03/01/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB190 | |
| SB116 | |
| SB199 | |
| SB217 | |
| HB168 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 217 | TELECONFERENCED | |
| + | SB 199 | TELECONFERENCED | |
| += | HB 168 | TELECONFERENCED | |
| += | SB 190 | TELECONFERENCED | |
| = | SB 116 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 1, 2012
1:33 p.m.
MEMBERS PRESENT
Senator Dennis Egan, Chair
Senator Joe Paskvan, Vice Chair
Senator Linda Menard
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 190
"An Act relating to activities, including violations and
penalties, under the supervision of the Big Game Commercial
Services Board; and creating a retired status master guide-
outfitter license."
- MOVED CSSB 190(L&C) OUT OF COMMITTEE
SENATE BILL NO. 116
"An Act offering mediation of disputed workers' compensation
claims by a hearing officer or other classified employee of the
division of workers' compensation and allowing collective
bargaining agreements to supersede certain provisions of the
Alaska Workers' Compensation Act; and providing for an effective
date."
- HEARD & HELD
SENATE BILL NO. 199
"An Act relating to the vocational and technical instruction
funding factor for public school funding."
- MOVED SB 199 OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 168(JUD)
"An Act requiring the amount of the security given by a party
seeking an injunction or order vacating or staying the operation
of a permit affecting an industrial operation to include an
amount for the payment of wages and benefits for employees and
payments to contractors and subcontractors that may be lost if
the industrial operation is wrongfully enjoined."
- HEARD & HELD
SENATE BILL NO. 217
"An Act establishing procedures and guidelines for auditing
pharmacy records; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 190
SHORT TITLE: BIG GAME COMMERCIAL SERVICES BOARD
SPONSOR(s): SENATOR(s) MENARD
02/08/12 (S) READ THE FIRST TIME - REFERRALS
02/08/12 (S) L&C, JUD
02/23/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/23/12 (S) <Bill Hearing Postponed>
02/28/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/28/12 (S) Heard & Held
02/28/12 (S) MINUTE(L&C)
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 116
SHORT TITLE: WORKERS' COMP.: COLL BARGAINING/MEDIATION
SPONSOR(s): LABOR & COMMERCE
03/25/11 (S) READ THE FIRST TIME - REFERRALS
03/25/11 (S) L&C, FIN
04/05/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
04/05/11 (S) Heard & Held
04/05/11 (S) MINUTE(L&C)
01/19/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
01/19/12 (S) Heard & Held
01/19/12 (S) MINUTE(L&C)
02/21/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/21/12 (S) -- MEETING CANCELED --
02/23/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/23/12 (S) Scheduled But Not Heard
02/28/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/28/12 (S) Scheduled But Not Heard
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 199
SHORT TITLE: VOCATIONAL EDUCATION FUNDING FACTOR
SPONSOR(s): MEYER
02/17/12 (S) READ THE FIRST TIME - REFERRALS
02/17/12 (S) EDC, L&C
02/22/12 (S) EDC RPT 4DP 1NR
02/22/12 (S) DP: MEYER, THOMAS, FRENCH, DAVIS
02/22/12 (S) NR: STEVENS
02/22/12 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
02/22/12 (S) Moved SB 199 Out of Committee
02/22/12 (S) MINUTE(EDC)
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 168
SHORT TITLE: INJUNCTION SECURITY: INDUSTRIAL OPERATION
SPONSOR(s): FEIGE
02/23/11 (H) READ THE FIRST TIME - REFERRALS
02/23/11 (H) JUD
02/25/11 (H) BILL REPRINTED 2/24/11
03/21/11 (H) JUD AT 1:00 PM CAPITOL 120
03/21/11 (H) Heard & Held
03/21/11 (H) MINUTE(JUD)
03/23/11 (H) JUD AT 1:00 PM CAPITOL 120
03/23/11 (H) <Bill Hearing Canceled>
03/30/11 (H) JUD AT 1:00 PM CAPITOL 120
03/30/11 (H) Scheduled But Not Heard
04/04/11 (H) JUD AT 1:00 PM CAPITOL 120
04/04/11 (H) Moved CSHB 168(JUD) Out of Committee
04/04/11 (H) MINUTE(JUD)
04/05/11 (H) JUD RPT CS(JUD) 3DP 2NR
04/05/11 (H) DP: KELLER, PRUITT, THOMPSON
04/05/11 (H) NR: GRUENBERG, HOLMES
04/07/11 (H) TRANSMITTED TO (S)
04/07/11 (H) VERSION: CSHB 168(JUD)
04/08/11 (S) READ THE FIRST TIME - REFERRALS
04/08/11 (S) L&C, JUD
02/23/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/23/12 (S) <Bill Hearing Postponed>
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 217
SHORT TITLE: PHARMACY AUDITS
SPONSOR(s): LABOR & COMMERCE
02/22/12 (S) READ THE FIRST TIME - REFERRALS
02/22/12 (S) L&C, FIN
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
MICHAEL ROVITO, Chief of Staff
Senator Linda Menard
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 190.
