Legislature(2001 - 2002)

03/13/2001 01:30 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
                 SENATE LABOR & COMMERCE COMMITTEE                                                                            
                          March 13, 2001                                                                                        
                              1:30 pm                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Randy Phillips, Chair                                                                                                   
Senator Alan Austerman                                                                                                          
Senator Loren Leman                                                                                                             
Senator John Torgerson                                                                                                          
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
All Members Present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
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."                                                                                 
     MOVED CSSB 37 (L&C) OUT OF COMMITTEE                                                                                       
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 37 - See Judiciary minutes dated 1/22/01 and 2/21/01.                                                                        
WITNESS REGISTER                                                                                                              
Mr. George Rhymeer                                                                                                              
Alaska Physicians and Surgeons Member                                                                                           
3340 Providence Dr.                                                                                                             
Anchorage AK 99508                                                                                                              
POSITION STATEMENT: Supported SB 37.                                                                                          
Dr. Mike Carroll                                                                                                                
No address provided                                                                                                             
Fairbanks AK                                                                                                                    
POSITION STATEMENT: Supported SB 37.                                                                                          
Mr. Mike Haugen, Executive Director                                                                                             
Alaska Physicians and Surgeons                                                                                                  
3340 Providence Dr.                                                                                                             
Anchorage AK 99508                                                                                                              
POSITION STATEMENT: Supported SB 37.                                                                                          
Mr. Clyde Sniffen, Assistant Attorney General                                                                                   
Department of Law                                                                                                               
1031 W 4th, #200                                                                                                                
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Commented on SB 37.                                                                                       
Ms. Laura Sarcone                                                                                                               
Alaska Nurses Association                                                                                                       
Alaska Nurse Practitioners Association                                                                                          
Alaska Chapter, American College of Nurse Midwives                                                                              
1444 Hillcrest                                                                                                                  
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Commented on SB 37.                                                                                       
ACTION NARRATIVE                                                                                                              
TAPE 01-10, SIDE A                                                                                                            
Number 001                                                                                                                      
         SB  37-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE                                                                   
CHAIRMAN  RANDY   PHILLIPS  called  the  Senate  Labor   &  Commerce                                                          
Committee meeting  to order at 1:30 pm and announced  SB 37 to be up                                                            
for consideration.                                                                                                              
SENATOR  KELLY, sponsor  of  SB 37,  said that  this  bill does  not                                                            
include nurses and it was  never his intent to include them. He said                                                            
the  nurses' associations  were  satisfied  with the  language  that                                                            
removes them.                                                                                                                   
MR. GEORGE  RHYMEER, Alaskan Physicians  and Surgeons Board  member,                                                            
said he is a cardiologist  from Anchorage and strongly  supported SB
37. He said:                                                                                                                    
     The physician  community is very  keen on this bill  for a                                                                 
     number  of  reasons,  one  of  which  is  that  it allows                                                                  
     physicians  in the state  to talk with  one another  about                                                                 
     medical concerns, about  clinical practices, about what is                                                                 
     best medical care for their  patients without being afraid                                                                 
     of being attacked by the Federal Trade Commission.                                                                         
He  said participation   is voluntary  and  the  bill has  a  sunset                                                            
DR. MIKE  CARROLL,  Fairbanks physician,  supported  SB 37. He  said                                                            
that recently  the Alaska  Health Care Network  was investigated  by                                                            
the federal government  for price fixing. He wanted  to clarify that                                                            
they have never dealt with  financial aspects in regards to the cost                                                            
of health care.  They have spent more  than $100,000 to try  and set                                                            
up an organization  that would avoid  price fixing. They,  then, had                                                            
