Legislature(2001 - 2002)
03/01/2001 01:35 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE LABOR & COMMERCE COMMITTEE
March 1, 2001
1:35 pm
MEMBERS PRESENT
Senator Randy Phillips, Chair
Senator Loren Leman
Senator John Torgerson
MEMBERS ABSENT
Senator Alan Austerman
Senator Bettye Davis
COMMITTEE CALENDAR
Confirmation Hearings:
Mr. Vince Coan - State Assessment Review Board
Mr. Ronald Otte - Personnel Board
SENATE BILL NO. 6
"An Act relating to required notice of eviction to mobile home park
dwellers and tenants before redevelopment of the park."
HEARD AND HELD
CS FOR SENATE BILL NO. 37(JUD)
"An Act relating to collective negotiation by physicians with
health benefit plans, to health benefit plan contracts with
individual competing physicians, and to the application of state
antitrust laws to agreements involving providers and groups of
providers affected by collective negotiations."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 6 - No previous action to record.
SB 37 - See Judiciary minutes dated 1/22/01 and 2/21/01.
WITNESS REGISTER
Mr. Tyson Fick
Staff to Senator Johnny Ellis
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 6.
Ms. Mackenna Johns
Alaska Manufactured Homes
P.O. Box 241592
Anchorage AK 99524
POSITION STATEMENT: Supported SB 6.
Ms. Stephanie Wheeler
Catholic Social Services
3710 E 20th
Anchorage AK 99508
POSITION STATEMENT: Supported SB 6.
MS. Angela Liston, Director
Department of Justice and Peace
Archdiocese of Anchorage
225 Cordova Street
Anchorage AK 99501
POSITION STATEMENT: Supported SB 6.
Mr. Randy Simmons
Property Management
Plaza 36
Fairbanks AK
POSITION STATEMENT: Commented on SB 6.
Senator Pete Kelly
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Sponsor of SB 37.
Mr. Clyde Sniffen
Department of Law
1031 W 4th, #200
Anchorage AK 99501
POSITION STATEMENT: Opposed SB 37.
Ms. Laura Sarcone
Alaska Nurses Association
Alaska Nurse Practitioner's Association
Alaska Chapter of the American College of Nursing
1444 Hillcrest Dr.
Anchorage AK 99503
POSITION STATEMENT: Opposed SB 37.
Mr. Michael Haugen, Executive Director
Alaska Physicians and Surgeons
4120 Laurel St #206
Anchorage AK 99503
POSITION STATEMENT: Supported SB 37.
Mr. Bob Lohr, Director
Division of Insurance
Department of Community and Economic Development
3601 C Street, Ste. 1324
Anchorage AK 99503
POSITION STATEMENT: Commented on SB 37.
Ms. Nicole Bagby, Account Executive
Aetna Insurance
Seattle WA
206-701-8086
POSITION STATEMENT: Opposed SB 37.
Mr. Mike Wiggins, Vice President
Aetna Insurance
Seattle WA
206-701-8086
POSITION STATEMENT: Opposed SB 37.
ACTION NARRATIVE
TAPE 01-8, SIDE A
Number 001
CHAIRMAN RANDY PHILLIPS called the Senate Labor & Commerce
Committee meeting to order at 1:35 pm and announced the
confirmation hearing for Mr. Vince Coan, State Assessment Review
Board and Mr. Ronald Otte, Personnel Board. There were no questions
and he announced they would forward their names to the President of
the Senate.
SB 6-MOBILE HOME PARK EVICTION NOTICE
CHAIRMAN PHILLIPS announced SB 6 to be up for consideration.
MR. TYSON FICK, Staff to Senator Johnny Ellis, testified that this
bill is the result of a task force report done by the United Way
and the Archdiocese of Anchorage following the inevitable
relocation of residents of the Alaska Village Mobile Home Court.
