995
1:40 P.M.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
MEMBERS ABSENT
Senator John Torgerson, Vice Chairman
COMMITTEE CALENDAR
SENATE BILL NO. 108
"An Act relating to the powers and duties of the commissioner of
commerce and economic development concerning the Alaska Tourism
Marketing Council; relating to the per diem and travel expenses of
the council's board of directors; relating to the powers and duties
of the council; extending the termination date of the council; and
providing for an effective date."
SENATE BILL NO. 100
"An Act relating to unfair discrimination against a physician
assistant or acupuncturist under a group health insurance policy."
SL&C 3/16/95
SB 104 (JOINT INSURANCE ARRANGEMENTS) was scheduled, but not taken
up this date.
WITNESS REGISTER
Mary Jackson, Legislative Aide
Senator John Torgerson
State Capitol
Juneau, AK 998-1-1182
POSITION STATEMENT: Commented on SB 108.
John Litton, Vice President
Government Relations
Alaska Visitors Association
211 Crabapple Dr.
Sitka, AK 99835
POSITION STATEMENT: Supported SB 108.
Bob Dindinger, Vice Chairman
Alaska Tourism Marketing Council
9085 Glacier Hwy., Suite 204
Juneau, AK 99801
POSITION STATEMENT: Supported SB 108.
Jeff Bush, Deputy Commissioner
Department of Commerce and Economic Development
P.O. Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Supported SB 108.
Nancy Lethcoe, President
Alaska Wilderness, Recreation, and Tourism Association
Valdez, AK
POSITION STATEMENT: Supported SB 108.
Fred Dure
Adventure Tours
536 W. 19th
Anchorage, AK 99503
POSITION STATEMENT: Supported SB 108.
Tina Lindgren, Director
Alaska Visitors Association
3201 C. St., Suite 403
Anchorage, AK 99503
POSITION STATEMENT: Supported SB 108.
Jack Heesch
Alaska Academy of Physicians Assistants
P.O. Box 201608
Anchorage, AK
POSITION STATEMENT: Commented on SB 100.
Nick Coti
East Care Acupuncture Clinic
230 S. Franklin St. #207
Juneau, AK 99801
POSITION STATEMENT: Commented on SB 100.
Don Koch
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
POSITION STATEMENT: Commented on SB 100.
Rachel Yates
Alaska Association of Marriage and Family Therapists
1301 1st Street
Douglas, AK 99824
POSITION STATEMENT: Supported SB 100.
Charlie Miller
Alaska Regional Hospital
P.O. Box 102286
Anchorage, AK 99510
POSITION STATEMENT: Commented on SB 100.
Jerry Reinwand
2 Marine Way, #219
Juneau, AK 99801
POSITION STATEMENT: Commented on SB 100.
Reed Stoops
Aetna
240 Main Street
Juneau, AK 99801
POSITION STATEMENT: Opposed SB 100.
ACTION NARRATIVE
TAPE 95-12, SIDE A
SL&C 3/16/95
SB 108 ALASKA TOURISM MARKETING COUNCIL
CHAIRMAN KELLY called the Senate Labor and Commerce Committee
meeting to order at 1:40 p.m. and announced SB 108 to be up for
consideration.
MARY JACKSON Legislative Aide for Senator Torgerson, said SB 108
extends the Tourism Marketing Council from December of 1996 to
December of 1999 and changes some of the contract terms with the
Trade Association to coincide with the revised sunset provision.
There is some housekeeping about the authority to sign a contract
and it directs the Commissioner to contract with a qualified in-
state trade association. It deletes language regarding out of
state travel expenses for association members.
JOHN LITTON, Vice President, Government Affairs, Alaska Visitors
Association, said he also sits on the Alaska Tourism Marketing
Council and has participated with the Council for the past six
years.
MR. LITTON said most of the changes in the language has to do with
making the Commissioner more directly responsible for the
contracting authority. He said he was concerned with the per diem
and reimbursement provision. For example, he traveled on behalf of
the Council back to New York meeting with travel editors, which is
something they annually do, to try to get stories about Alaska
placed in different magazines and newspapers nation-wide. This is
the trip on which he met the president of ABC Network and talked
about bringing Good Morning America to Alaska. Shortly, thereafter,
there was an audit of their department and it was brought to their
attention that reimbursement for his travel to New York was not
appropriate. Travel is specifically supposed to be for in-state
council meetings.
SENATOR KELLY asked how many board members there were. MR. LITTON
replied there was a total of 21 - ten appointed by the Governor,
the Director of the Division of Tourism, and 10 that are appointed
by the industry.