DANA OWEN, Staff
Senate Labor and Commerce Committee
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 190 and SB 217 for the
sponsor.
DENNIS BAILEY, Legislative Counsel
Legislative Affairs Agency
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Was available to answer questions on SB 116.
SHARON LONG, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Explained amendment to SB 116.
SENATOR KEVIN MEYER
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 199.
EDRA MORELEDGE, Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Available for comments on SB 199 on behalf
of the sponsor.
MARGARET SODEN, President
Alaska Pharmacists Association
Fairbanks, AK
POSITION STATEMENT: Supported SB 217.
BARRY CHRISTENSEN, Co-Chair
Legislative Committee,
Alaska Pharmacists Association
Ketchikan, AK
POSITION STATEMENT: Supported SB 217.
DIRK WHITE, Vice Chairman
Board of Pharmacy
Sitka, AK
POSITION STATEMENT: Supported SB 217.
CINDY LAUBACHER, Senior Director
Government Affairs
Medco Health Solutions
POSITION STATEMENT: Opposed SB 217.
SCOTT WATTS, Owner
Ron's Apothecary Shop
Juneau, AK
POSITION STATEMENT: Supported SB 217.
REPRESENTATIVE ERIC FEIGE
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of HB 168.
ACTION NARRATIVE
1:33:08 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:33 p.m. Present at the call to
order were Senators Giessel, Paskvan, and Chair Egan. Senator
Menard joined the committee shortly after.
SB 190-BIG GAME COMMERCIAL SERVICES BOARD
1:35:52 PM
CHAIR EGAN announced SB 190 to be up for consideration. [CSSB
190 (), version 27-LS1328\M, was being considered for adoption].
1:35:59 PM
SENATOR DAVIS joined the committee.
1:36:07 PM
MICHAEL ROVITO, Chief of Staff for Senator Menard, sponsor of SB
190, related the Big Game Commercial Services Board spent a year
working on the changes in this bill.
1:37:03 PM
SENATOR PASKVAN moved to report CSSB 190( ), [version 27-
LS1328\M], from committee with individual recommendations and
attached zero fiscal note. Chair Egan removed his objection.
There were no further objections and CSSB 190(L&C) moved from
committee.
1:37:32 PM
At ease from 1:37 to 1:38 p.m.
SB 116-WORKERS' COMP.: COLL BARGAINING/MEDIATION
1:38:54 PM
CHAIR EGAN announced SB 116 to be up for consideration.
SENATOR PASKVAN moved to bring CSSB 116 (L&C), labeled 27-
LS0549\X, before the committee. There were no objections.
DANA OWEN, staff to the Senate Labor and Commerce Committee,
said this CS clarifies issues that were raised in the previous
hearing of the bill and adds one item that was not discussed. He
said the title was expanded to add, "An Act authorizing
employers and employees to mediate disputed workers'
compensation claims and to negotiate a collective bargaining
agreement that offers mediation and mandates arbitration..." The
remainder of the title stays the same. Section 1 remains the
same.
He said the changes begin in Section 2, collective bargaining
agreements. Subsection (a) expands language in (a)(1) of the
previous bill and provides more details of the appeals process.
Changes begin on line 28 where the bill establishes a process
for resolving disputes through mediation, arbitration or both.
The parties must agree before a particular dispute may be
submitted to mediation. Then if mediation fails, it provides for
arbitration.