There are currently 41 manufactured home communities in the
Anchorage Bowl and SB 6 deals only with manufactured home dwellers
and what happens in the event of rezoning and subsequent
development of land which is currently used in mobile home courts.
The task force recommended lengthening the amount of time allocated
for relocation from 180 days to 360 days, and no earlier than April
1 and no later than September 30. One-hundred-eighty days notice
can be required if the developer pays for the cost of relocating
the mobile home, not to exceed $5,000.
MR. FICK explained that the committee substitute changes language
in section 2, line 30 from "only 180 days notice is required or the
mobile home park owner or operator finds a suitable place to
relocate the mobile home" to "only 180 days notice is required if a
suitable place is found". The idea is that it takes the
responsibility of finding a new location away from the owner,
specifically, which addresses some concerns of the development
community.
MR. FICK said this bill is supported by a wide range of people from
mobile home residents, Catholic Social Services, United Way and
Alaska Manufactured Home Residents Advisory Council.
SENATOR DAVIS moved to adopt the committee substitute, version J,
to SB 6. There were no objections and it was so ordered.
MS. MACKENNA JOHNS, Alaska Manufactured Homes, supported SB 6. The
only the concern they is that the $5,000 cannot be applied to
things inside the mobile home. Since the bill was written, they
have discovered that the actual costs are averaging around $8,000.
SENATOR LEMAN wanted to clarify that the costs to disconnect,
relocate, reskirt and prepare a new site is averaging $8,000.
MS. JOHNS said that was right. She explained when you move a mobile
home, you have to bring it up to code. The way the bill is written,
moving the home and bringing it up to code are defined together.
The disconnection and relocation is one part and the
reestablishment depends on your operator. All they usually do is
put it on the lot and level it. When you add skirting and
insulation, that's an additional cost that's not covered by the
mover.
SENATOR LEMAN asked if a new code applied when you moved, like
bring the furnace and plumbing up to new standards.
MS. JOHNS replied yes and said those issues are unique to each
home. Specific to each home would be blocking, leveling, skirting
and insulation and connections, all code issues. A mobile home
owner is grand fathered in where he is, but as soon as he moves to
a new location, he must bring yourself up to whatever the municipal
code is currently. It usually means gas and electrical fittings and
can mean some pad work. Lines and other items inside the home are
unique to each home.
SENATOR LEMAN said he didn't realize that equipment inside the home
might have to be upgraded, as well as outside the home. He wanted
to confirm this.
MR. FICK explained that the $5,000 figure came from the Anchorage
Response to Manufactured Housing Community Relocations Task Force
Report. It was admittedly an arbitrary number at the time.
SENATOR DAVIS asked if this bill was designed to cover the full
costs of moving.
MR. FICK answered yes.
CHAIRMAN PHILLIPS asked Ms. Johns to fax whatever information she
had to justify the $8,000.
MS. FICK said she would do that, but she has only one set of
receipts from the tenant who moved to Rangeview. She also said that
she had a small problem with the April 1 date, because there could
be some items that are still frozen in the ground at that time. She
thought May 1 would provide adequate time.
Number 2400
MS. STEPHANIE WHEELER, Catholic Social Services Anchorage, said SB
6 addressed some major concerns of residents needing to relocate -
adequate notice and financial compensation for relocation costs. A
365-day notice will help residents explore options and finalize a
plan for relocation.
MS. ANGELA LISTON, Archdiocese of Anchorage, said she was on the
Task Force last year and actually drafted the portion of the report
that dealt with this specific provision and she is pleased that the
legislature decided to consider it. Her primary concern is that
otherwise self-sufficient people may be forced into poverty as a
result of these massive displacements. She said the $5,000 was not
a result of any study, but it now appears to be to little.
CHAIRMAN PHILLIPS asked if there was any real life experience with
this yet. He knew she was handling Alaska Village.
