Legislature(1995 - 1996)
03/28/1996 01:38 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 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.