1:42:27 PM
MR. OWEN pointed out that lines 2 and 3 of page 2 specify that
the arbitration will be conducted under AS 09.43. Title 9 is the
code of civil procedure and chapter 43 is arbitration; the
sections that are cited, 300 to 595, constitute Article 3, the
Revised Uniform Arbitration Act. In the last meeting they heard
there was some confusion over how the arbitration was to take
place. The drafter suggested that it would be most direct to
establish the arbitration as taking place under AS 09.43 because
attorneys and courts are familiar with it; everyone involved
should be familiar with it.
1:43:58 PM
He also said that placing it under AS 09.43 implies a different
appeals process than the Workers' Compensation Act where there
is an appeal to the Workers' Compensation Commission. This will
obviate that as appeals will no longer go to the Workers'
Compensation Commission (the original intent of the bill).
MR. OWEN said the bill clarifies that mediation or arbitration
will govern the dispute resolution process under this chapter.
It also says the dispute resolution process must result in
findings of fact, award in a final order or decision by the
arbitrator and that award order or decision has the same force
and effect as a finding of fact, award order or decision of a
hearing officer under AS 23.30.005 (Workers' Compensation
Board). This means the arbitrator's ruling under a collectively
bargained agreement will have the same effect and force as an
order of the board.
Subsection (b) on page 2, line 25, of the bill guarantees that
benefits under Chapter 23.30 (Workers' Compensation Act) cannot
be bargained away. It further clarifies that the agreement and
processes negotiated under this law cannot themselves be
considered a reduction of benefits.
1:45:39 PM
Subsection (c) on line 30 insures that physicians can meet and
communicate with parties to a negotiation in the process of
establishing lists of physicians who are the exclusive medical
providers in a collectively bargained agreement. Currently,
physicians are prevented by law from collaborating on contracts,
fees and things like that. Alaska has a very narrow exception
carved out in statute and this would be the only other
exception. Currently physicians are allowed to do that only if
they are negotiating a managed benefits organization. This would
allow physicians to talk to one another if they were going to
try and get on to the list that would be established under a
collectively bargained agreement under this statute.
1:47:20 PM
DENNIS BAILEY, drafting attorney, Legislative Affairs Agency,
Alaska State Legislature, said he was available to answer
questions on SB 116.
SENATOR GIESSEL said as a health care provider her overarching
concern is patients' choice in one of the most intimate aspects
of their lives. She invited her staff to explain her proposed
amendment.
1:48:32 PM
27-LS0549\X.1
Bailey
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR GIESSEL
TO: CSSB 116(L&C), Draft Version "X"
Page 3, lines 13 - 15:
Delete all material.
Renumber the following paragraphs accordingly.
Page 3, line 26, following "not":
Insert "(1)"
Page 3, lines 26 - 27:
Delete ". For purposes of this subsection"
Insert "; for purposes of this paragraph"
Page 3, line 29, following "chapter":
Insert "; or
(2) identify health care providers who are
the exclusive source of medical treatment provided
under this chapter; in this paragraph, "health care
provider" has the meaning given in AS 09.55.560"
Page 3, line 30, through page 4, line 4:
Delete all material.
Reletter the following subsection accordingly.
SHARON LONG, staff to Senator Giessel, directed them to page 3
of the amendment where lines 13-15 were deleted to show up
later. The second change begins on line 26 and inserts "1" after
"not" and deletes "for the purposes of this subsection" and
inserts "for the purposes of this paragraph." On line 29, "2" is
inserted after "chapter." The language that was deleted from
lines 13-15 is inserted after "chapter."
The last change deletes lines 30 and 31 on page 3 through line 4
on page 4. This preserves the right currently in statute for
injured workers to choose their own health care provider.
SENATOR PASKVAN said he understands that now there are generally
exclusive providers designated under plans and asked if that is
true and assuming it is, does this prohibit that in the future.
SENATOR GIESSEL replied the main purpose is to allow the patient
to choose whatever health care provider they want to: in other
words, their private physician or if they are part of a plan
that designates a physician. This addresses a collective
bargaining agreement not a person who is not part of a
collective bargaining agreement.
SENATOR PASKVAN said his belief is if you want to go to a
dentist, there are dentists the state has said are on the list
and those dentists have agreed with the state of Alaska, for
instance, that they will do a cavity for $100. His question is
if this would prohibit the State of Alaska from negotiating with
dentists to get a lower collective price for that service.
SENATOR GIESSEL said it wasn't her intent to do that, but the
drafter could help answer that.