to spend $75,000  to deal with the  federal government because  more                                                            
than  30 percent  of Fairbanks  physicians  were  involved in  their                                                            
network.  "They did  not have an  appreciation for  the practice  of                                                            
medicine, the  isolation, the way  specialties are directed  in some                                                            
of our communities."                                                                                                            
He thought that patients  and businesses in Fairbanks suffer because                                                            
competition  on the  insurance  side of  things went  away when  the                                                            
Network was asked to stop trying to direct the contracts.                                                                       
     Small  insurers have elected  to not come to Fairbanks  at                                                                 
     this point,  because they have no means of directing  some                                                                 
     of  their queries  to an  organized group  of physicians.                                                                  
     That left  just the large insurance companies  and it's to                                                                 
     their  advantage  not to  have  any competition.  I  don't                                                                 
     think health  care costs for the State of Alaska  or other                                                                 
     organizations  in the Fairbanks  area have gone down  over                                                                 
     the  last year  as  a result  of the  limits  the federal                                                                  
     government put on the physicians in Fairbanks.                                                                             
MR.  MIKE   HAUGEN,  Executive  Director,   Alaska  Physicians   and                                                            
Surgeons,  explained  what  are  in  the  contracts  that  could  be                                                            
negotiated between physicians and health insurers:                                                                              
     There  is some confusion about  would a list of potential                                                                  
     covered services  be allowed to be negotiated  by doctors.                                                                 
     In  other words,  would the doctors  be able  to tell  the                                                                 
     insurers that you must provide  a certain list of benefits                                                                 
     or covered areas to your  patients before the doctors will                                                                 
     consider  doing  a contract  with  you.  And I  wanted  to                                                                 
     clarify   that  those   are  not  terms   that  would   be                                                                 
     negotiated.  Terms  that  would  be  negotiated  would  be                                                                 
     things   like  what  is  the   medical  necessity  -   the                                                                 
     definition  of it.  What are  covered services.  Often  in                                                                 
     these  contracts,  the doctors  don't even  know what  the                                                                 
     complete  list is. We're not  talking about defining  what                                                                 
     the list  is, just they would  like to know what the  list                                                                 
     is. What's the appeals process.  Is mutual written consent                                                                 
     required on both parties  parts before the contract can be                                                                 
     amended? In  many of these contracts that's not  the case.                                                                 
     The insurance  carrier can unilaterally  change the  terms                                                                 
     of  the  contracts  with  some sort  of  notice,  but  the                                                                 
     doctors' only option at  that point is to try to terminate                                                                 
     the contract, going through  that process or live with the                                                                 
     changes. That's just a short  list of some of the types of                                                                 
     things that may be negotiated,  but we're certainly not in                                                                 
     any way  trying to lead you to  conclude that the doctors                                                                  
     are  trying to define  for the health  care insurers  what                                                                 
     their list of covered services would be.                                                                                   
Number 700                                                                                                                      
SENATOR DAVIS asked how this bill would increase competition and                                                                
MR. HAUGEN answered that, "In two areas, it may. That's why there                                                               
is a five-year sunset and I view it as an experiment, particularly                                                              
in the State of Alaska.                                                                                                         
     It  might increase  competition,  because  right now  this                                                                 
     state   has  difficulty  in   attracting  outside  health                                                                  
     insurance carriers. We have  a relatively small population                                                                 
     base and we're  separated from the rest of the  country by                                                                 
     a  great  distance.  It  is  attractive   to health   care                                                                 
     insurers to be able to get  an instant panel of doctors if                                                                 
     they can arrive  at a contract with the doctors.  In other                                                                 
     words,  it's very expensive  for the  carriers to come  up                                                                 
     and  do  it one  doctor  at a  time  and  try to  build  a                                                                 
     network. If  we were in a position where we could  go to a                                                                 
     carrier  and say, "If  we can come to  a contract that  is                                                                 
     acceptable  to  the doctors,  you  will instantly  have  a                                                                 
     panel  of 150 or  200 doctors." That  automatically  makes                                                                 
     that new carrier a player  up here. That can't help, but I                                                                 
