Legislature(1995 - 1996)

03/28/1996 01:38 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               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             
 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            
 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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