SENATOR KELLY said he has a problem with the paragraph on
reimbursing 21 members to travel all over the world by just getting
the approval of this trade association.
BOB DINDINGER, Vice Chairman, Alaska Tourism Marketing Council
(ATMC), said originally that provision was in the statute so that
the Marketing Council would not have its regular meetings outside
the State of Alaska. SB 108 proposes, not to reimburse members for
attending the meetings outside the state, but to reimburse a member
who is sent by the council to sell Alaska. They have no intention
of holding meetings outside of Alaska. He also explained that only
the council members appointed by the Governor are reimbursed for
attending meetings. The 10 industry members are never reimbursed
at state expense.
JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic
Development, pointed out that lines 7-9 on page 2 state that if
board members appointed by the trade associations receive per diem
and travel, the trade association has to reimburse the council for
it.
MR. DINDINGER said reauthorization of the ATMC was appropriate in
the Labor and Commerce Committee, because it's an issue about jobs
- about 27,000 primary Alaskan jobs and over 50,000 total Alaskan
jobs. He said this is the only state sponsored program that
addresses the 92% of Alaska visitors that come from the continental
United States and Canada. It addresses visitor demand by all modes
of transportation and the needs of both independent travelers and
package tour travelers. In other words, it is a very generic
program.
The primary vehicle of this program is print advertising which
consists of approximately 650,000 names to which the Vacation
Planner is sent. The Vacation Planner lists over 1,000 Alaskan
businesses and the nature of their services.
He concluded saying that they highly recommend reauthorization of
the Marketing Council. The money is well spent and it is well
managed.
Number 154
SENATOR KELLY asked if the Marketing Council was funded as a line
item in the Department of Commerce budget. MR. DINDINGER replied
that was correct and last year it was about $3,800,000 from the
general fund with a 25% match from the industry.
SENATOR KELLY asked what trade association they currently had a
trade agreement with. MR. DINDINGER said that the Alaska Visitors
Association was the only one that has ever had a joint management
agreement with the state. They are limited to three state
employees. SENATOR KELLY said he was the one to put that limit in.
SENATOR KELLY asked if the Marketing Council had the budget in
their control. MR. DINDINGER answered that it was and that it was
managed under the state procurement system.
Number 210
SENATOR MILLER noted that over the years he has been a critic of
the Alaska Tourism Marketing Council, because they had a tendency
to promote just one mode of transportation. However, he is a co-
sponsor of this legislation, because they have done a tremendous
job of including all other modes of transportation.
NANCY LETHCOE, President, Alaska Wilderness, Recreation, and
Tourism Association, pointed out that they support reauthorization
of ATMC. They are concerned with the definition of a qualified
trade organization, because although the current definition allows
without limitation the composition of the ATMC, only those listed
specifically are appointed. Those that are covered by the generic
words "without limitation" do not have representation. She hoped
for an amendment with a new definition to fine tune this program to
make it better for small Alaskan owned and operated businesses.
She also would like to see changes to section c, which is in the
House version of this bill, that would give the Governor the
opportunity to appoint more members to ATMC and reduce the number
that are from the one trade organization. She wanted expertise
brought to the table from people who are specialists in hunting,
sportfishing, wilderness guides and outfitters.
FRED DURE, Adventure Tours, supported reauthorization of ATMC. He
supported Ms. Lethcoe's comments about the definition of a
qualified trade association. As Alaskan tourism grows, it will be
to all of Alaska's benefit to insure that all types of visitors are
addressed in the marketing of their destination.
Number 332
TINA LINDGREN, Director, Alaska Visitors Association, supported SB
108. She can't see any problem with adding to the definition, but
there would still be many segments that would be left out like,
gift shops, camp grounds, food and beverage companies, and sight
seeing tours. She pointed out that it is currently part of the law
that the Governor shall ensure that appointees are broadly
representative of the different regions of the state and the
various sectors.
SENATOR KELLY asked if she currently authorizes travel for AVA
board members outside the conventions and such. MS. LINDGREN
replied that AVA doesn't reimburse their board members for travel.
The appointees that AVA has on the ATMC pay their own way to all of
the meetings.
MR. BUSH supported SB 108. He said it's been a successful
partnership and has done a very good job on tourism marketing. He
requested changing "shall" on page 1, line 11, to "may" saying that
everyone supported the change. He explained that the legislature,
in passing this legislation, is essentially deciding it is in the
best interest of the state to have a cooperative marketing program
and they agree. However, in taking out the best interests
language, there would essentially be no discretion for the
department with respect to entering into this contractual
arrangement. That language provides the opportunity to negotiate
if there is something inappropriate in a contract.