     think, increase  competition, because right now  there are                                                                 
     really only two large ones.                                                                                                
     The second issue, and Dr.  Rhymeer touched on it, was that                                                                 
     there are  many areas where doctors see inefficiencies  in                                                                 
     the system.  They don't feel comfortable, because  of what                                                                 
     happened   in  Fairbanks  and  the  general  climate,   in                                                                 
     discussing those inefficiencies.                                                                                           
MR. HAUGEN continued to explain:                                                                                                
     If they were in a position  as a group to say, "Look, what                                                                 
     you're  doing here is crazy.  You're wasting all kinds  of                                                                 
     money. Try this. That may lower costs."                                                                                    
SENATOR DAVIS asked if it had been 30 percent of the doctors in                                                                 
Fairbanks, not 60 percent, would they have been targeted.                                                                       
MR. RHYMEER answered that he really didn't know the answer to that.                                                             
Part of the problem is that they have never been able to get the                                                                
guidelines and rules from  the FTC about what they can do and how to                                                            
do them.  "Physicians are  basically operating  in the dark  when it                                                            
comes to talking with one  another about anything more than what you                                                            
had for lunch, basically."                                                                                                      
MR.  RHYMEER  said  that  the rules  could  change  along  with  the                                                            
administration in Washington D.C. at this point.                                                                                
SENATOR  DAVIS asked  him to point  out some  of the inefficiencies                                                             
that he envisions would be corrected.                                                                                           
MR. RHYMEER answered:                                                                                                           
     There are  numerous instances of duplication of  services,                                                                 
     because  physicians are dealing  with different insurance                                                                  
     companies with different  carriers and if there was a more                                                                 
     business  orientation and a greater  business association                                                                  
     between  physicians, there  would be  a greater incentive                                                                  
     and  a  much  easier  time to  do  things  that  are  less                                                                 
     duplicative.  Information transfer would be better.  I see                                                                 
     people  all the time who've had  a chest x-ray three  days                                                                 
     ahead  of time,  but it's  unavailable for  one reason  or                                                                 
     another… There  are many instances of that. Plus  the fact                                                                 
     that  a large amount  of money is spent  in the emergency                                                                  
     room  now, physicians  think  unnecessarily.  Part of  the                                                                 
     reason  is because  of the way  medicine is  paid for.  We                                                                 
     think physicians working  together with people who pay the                                                                 
     bills  is distinctly  the way to go  to get efficiencies.                                                                  
     The physicians'  community desperately  wants to do  that.                                                                 
SENATOR DAVIS  asked if the  emergency room  charges he was  talking                                                            
about were for reasons other than emergencies.                                                                                  
MR. RHYMEER answered that was what he was talking about.                                                                        
SENATOR DAVIS  asked if he was referring  to incidents in  Fairbanks                                                            
where doctors  might consider situations  emergencies and  insurance                                                            
companies  might not consider  them to be,  because the people  were                                                            
not hospitalized. Would this bill correct those situations?                                                                     
MR. RHYMEER  answered that  he couldn't say  the bill would  correct                                                            
them, but  it would  make it easier  for physicians  to talk  to one                                                            
another  and come  to some  consensus  about  what the  best way  to                                                            
practice medicine  and take care of certain disease  processes might                                                            
be and deal with  the carriers and with the people  who pay the bill                                                            
in taking care of that.                                                                                                         
MR. CARROLL  added that on the emergency  issue, he partly  misspoke                                                            
when he  said physicians  in Fairbanks  were not  involved in  price                                                            
     If defining  emergency care represents price fixing,  then                                                                 
     I would  say we were  probably guilty  at that point,  but                                                                 
     our  interests  were in  working with  the patient  so  he                                                                 
     could be part  of the definition of emergency  care rather                                                                 
     than  just the  insurance carrier.  It all  depends on  if                                                                 
     you're  having chest  pains, you  don't know  if that's  a                                                                 
     heart  attack or  acid valve  cap. Things  like that  were                                                                 
     reasonable to get involved with.                                                                                           
     The  other issues were  areas of inefficiency.  There  are                                                                 