MS. LISTON replied that two people testified at an Assembly meeting
two weeks ago that it was nearly $8,000. She has heard no one say
they could do it for $5,000. She noted the Ms. Johns just told her
that they have six people who have relocated.
CHAIRMAN PHILLIPS asked her to supply the committee with the
information.
MR. RANDY SIMMONS, property manager, said they are currently
redeveloping Plaza 36 in Anchorage to construct a 10-story, 200,000
sq. ft. office building for one single tenant. They acquired the
mobile home park for the site and have very little experience in
developing a mobile home park. With the help of United Way, they
came up with a process to mitigate tenants moving. They have put
the sum of $5,000 for each mobile home into an pool that would be
administered by the Catholic Social Services. They did it that way
because some homes would cost more than $5,000 and some would cost
less. At least one person wanted just six months free rent and they
would move themselves. He said there are 43 trailers that have to
be moved.
MR. SIMMONS said his company has no objection to this bill. He
cautioned that people would wait the 365 days and tenants will get
nothing to move. They have committed $5,000 during two different
phases, but not for phases three and four. He said it would take a
long time working with grants and with HUD. The current bill is a,
"fair balance between mobile home park owners and the actual owners
of the mobile home."
SENATOR DAVIS asked if the bill could be amended to say the money
is placed in a pool so that people could receive their actual
costs.
MR. SIMMONS said that would work for them and that's how they set
it up in the first place.
SENATOR LEMAN said he thought it was a good idea, but he didn't
think they needed to write into the bill that a third party could
administer the program, but they need to allow that they could. He
also thought there needed to be a minimum number of units in a
mobile home park, like 10, that can be pooled.
SENATOR LEMAN moved this as a conceptual amendment. There were no
objections and it was so ordered.
CHAIRMAN PHILLIPS asked if anyone objected to changing the dates to
May 1 - October 15.
MS. JOHNS said that Catholic Social Services happened to be the
lucky party that got chosen the first time out and suggested they
use language like "independent agency".
CHAIRMAN PHILLIPS responded that they were only concerned with
pooling the money and the dates at this point. They did not want to
specify any agencies.
SENATOR LEMAN said that he wanted an owner to be able to do it
himself or work through an independent third party, but the
legislature would not specifically say how it should be done.
CHAIRMAN PHILLIPS said they would continue to work on the bill and
set it aside till the next meeting.
SB 37-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE
CHAIRMAN PHILLIPS announced SB 37 to be up for consideration.
SENATOR PETE KELLY, sponsor, said:
The health care industry nation-wide is changing rather
rapidly and so is the health insurance industry. In the
last few years, the major health insurance companies in
the United States have gone from 18 down to six and as I
understand it, the number might be lower than that now.
The bottom line is that there are fewer and more powerful
insurance companies in the market and as they have become
fewer in number, they have gained more and more power and
wield much more power in the market place. Unfortunately
physicians' position in the market place has not grown.
As a matter of fact, it's restricted somewhat by the
provisions of the Sherman Clayton Anti-Trust Act, which
does not allow them to gather together as a group and
negotiate with the large insurance companies.
This was foreseen by the courts many years ago, and they
created what is called as State Action Doctrine, which is
where a state can have active oversight and allow for the
gathering together of groups in the market place to
negotiate. And as long as they have that state oversight,
they won't be guilty of infringement of the Anti-Trust
provisions of the Sherman Clayton Act.
Active oversight will keep the physicians group from
forming a monopoly and will give them the needed power
they need to negotiate against these smaller in number
and greater in power insurance companies that are
beginning to have almost monopoly power in the State of
Alaska.
This State Action Doctrine is a federally endorsed and
court endorsed provision and is resisted somewhat by the
insurance companies because right now they have a lot of
power in the market and they want to keep it that way.
The State Action Doctrine allows some fairness in the
market place so that people can continue to be in
business while they go up in negotiations against some of
the largest companies in the world.