Number 400
SENATOR SALO moved to amend SB 108 on page 1, line 11 to change
"shall" to "may." There were no objections and it was so ordered.
SENATOR KELLY said he still has a problem with allowing board
members to travel around the world when their primary business is
tourism. He thought they should pay for their own travel.
SENATOR KELLY asked Mr. Dindinger if he reimbursed Marketing
Council members for their travel to meetings.
MR. DINDINGER said the paid staff of ATMC (who are state employees)
are reimbursed for their travel to the meetings, as are the
Governor's appointees. He said all of the board members are
reimbursed for their costs to attend the meetings, but the AVA has
to reimburse the state for its appointees.
SENATOR SALO asked what was their budget for out of state travel.
MR. DINDINGER said he would have to get that information.
SENATOR KELLY asked if the Governor's appointee members had been
reimbursed for traveling outside the State of Alaska on these types
of jobs. MR. DINDINGER answered not to his knowledge. He said
when someone is traveling on behalf of the Marketing Council, they
don't get to represent their own business. They can only represent
the collective interest of the travel community within Alaska. He
said they do send people out on those kinds of assignments. The
problem is that it is enough of a burden on the private sector
people to attend the meetings at their own expense, but when they
are asked to dedicate a week to 10 days of their time to travel
around the country on the state's behalf and to pay for the travel
expense, that's a bit much. He said they are often not able to get
the people they would like to do that.
SENATOR KELLY said wasn't that what they had full time employees
for. MR. DINDINGER said some board members had greater depth of
experience and better contacts than the employees did.
Number 457
TINA LINDGREN explained what brought this situation about, in
particular, was Good Morning America. It's very rare that a
council member is asked to do work on behalf of the state. The way
legislation is currently written they can send any person in the
state except for members of the council, and reimburse their
travel. She said their auditors suggested they change the statue,
because right now, as it stands, they are inhibiting the council's
ability to do the work they have been assigned to do.
SENATOR SALO asked for a ballpark figure how much the change in the
statute would cost. MS. LINDGREN replied that it shouldn't change
the budget at all. Currently, there's $55,000 set aside for travel
that probably won't be entirely used. She guessed they were
talking about a $10,000 for council member travel for one or two
trips to New York or the West Coast during a year.
Number 483
MR. LITTON clarified that a board member does not have the ability
to just decide they want to go and participate in something and
come back. Any travel that is done by a board member has to be
approved by the department prior to the travel, like in any other
department.
SENATOR KELLY said he wanted to have more comfort that there
wouldn't be increased travel activity in the future because of the
change in this law.
SENATOR KELLY said they would hold the bill for amendments on
Tuesday.
SB 100 DISCRIMINATION UNDER GROUP HEALTH INS.
SENATOR KELLY announced SB 100 to be up for consideration and noted
there was a proposed committee substitute. He said there were
three sections to this bill and started with the physician's
assistants.
JACK HEESCH, Alaska Academy of Physician's Assistants, said he
thought this bill would prevent discrimination by group health
insurers among physician's assistants (PA). This means if a person
is licensed by the State of Alaska as a state licensed practitioner
and is covered under group policy, then all people with similar
licenses must be paid for services. He believed the bill did not
mandate or require coverage of physician's assistant services; it
merely says that if an insurer covers PA service, then they must
cover all PA's without discriminating among them.
MR. HEESCH said the fiscal affects of this bill are $0. He also
pointed out that this bill did not have adverse comment when it was
introduced last year, nor has it this year. This specific statute
was amended in 1992 to provide for psychologists and psychological
associates and again, in 1994, to include certified direct entry
midwifes - both without adverse comment.
NICK COTI, East Care Acupuncture Clinic, supported SB 100. He said
his wife is an acupuncturist and a medical doctor and received her
training in China. He said he has recently completed one and half
years of graduate study in China and he found that macro economic
information supports how effective acupuncture is, not only as a
mode of treatment, but as a means of containing costs. Life
expectancy, health care, and some other things are better in China
than in Washington, D.C., one study concluded.
The World Bank has conducted studies on the nature of the Chinese
currency and its value in the economy, in general. It was found
that there was a very reliable correlation between life expectancy
and per capita income. At that time, China had a per capita income
of $250 and a life expectancy of 70 years. One would predict, with
a per capita income of $250, a life expectancy of something like 50
years. A life expectancy of 70 years is more consistent with an
advanced industrialized economy. One of the reasons for this is
that they have a fully integrated western and Chinese medical
system. The use of both is encouraged interchangeably.
