Legislature(1995 - 1996)
03/28/1996 01:38 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
March 28, 1996
1:38 P.M.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator John Torgerson, Vice Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 288
"An Act establishing the Alaska Health Purchasing Alliance;
relating to group health insurance provided to employees of the
University of Alaska, to employers and employees, to uninsured
residents of the state, to certain Medicaid enrollees, and to
persons in state custody; and providing for an effective date."
SENATE BILL NO. 282
"An Act relating to regulation of managed care health insurance
plans and utilization review companies; and providing for an
effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 288 - No previous action to consider.
SB 282 - No previous action to consider.
WITNESS REGISTER
Marianne Burke, Director
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
POSITION STATEMENT: Commented on SB 282 and SB 288.
Don Dapcevich
Advisory Board on Alcoholism and Drug Abuse
P.O. Box 110608
Juneau, AK 99801
POSITION STATEMENT: Supported concepts in SB 282.
John Riley
6411 Italy Circle
Anchorage, AK 99516
POSITION STATEMENT: Supported SB 282.
Elizabeth McNeill
2600 Denali, #701
Anchorage, AK 99503
POSITION STATEMENT: Supported SB 282.
ACTION NARRATIVE
TAPE 96-23, SIDE A
Number 001
SB 282 REGULATION OF MANAGED CARE INS. PLANS
CHAIRMAN KELLY called the Senate Labor and Commerce Committee
meeting to order at 1:38 p.m. and announced SB 282 to be up for
consideration.
SENATOR DUNCAN, sponsor, said SB 282 would charge the Division of
Insurance with insuring the quality of care which consumers receive
under managed care plans which might do business in Alaska. He
said there is an increased interest in managed care firms and
thought now was a good time for the Alaska legislature to make a
statement about the kind of care we expect for our residents and to
determine what rights health care consumers should have under
managed care plans.
MARIANNE BURKE, Director, Division of Insurance, said this is one
of the most challenging areas facing insurance today. It is
absolutely critical, she said, that we maintain an adequate market
to provide timely and appropriate care. She said the Division of
Insurance is absolutely committed to providing the type of health
care Alaskans are entitled to to the extent that they, as
regulators, can do so. They are committed to making sure there is
no discrimination; that there is availability and affordability.
MS. BURKE said they support the concepts in SB 282, but they feel
some areas need some work.
SENATOR KELLY asked if there was a companion bill in the other
body. SENATOR DUNCAN replied that there wasn't.
Number 197
SENATOR SALO asked Ms. Burke to explain conceptually what her
concerns are. MS. BURKE replied that the concept of managed care,
itself, is based on the ability to negotiate reduced fees for
services provided in exchange for an increased number of patients.
This does conflict with any willing provider provisions.
Number 217
DON DAPCEVICH, State Advisory Board on Alcoholism and Drug Abuse,
said they have been working very diligently on model State drug
laws dealing with consumer protections and managed care. They
welcome managed care in Alaska and believe that the cost of health
care has been escalating and this is a good means for keeping
health care costs down.
They also recognized with the use of managed care come some
responsibility by government to insure that the consumer is
protected. This bill offers that consumer protection.
SENATOR SALO asked if Alaska had many managed health care programs
in Alaska; and also asked about drug and alcohol treatment. MR.
DAPCEVICH replied that they had the largest group plan in Alaska.
The one that governs State employees is managed by a managed care
provider. It has had a great deal of impact on drug and alcohol
treatment in the State. It has made providers of drug/alcohol
services a lot more aware of their responsibilities and aware of
cost containment. At the same time, it has ended up reducing
benefits and making some services not available, especially
emergency services.
When there has been some conflict between the consumer and the
managed care organization, the grievance is held within that
organization. There is no means by which the consumer has to
contest the decision that's made on their health care delivery
except to go to the person who made the decision. This bill
provides for a source outside of that organization to deal with it.
Number 273
JOHN RILEY, Alaska Academy of Physician's Assistants, noted that
the federal reform collapsed which slowed the process in many
states. The problems that spawned the health care debates are
still present. The number of uninsured American increased from 37
- 44 million in the past two years. There are probably an
estimated 75 - 80,000 uninsured Alaskans. Health care costs
continue to rise. Employers are feeling the crunch and efforts to
control the costs are increasingly turning to managed care as a
solution to cost containment.
Impact of cost control measures on the quality of health care is a
major point of contention. Supporters of managed care stress that
fee for service medical care is inefficient with the economic
incentive being geared towards unnecessary tests and procedures,
longer hospital stays and little incentive to promote preventative
care.
Managed care plans promote preventative medicine and must closely
monitor their quality of care. Critics of managed care argue that
medically necessary care can be denied because the economic
incentive is to minimize the amount of care provided especially in
a risk plan where providers risk losing money if they spend too
much on patient care.
MR. RILEY said that SB 282 comprehensively deals with many of the
challenges presented by managed care. There is no doubt that
managed care, if poorly done, can result in bad health care.
Number 332
ELIZABETH MCNEILL, Chairman, Insurance Committee for the Alaska
Psychological Association, supported SB 282. When managed care
companies first started it was to contain and bring down costs. In
the beginning there were lawsuits because some people were not
getting the care they needed causing the managed care industry to
become more interested in quality of care. There is now more of a
balance between the two. Each year more providers are coming into
the State.
SB 282 gives a set of rules where managed care companies and
consumers can all play. This bill requires managed care companies
to lay out the criteria by which they determine medical necessity,
how they terminate services, where the appeals processes are, and
maintains confidentiality. SB 282 has included all the major
points that good utilization review should include.
MS. MCNEILL said there are abuses within Alaska and she would
provide that documentation to the committee if they wanted it.
SENATOR KELLY said they were interested in information on any
alleged abuses, but not at the expense of any confidentiality.
He said they would set SB 282 aside and instructed his staff to get
more specifics on Ms. Burke's concerns.
SB 288 ALASKA HEALTH PURCHASING ALLIANCE
SENATOR KELLY announced SB 288 to be up for consideration.
SENATOR DUNCAN, sponsor, said this legislation takes some steps
toward increasing access to Alaskans to health care and helping
reduce costs. The purpose of an alliance is to provide the
economies of a large purchaser of a health insurance benefits to
all Alaskans. Other states have been successful using this type of
cooperative. It is also likely that there will be a number of
different benefit packages and risk pools to maintain the current
level of benefits for public employees, for example.
Number 310
MS. BURKE, Division of Insurance, testified that this goes to the
heart of insurance by establishing an alliance that would be open
to State employees, municipal employees, school district and
university employees, and other groups. It also provides that
medicaid patients would also be eligible on a sliding scale.
Her concern with this concept is that with a larger group you get
a more diverse demand for packages. This would have a dampening
effect on the economies of scale in purchasing benefits.
SENATOR KELLY asked her to explain what fees for services means.
MS. BURKE explained that this is what we have historically had - an
insurance policy that would provide services for a procedure and a
usual and customary fee would be paid for that service. The
concept behind managed care is an antithesis to that.
SENATOR DUNCAN added that he thought this was a needed piece of
legislation that gives another tool to increase access to health
care for Alaskans and to decrease costs. It has been proved to
work and it could be successful here.
SENATOR KELLY said they would set SB 282 aside and bring it up
another time. He adjourned the meeting at 2:12 p.m.
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