SENATOR KELLY said the committee would hear that there are huge
costs associated with this legislation and that it would change
business as we know it in the state. He didn't agree. He reiterated
that it has oversight by the State Attorney General's Office and
everything in the bill is voluntary and it has a sunset date.
Number 3350
SENATOR LEMAN said he had a letter, dated February 8, from a
registered nurse who expressed concern that this could affect her
practice.
SENATOR KELLY responded that the last committee amended the bill to
address her concerns, although he has been told that they didn't
like the language. He has asked them to provide language that is
acceptable to them. It is his intent to exempt the nurses.
MR. CLYDE SNIFFEN, Department of Law, said they have concerns about
the bill that are addressed in a letter dated February 25. He said
that a group of physicians in Fairbanks requested this bill last
year when it was drafted as HB 256. The Department of Law has the
same concerns now, because the language in the bill hasn't changed
any. He elaborated that the State Action Immunity Doctrine requires
that if a state wants to clearly specify it intends to replace
competition with regulation, it needs to take an active role in not
only supervising, but implementing and reviewing that kind of anti-
competitive conduct. That would happen through the Regulatory
Commission of Alaska that regulates practices of utilities up here.
"That process requires submission of utility companies information
regarding rates and services. The information is reviewed by the
RCA; hearings are held; experts are involved, testimony is
provided; there's an appeal procedure. Competition is replaced with
regulation."
SB 37 attempts to replace competition with some kind of regulation
that doesn't rise to the level of active state involvement that
would exempt this type of conduct from the anti-trust laws Mr.
Sniffen said. The amount of authority given to the Attorney General
under this bill is very limited and a very small amount of
information would be provided to him in the beginning to determine
if negotiations should be allowed or whether the negotiated
contract is appropriate. Other things in the bill just don't give
the state the kind of active involvement the State Action Immunity
Doctrine would require before this kind of activity would be exempt
from federal anti-trust laws.
They have concerns with the definition of concerted action of
boycotts and there is confusion as to what kind of conduct the
physicians would be able to engage in if things weren't going their
way. He didn't know if the concept of market power in this bill had
any connection to what the market power really is in Anchorage or
other parts of Alaska.
MR. SNIFFEN said he hadn't seen any information saying these issues
were really a problem in Alaska. He thought physicians in rural
areas might already have a certain amount of power in negotiating
with health care plans. In a large area like Anchorage, there may
be specialty groups of physicians, like neurologists or
dermatologists, where there just aren't a lot of them and health
care plans don't have a lot of choice in dealing with those limited
specialties.
In comments from Senator Kelly's office there was a concern that
the large insurance companies are already exempt from anti-trust
laws and that is why we need to have this balancing of power. But
Mr. Sniffen explained that the bill does not address itself to the
health insurers; it only addresses health benefit plans. Those are
different from health care insurers and it is an important
distinction. One insurer may have a large portion of the health
care market here in Alaska, but there are many health benefit plans
that may or may not be insured by that insurer. To say that health
insurers are exempt from anti-trust laws may or may not be true,
but health insurers are not the target of this bill; it's health
benefit plans.
CHAIRMAN PHILLIPS asked if he had concerns or was he in total
opposition to this approach.
TAPE 8, SIDE B
MR. SNIFFEN said it would be difficult to change the bill to
satisfy their concerns. It would have to include oversight by a
regulatory body such as the RCA or the Division of Insurance with a
hearing mechanism.
CHAIRMAN PHILLIPS said he could understand philosophical
opposition, but he would like to see alternative language if Mr.
Sniffen could do that. He asked if the AG's office looked into the
Fairbanks problem.
MR. SNIFFIN answered that they hadn't, but Mr. Lohr could comment
on that further.
CHAIRMAN PHILLIPS said that he was farther down on his list and
could answer that question when the committee got to him.