Current insurance laws make it difficult for people to get
acupuncture, because they have to pay fully out of their pocket to
do so.
TAPE 95-12, SIDE B
MR. COTI asked the committee to consider very seriously the
importance of taking discrimination against acupuncturists. He
also pointed out that many acupuncturists are receiving either
directly or indirectly support from insurance companies through
other people who bill for them which is not a very good practice.
SENATOR KELLY said they would go on to the third section of the
proposed committee substitute.
DON KOCH, Division of Insurance, commented that there has been a
litany of providers added to this section of law over the years.
He explained that his department's position on section 1 is that if
the provider is performing a service that is covered under a group
insurance health policy, and that service is within the scope of
his occupational license and practice, then the insurance company
should not be able to discriminate against that person. This does
not mandate to the insurer that they provide a specific kind of
coverage that is particular to one practitioner. It does say that
if whatever you do provide coverage for can be provided by multiple
kinds of practitioners, then you have to treat them equally.
MR. REINWAND, Blue Cross, asked if this means you can't have
preferred provider arrangement with different fee schedules within
a group like doctors and hospitals.
MR. KOCH replied that at this time, he believed there does not
exist authorization for preferred provider arrangements in statute
- with the exception that, in the case of hospital medical service
corporations (for example Blue Cross and Blue Shield), they are
directly the provider who through contracts with practitioners
provide a service. So you can have, in effect, a different level
of coverage for the entity with whom the Blue Cross, Blue Shield,
Hospital Service Corporation, is in contract with versus the piece
in their policy that provides for indemnification for other kinds
of services that they're not under contract with a provider for.
SENATOR SALO asked when he talked about "not discriminating" did he
mean between providers within the same category or between a
variety of providers like acupuncturist, medical doctors, etc. MR.
KOCH replied that it was between all the different providers. He
explained that typically a hospital medical service corporation
will enter into contracts with hospitals and, generally, with
medical doctors. They may have arrangements in some cases where
they go to other practices as well. In that case, you're going to
have a level of care that can be stated in the policy that may be
greater than the level of care you would provide on an
indemnification basis. He said they may limit coverage to the care
provider who was "first in line" to give treatment.
Number 501
SENATOR DUNCAN asked if Mr. Heesch agreed with Mr. Koch's
testimony. MR. HEESCH answered that he didn't. SENATOR DUNCAN
restated that Mr. Heesch's understanding of adding physician's
assistants meant you have to treat all physician's assistants the
same. What Mr. Koch's understanding of the unfair discrimination
is that if you have a headache, you should be able to go to anyone
who is licensed to practice in the state who could cure that
headache. MR. KOCH replied that was correct.
SENATOR DUNCAN asked if the list of providers is necessary to be
included in the bill. MR. KOCH replied that he would take out the
list of providers and put in some generic language that says, "if
the practitioner is operating within the scope of his license, and
the event that is triggering his care is within the scope of his
practice."
SENATOR DUNCAN asked if that had been suggested in the past,
because there is the problem of continuously adding to the list and
then there are providers who aren't being recognized by the
insurance industry, although they are certified and licensed. MR.
KOCH answered no, their deputy director, Thelma Walker, recently
asked the same thing.
SENATOR DUNCAN said just adding "physician assistant" wasn't
solving the problem the physician assistants were concerned with.
MR. KOCH agreed and said there was one more issue which is, in some
cases, some of the items have been added to the list, but the scope
of practice is not particularly clear.
SENATOR KELLY announced an at ease at 2:35 - 2:43.
RACHEL YATES, Alaska Association of Marriage and Family Therapists,
said they are licensed clinical professionals and provide a
comparable service to psychological associates and clinical social
workers. She asked to be added to the list in the bill.
CHARLIE MILLER, Alaska Regional Hospital, supported SB 100. Alaska
Regional Hospital has a very well defined scope of service. They
are well established, highly regulated, certified, and licensed
facilities. They are primary providers of health care in the state
and requested to be added to the list of providers.
MR. MILLER noted there was a question about them being an
institution rather than an individual, but he did not think this
was significant.
SENATOR SALO said it looked like listing hospitals would start a
whole other list, because there are nursing homes, clinics, etc.
MR. MILLER said that usually a clinic is included with a
physician's billing. SENATOR SALO said that wasn't necessarily the
case, because many clinics offer surgical services where they do
bill separately.
SENATOR SALO said some insurance companies prefer using Providence
in Anchorage and asked if that would be prohibited. MR. MILLER
said a lot of programs are regulated by federal law. There are no
provisions for preferred provider agreements in the indemnity
insurance, as Mr. Koch said, in AS 21.36.090. The ones that are
allowed are in AS 21.87.