     several  areas we started to  address and would have  like                                                                 
     to  addressed on  a wider  network basis,  but now cannot                                                                  
     address  those. One  of them  is information  systems.  We                                                                 
     were  trying  to  put  together   a  system  so  that  the                                                                 
     computers  around  the physicians  in the  hospital  would                                                                 
     talk  to each other  and, as a result,  eliminate some  of                                                                 
     the  unnecessary testing  or duplication  of testing  that                                                                 
     would occur, eliminate some  of the paper work that may be                                                                 
     generated in that situation.  In order to do that, it gets                                                                 
     expensive,  but we had actually gotten to the  point where                                                                 
     we  were  staring  to  get  compatible  computer  systems                                                                  
     throughout  the  medical community.  I  think  that was  a                                                                 
     really  big step forward  that a whole  fleet of patients                                                                  
     would have  been the benefactor of. We can't get  involved                                                                 
     in that any more, I'm sorry to say.                                                                                        
     As far  as dealing with efficiencies  of service, we  have                                                                 
     established committees that  looked at pharmaceutical drug                                                                 
     usage  and try to address through  an educational process                                                                  
     with the physicians  and ultimately with the patients  the                                                                 
     proper  use of pharmaceutical  agents  both on the proper                                                                  
     indications and their costs.  Sometimes there are three or                                                                 
     four  drugs   that  have  equivalent  actions,   but  have                                                                 
     radically   different  costs.  We  thought  by  educating                                                                  
     physicians  and patients along  those lines and started  a                                                                 
     process   of  bringing   up  expert   speakers  from   the                                                                 
     University  of Washington and other parts of the  country,                                                                 
     even as far  away as Dallas, Texas, that we could  improve                                                                 
     on  and  make  the cost  more  efficient  in  the  use  of                                                                 
     pharmaceuticals.   It's  an   issue  that's  got  immense                                                                  
     publicity   on  the  federal   level.  We  can't  involve                                                                  
     ourselves in that anymore, I'm sorry to say.                                                                               
He added that they were trying to address the issue of quality                                                                  
care, but they can't address that any more, either.                                                                             
MR. CLYDE SNIFFEN, Assistant Attorney General, responded that all                                                               
the concerns raised by  the physicians who have testified today have                                                            
been   non-price   related   issues.   One   of   the  Department's                                                             
recommendations was to eliminate those.                                                                                         
He explained  that under the current  system there is a way  doctors                                                            
can  get to  health  benefit  plans. "There's  nothing  to  prohibit                                                            
individual  physicians from  expressing concerns  to health  benefit                                                            
plans and  in limited circumstances  with  the integration  model or                                                            
the messenger model, groups  of physicians can get together and give                                                            
that information to the  plans. I don't know if SB 37 in its current                                                            
form would necessarily provide any more ability to do that."                                                                    
MS.  LAURA   SARCONE,  Alaska  Nurses   Association,  Alaska   Nurse                                                            
Practitioners  Association, and the  Alaska Chapter of the  American                                                            
College of Nurse Midwives,  said her concern was on page 2, lines 16                                                            
- 17 of  the committee  substitute, where  the competing  physicians                                                            
meet and  communicate concerning  critical  practice guidelines  and                                                            
coverage  criteria. They  would like  language  that clarifies  that                                                            
physicians  may  communicate  using  physicians'  clinical  practice                                                            
guidelines,  not nurse practitioners'  or  nurse midwife or  another                                                            
other practitioners' clinical practice guidelines.                                                                              
SENATOR LEMAN moved to  adopt the committee substitute, 3/8/01 to SB
37. There were no objections and it was so ordered.                                                                             
SENATOR  AUSTERMAN moved  on page 2,  line 17 to  add amendment  # 1                                                            
that  would  clarify   that  during  negotiations,  physicians   may                                                            
communicate concerning  their specific clinical practice  guidelines                                                            
and not those of other health care providers.                                                                                   
MS. SARCONE indicated her  approval of that language.  There were no                                                            
objections and to the amendment and it was adopted.                                                                             
SENATOR  LEMAN moved  to  pass CSSB  37  (L&C) from  committee  with                                                            
individual recommendations.  There were no objections  and it was so                                                            
CHAIRMAN PHILLIPS adjourned the meeting at 1:55 pm.                                                                             

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