MS. LAURA SARCONE, Alaska Nurses Association, the Alaska Nurse
Practitioner's Association and the Alaska Chapter of the American
College of Nursing, strongly opposed SB 37, which would give broad
anti-trust immunity in negotiations between individuals and
competing physicians and health benefit plans. She said:
A lot of physicians believe that the anti-trust laws
prevent them from negotiating fair fees with large health
plans and insurance companies. Therefore, they support
this legislation in order to "level the playing field."
Existing anti-trust law, however, already allows
physicians to form physician controlled group practices
or other joint ventures that enable them to increase
their bargaining power and offer their services more
efficiently and effectively. Non-physician providers also
already have this capability. The real complaints doctors
have against the anti-trust laws is it prevents them as
competitors from jointly negotiating fees. SB 37 would
allow individual competing physicians to jointly
negotiate fees that remove competition from the health
care field altogether. This can only result in higher
prices to consumers and lower quality health care. The
immunity proposed in SB 37 is unnecessary. Anti-trust
laws already provide a remedy against anti-competitive
abuses by health benefit plans in their dealings with
health care providers. State and federal laws and
initiatives can address the practices of health benefit
plans.
Permitting provider cartels will not solve problems; it
will only create new ones. This bill would be
particularly harmful to advanced nurse practitioners and
certified nurse midwives whose expanded role in health
care has often been opposed by physicians. The American
Medial Association has made it their priority to limit
the scope of practice of advanced nurse practitioners,
certified nurse midwives, and other non-physician
practitioners. Their members have repeatedly sought to
restrain the trade of non-physician practitioners and
their statements and behavior to this effect are a matter
of public record.
The Judiciary Committee adopted an amendment which
intends to prohibit physicians from reaching agreements
to limit the coverage or reimbursement of services
provided by non-physician providers. With all due respect
to members of that committee, I want to state clearly
that this amendment would be ineffective in protecting
advanced nurse practitioners from continuing efforts by
physicians to limit our role in the health care delivery
system. We greatly appreciate Judiciary's attempt to
protect our interests, however, we do not believe this
amendment preserves the vital protection we currently
enjoy under existing anti-trust laws. While the amendment
suggests that advanced nurse practitioners may retain
some anti-trust protection against the most blatant
exclusionary practices, it does not insure protection
against the more subtle practices that, in fact, pose the
greatest risks. The proposed amendment would not prevent
physicians from collectively negotiating with health
plans for contractual terms that have the effect of
placing non-physician providers at a great competitive
disadvantage. Consider, for example, contract terms that
would require that a physician be present for certain
procedures even though advanced nurse practitioners can
furnish those procedures independently under state and
federal law - or contract terms that impose "quality
standards" that forbid or discourage referrals to
advanced nurse practitioners - or terms that establish
reimbursement rates that are so low for non-physician
providers that it is not viable for any of them to
participate with health plans as independent providers.
Historically, the playing field upon which we, as non-
physicians, have sought to compete with physicians has
not been a level one and this has been primarily because
of physician's dominance of the health care market place.
Non-physicians have managed sometimes against all odds to
establish a place in that market. We provide consumers
with greater access and more choice. Advanced nurse
practitioners and certified nurse midwives are health
care providers with increased access, improved outcomes,
lower costs and increased satisfaction rate. In 1998,
over 1,400 Alaskan mothers chose a certified nurse
midwife to attend the birth of their babies. That
represents 16.7 percent of all vaginal births that
occurred in the state that year. Consumers in Alaska want
to choose the health care provider who best meets their
needs. SB 37 will both limit choice and increase costs.
MR. MICHAEL HAUGEN, Executive Director, Alaska Physicians and
Surgeons, supported SB 37. He said:
SB 37 would allow physicians to get together and
negotiate as a group with third party payers provided
that the State of Alaska manages the negotiation and
provides oversight.