MR. KOCH added that AS 21.36.090 does apply to both an insurance
company and a medical service corporation. The reason is because
there is a reference in 21.87 back to 21.36. saying it picks it up.
In addition, there is language that talks about "group disability
policy" and "group service for an indemnity type contract." "Group
service" is the language that should be used to pick up the
contract that a hospital medical service corporation uses; and the
term "policy" used for the contract and insurance companies issues.
Both are covered by the language in AS 21.36.090.
SENATOR DUNCAN asked if he was saying that nowhere in statute is
there a provision for preferred provider networks in this state for
insurers, for example, Aetna. MR. KOCH agreed, but said Blue Cross
and Blue Shield could, because they are a medical service
corporation. The way they could be viewed as a preferred provider
is that those that they enter into a contract with to provide
services may be recompensed under their contract at a different
level than those they don't have a contract with, but have the
ability to be picked up as an indemnifier.
SENATOR DUNCAN commented, then, that under the way our statutes are
presently written, and with the movement towards managed care
networks in the country, Alaska is really in a very weak position
to have managed care. MR. KOCH said that was absolutely correct
and if this is what they want, he has a copy of a model bill that
may address that issue.
SENATOR KELLY asked how this affects the arrangement that Aetna has
with Providence Hospital. MR. KOCH said he contends that Aetna
could enter into those kinds of arrangements with self insurers,
because the insurance code provides no impediment to a self
insurer.
SENATOR DUNCAN asked if they were sure there were no PPO's in this
state that are in violation of the law right now. MR. KOCH replied
that no, they are not. If there are PPO's written by insurers of
this state, they may well be in violation of the statutes.
REED STOOPS, Aetna, said that Aetna does have PPO agreements, and
have had them for years in Alaska. They believe the statute
permits those agreements. The Division of Insurance has approved
policies with those provisions and there has never been any attempt
to prohibit Aetna from doing it.
MR. STOOPS said there are other statutes in other states that have
litigated this question before and courts have determined that
unfair discrimination does not mean that one cannot have a PPO
agreement.
What he thought the issue really was, was an attempt by Alaska
Regional Hospital to clearly prohibit a PPO agreement. He thought
PPO agreements were in the public interest; they are common
practice in the rest of the country and provide lower cost
insurance for Aetna's clients.
Number 334
SENATOR DUNCAN asked if the Municipality of Anchorage is self-
insured. MR. STOOPS said they are not self insured.
SENATOR DUNCAN asked who their contracts are with. MR. STOOPS
replied that they have a PPO with Providence, although not for all
clients. They also have a PPO agreement with some doctors and
dentists in Anchorage.
SENATOR DUNCAN wanted to ask the Division of Insurance to respond
to the testimony that they have been approving contracts that they
think are in violation of the law.
Number 284
MR. KOCH responded that they have written to Aetna and told them
that these arrangements are not legal; some have been disapproved.
If any have been approved, it has happened inadvertently. He said
Mr. Stoops is correct that they presented some arguments that place
somethings into question. They haven't gone to court to contest
it, because there were discussions going on about it in the
legislature.
MR. STOOPS said there was no doubt that this particular amendment
will strengthen the case. He said he would like to have someone
from Aetna testify about which customers are included under PPO
arrangements now.
JERRY REINWAND, Blue Cross, said he thought there were a couple of
issues here: what the existing law says, what the legislature
thought it said, and what the division says it says.
He thought he heard the division say that the section in existing
law is really a mandate. If you are on the list, you're mandated
to cover that scope of practice. He suggested getting the
division's interpretation of what the existing law is. MR.
REINWAND said he would like to know what this amendment does to
Blue Cross and other providers and does it mean they have to void
their existing PPO arrangement with Providence's other providers.
Third, he wanted to know the public policy on this and if this is
the right direction to go. The whole trend is toward managed care
to try to bring costs down and this appears to be going in the
other direction.
SENATOR DUNCAN said the real question on managed care is are we
really reducing costs or increasing costs by adding layers of
bureaucracy.
MR. REINWAND said there is a question of discrimination within a
group and, then, whether it applies to Blue Cross or not is another
public policy question. If it's discrimination between groups,
does that apply to services. If a physician provides a service,
and an acupuncturist provides the same service and they get a bill
from both, do they say no to one and pay the other.
SENATOR SALO said she wanted to know what the affect would be of
going to the generic language rather than the specific list.
SENATOR KELLY said they would find that out for next Thursday and
adjourned the meeting at 3:05 p.m.
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