He said that the dramatic consolidation of the health care market
has left the state with a few dominant carriers for private health
insurance who offer contracts on a "take it or leave it" basis. In
his opinion, the negotiation playing field is wildly out of
balance. SB 37 would help that balance and might actually increase
the access of citizens of the State of Alaska to additional health
insurance carriers. He explained that currently anti-trust laws
prohibit his members from getting together to discuss fees and non-
fee related issues.
It's very difficult for an out-of-state or small player
in this market to establish a foothold. We are
geographically isolated from the rest of the country and
our population is fairly small relative to the rest of
the country. He has talked to other health insurance
carriers who would like to do business in the state, but
for financial reasons find it very difficult to establish
a large panel of doctors in this state. They have to do
it one doctor at a time. This bill would allow groups of
doctors to get together and actually negotiate one
contract with an additional carrier or more than one
carrier and assure that carrier that if the contract
terms are acceptable, not only to the carrier and
doctors, but also to the Attorney General's office, that
carrier would instantly have a very large panel of
doctors available for their customers. At that point, the
carriers are in a position to actively market and spend
the money that's required to market a new plan in the
state. Currently, they find that almost impossible.
MR. HAUGEN said the fear is that if physicians could negotiate,
that would sharply increase fees and force the carriers to pass
them on to the subscribers in the form of higher premiums. This is
unfounded, as the Attorney General's Office will ultimately approve
and oversee the negotiations including the fee schedules. The
doctors do not have the final veto power. The bill also includes
provisions on page 7, line 25 that allow the Attorney General to
adopt regulations necessary to implement this chapter.
MR. HAUGEN said the idea of a State Action Doctrine is a federal
policy and is designed to be implemented in some form and since the
Attorney General's office is the expert on anti-trust issues, they
would also have the responsibility for implementing it. To say this
bill would replace competition with regulation is a little
inaccurate because in his opinion right now competition between
health insurers and their relative size to a very small doctors
practice doesn't exist.
Additionally, on page 5, the parties are required to give the
Attorney General's office information on the subject matter of the
negotiations and the attendant discussions. It also provides on
lines 3 and 13, page 5, that he may disallow the negotiations if
they are not satisfied. He said they need to see some guidelines
that would satisfy the AG's office.
MR. BOB LOHR, Director, Division of Insurance, said:
On September 20, 2000 the Alaska Health Care Network
(AHN), an association of 86 Fairbanks physicians agreed
to settle U.S. Trade Commission charges that the AHN and
its members agreed to fix prices dealing with health
plans and obstructed the entry of new health plans into
Fairbanks. AHN acted as the collective bargaining agent
of its physician members orchestrating agreements on
prices and other terms. This resulted in higher prices
and fewer choices for patients of Fairbanks doctors.
MR. LOHR said that SB 37 would make conduct like that legal. It
would not violate federal anti-trust law, if the State Action
Doctrine requirements are met. "However, in my opinion and that of
the Division, it would be bad public policy or bad medicine. This
bill will increase health care costs. The amount of the increase is
not known."
MR. LOHR said further that to date not one other state has
implemented a law comparable to SB 37.
Why should Alaska be on the cutting edge of this
experiment? All agree that qualifying for the State
Action exemption is fraught with peril. You don't know
whether a state scheme qualifies for it until after it is
challenged in federal court. Even if it does qualify for
the exemption, it will increase costs to the Alaska
health care consumer. It will increase the costs of
insurance coverage and this will quite likely result in
reduced availability of coverage, increase numbers of
people being thrown into the uninsured pool and possibly
reduce health care benefits under existing plans. To the
extent that self-insured plans may be covered, and I
believe that's doubtful, it could encourage a migration
into the self-insured pool.
MR. LOHR continued:
Our attorneys advise us that self-insured plans are
covered by the Employee Retirement and Income Security
Act (ERISA) and these plans would thereby be preempted
from state law coverage. So whether or not the bill
attempts to incorporate them currently, it is the
Attorney General's opinion that they would be preempted
by federal law.
Number 3000
CHAIRMAN PHILLIPS said he understood the Judiciary Committee put in
an exemption for nurses and asked why that was not satisfactory to
the Nurses Association. He asked if they had a legal opinion
stating that the proposed exemption didn't cover them.
MS. SARCONE responded that language on page 6 says:
This section does not exempt from the application of the
anti-trust laws an agreement or conspiracy that excludes
services provided by a provider or a group of providers
or that limits the participation or reimbursement of or
otherwise limits the scope of services provided by a
provider or a group or providers which is [indisc.] to
the performance of services that are within the scope of
the occupational licenses held by the providers.
CHAIRMAN PHILLIPS said that was her own interpretation of what
was said, not a lawyer's.
MS. SARCONE replied it was an interpretation arrived at through
discussions with policy people in their national organization in
Washington D.C. when they worked on the same bill at the federal
level. This amendment is almost verbatim to an amendment that was
added and failed to the federal bill.
CHAIRMAN PHILLIPS said that there is a sunset provision of 2006 and
asked if she opposed that.
MS. SARCONE answered that she opposed the whole bill.
CHAIRMAN PHILLIPS asked if they had this bill as law for five
years, would they not find out what the real costs would be.
MS. SARCONE answered if mechanisms were put in place at the front
end of this legislation that would create adequate data to be
collected, they would have some answers at the end of five years.
MR. LOHR answered the same question saying he thought they would
get a better indication of the costs with a five year trial period,
but the question of whether or not to use the Alaska health care
market, which is acknowledged to be a fairly fragile market,
difficult to attract to attract new entrants, as a basis for doing
the experiment is a good idea. He also cautioned that after five
years he wouldn't have exact information. He said in Texas there
was only one applicant under a similar law that was passed last
year. Staff for the Texas Attorney General's office told him today
that they are surprised at the limited number of applications and
they attribute that to fear of litigation by physicians. The
doctors are not certain this will qualify for the State Action
exemption, even though the Texas law provides for far greater
discretionary authority by the Attorney General of Texas than the
Alaska law provides.
MS. NICOLE BAGBY, Account Executive, Aetna, said Mr. Mike Wiggins,
Vice President, Aetna, was with her to testify against SB 37. MS.
BAGBY testified that:
This bill would allow physicians in Alaska to
collectively bargain for contractual services and fees
with health insurance companies if the market share of
the insurer is greater than 50 percent within a
geographic area. In testimony before the Senate Judiciary
Committee, representatives for the physicians indicated
the legislation was primarily aimed at two vendors, Blue
Cross and Aetna.
MS. BAGBY explained that,
Aetna's primary business in Alaska is to act as a third
party administrator for close to 100,000 self-insured
members including the State of Alaska employees. Aetna
also insures only about 10,000 Alaskans through fully
insured products. Our first concern is that it's not
clear from the bill whether it legally applies to self-
insured entities, which are those normally exempted from
most forms of insurance regulation by the Employee
Retirement and Income Security Act (ERISA). We will
assume for the testimony that it does, but it is
something we recommend that the committee investigate.
The remainder of our business, 10,000 members, is not
large enough to be considered as having market power or
market share using any reasonable definition.
I would like to point out that this type of legislation
has only been adopted in Texas, a state that has far
greater degree of managed care than Alaska. The Texan
bill is still in its infancy. We urge the committee to
carefully review the regulations that were necessary to
implement the Texas legislation to get a good idea of the
complexity of the issues, which must be overseen by the
Attorney General's office.
The cost to the state will be substantial, if you choose
to give physicians this power. Every negotiation must be
approved and reviewed by the state to make sure the power
is not used to circumvent the public interest. The State
of Washington has a far more limited statute, which only
allows collective negotiations for non-economic terms. To
our knowledge, this is not being used since it's an
estimate, which a good indicator that the issue is really
about fees.
No other state allows the anti-trust exemption. The
chairman of the Federal Trade Commission has testified
against this type of legislation. The Division of
Insurance and the Department of Law both have significant
concerns about SB 37. The practical effect of this
legislation will be to increase the cost of health
insurance in Alaska. It is already difficult for Aetna to
negotiate discounted fees with providers with our large
customers due to the relatively small number of medical
service providers in Alaska. Where we have been able to
negotiate discounts, they are only in the five to 10
percent range. The benefit for providers in these
negotiations is a greater number of patients. With
collective negotiations allowed by physicians, it is very
hard to imagine these would go down rather than up.
Last year we worked with Representative Rokeberg on a
Patient's Bill of Rights that partly dealt with
contractual issues between insurers and medical service
providers. That bill will go into effect this summer. The
legislation should go a long ways in resolving problems
between physicians and insurers on non-economic terms.
SENATOR LEMAN asked if the opposition to this bill on the federal
level was from the previous administration or the new one and if
it's the former, has she been able to talk to the current
administration to see if they are going to take the same stand.
MR. MIKE WIGGINS, Vice President, Aetna Insurance, answered that it
was the prior administration's stance.
SENATOR LEMAN said he thought it would take at least a couple more
weeks before they could get a position from the new administration.
MR. WIGGINS agreed.
SENATOR DAVIS said she has a lot of serious concerns and would like
to have time to review them. After conversations she had with two
specialists in different areas, they wanted to know why the bill
was in front of the legislature in the first place. They felt it
was something that wasn't needed and there might be a small group
of doctors who want it. Implementing something state-wide based on
what a few people in a certain area want, in particular doctors who
have had litigation, is not a good direction to go.
SENATOR DAVIS said that the State of Alaska who insures their
employees would probably have the coverage premiums go up if
doctors would go out and negotiate directly.
SENATOR KELLY responded that over the years, he has heard from a
number of doctors, including the Alaskan Physician's Association
and the American Medical Association testifying in favor of this
bill. They are not doing this for a small group of doctors. He said
that right now Texas and Washington have legislation like this and
a number of other states have legislation pending.
SENATOR DAVIS said she spoke with two doctors, but she has an
opportunity to speak with more. Their association said they would
not take a stand on this. If they thought it was a good idea, they
would be out in numbers to get its passage. She also asked if the
state is interested in implementing this, what kind of oversight
would the Attorney General actually have? "Not only would they have
the oversight, but they would supervise it, review it and do
implementation when needed, and how much would it cost us to do
it."
SENATOR KELLY responded that the answer was on page 7, line 25 and
26 allowing the AG's office to write regulations for it. He thought
the Attorney General's objections were insincere, since they would
get to write the regulations that could address all of their
concerns.
SENATOR KELLY said, "If people don't want to participate in this,
they don't have to." If doctors even want to discuss this, they are
liable to FDC for a lawsuit.
CHAIRMAN PHILLIPS asked Mr. Haugen how the guidelines on line 23
through 26, page 5, would be provided.
MR. HAUGEN replied that the language in the bill was written
broadly enough to give discretion on interpretation to the Attorney
General.
SENATOR LEMAN said he found the nurses testimony compelling and
would like to work with them on it.
SENATOR KELLY asked Ms. Sarcone if the language they inserted
exempting nurses was not acceptable, and if acceptable language to
them were found, would they still testify against the bill.
MS. SARCONE responded, "I don't know what you could do at this
point that would "take care" of me, Senator." She was still
concerned with oversight, having a public process and having some
recourse for nurse practitioners. The exemption protects them from
the most blatant exclusionary practices, but there are more subtle
practices that are not protected by that clause. She said she could
work it language that would be more clear that they could practice
and not be excluded.
SENATOR KELLY said that was his intention.
CHAIRMAN PHILLIPS asked the participants to fax their concerns to
him and for the Attorney General's office to come up with some
solutions and adjourned the meeting at 3:05 pm.
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