MR. BAILEY said the focus of the bill allows an employer and
their employees in a union to negotiate a mediation and an
arbitration process. As part of that process they are allowed to
negotiate the selection of health care providers that would be
permitted to provide services to the union members (in section
2). The normal operation of the workers' compensation statute
that allows employers to negotiate with health care providers to
provide services under their workers' compensation coverage
isn't affected by this bill. The bill is restricted to the
concept of negotiating different terms under the provisions of
the collective bargaining agreement.
SENATOR PASKVAN remarked that the short answer is no or he is
confused. He rephrased his question; if you allow full choice to
the employee who goes to a dentist that charges $150 instead of
a contracted dentist who charges $100, who pays the $50?
MR. BAILEY replied under the current workers' compensation
statute outside of a collective bargaining agreement the
employee who makes a claim can choose his/her health care
provider and an alternate. The issue really is choosing who your
health care provider is. There may be circumstances where an
employer chooses the health care provider for an employee who
makes a claim, but that is limited to employees that don't make
their own choice. It may be that the employer could negotiate
with a group of physicians to provide that in those
circumstances, but the general rule is the employee gets to
choose their own physician in workers' compensation. So, the
question of negotiating a lower rate is more applicable to a
health care plan not within the context of a workers'
compensation claim.
SENATOR PASKVAN said he thinks where it talks about "competing
physicians may meet and communicate" means with respect to
whether they are participants in an exclusive source agreement
with an employer. His perception is if you have competitors
meeting, you have price fixing and wanted to know what the
result of that would be.
MR. BAILEY replied the purpose of allowing physicians to
communicate concerning providing services by the group is
intended under AS 23.50. In the absence of a provision like
that, whoever is negotiating with the physicians could go and
negotiate with each physician and pit one against another to
negotiate a lower price. It's included in this bill because it
provides for a negotiation of who the medical providers are. In
that negotiation physicians, presumably, would want to be able
to negotiate as a group not individually. That is the purpose of
Section (c).
SENATOR GIESSEL said the amendment would remove that section.
MR. BAILEY said the amendment takes out the provision about
negotiating who the health care provider is. It says we don't
want you to negotiate who the physicians are; we want the
existing method that allows an individual to choose their own
provider to apply instead.
2:01:51 PM
MS. LONG said the amendment takes away the ability to bargain
away one's right to choose a physician in a bargaining
agreement, but it doesn't change the ability of physicians
getting together to decide to provide a service through an
employer at certain rates. It doesn't take away the provisions
of the physicians under AS 23.50.020 outside of a bargaining
agreement.
MR. BAILEY added that AS 23.50 allows physicians to negotiate as
a group under certain circumstances. The only reason it was
included originally was as it applies to the collective
bargaining agreement sections. If you take it out of the
collective bargaining agreement context, it does not affect the
remainder of AS 23.50 which relates to bargaining by physicians.
SENATOR GIESSEL said Mr. Owen referred to a managed care group
and that provision is still there.
2:04:20 PM
SENATOR PASKVAN said the operative term is "competing
physicians." If the physicians formed as a group they are not in
competition with each other, but the question is if that second
group is comprised of competing individuals and how that affects
the analysis.
MR. BAILEY replied that you have to keep it in the context of
this bill that relates to collective bargaining for mediation
(to decide who the health care providers are for the union
employees). When a collective bargaining agreement allows for
(it's not mandated) designating a certain group of physicians to
provide medical services, then the provisions of (c) apply. So,
by taking that section out, you're saying that it doesn't apply
here because a particular physician isn't being chosen to
provide services.
SENATOR PASKVAN stated that lines 13-17 of the amendment say the
agreement may not identify health care providers who are the
exclusive source of medical treatment, but the inference is that
there is a list of exclusive source and you can't give it to the
employee. Is that a misunderstanding?
MS. LONG replied that she didn't understand the question.
SENATOR PASKVAN asked why put an amendment in that says they
cannot identify the list if they never put a list together.
SENATOR GIESSEL said this bill deals with a disputed works claim
issue (collective bargaining agreements) that would have a list
of exclusive health care providers. The injured worker would now
be confined to an exclusive list that might or might not include
their own personal healthcare provider. That is the piece the
amendment removes. It would allow them to go to their own
healthcare provider.
CHAIR EGAN stated that he wanted to make sure the committee had
enough time to get answers to the questions before passing this
bill.
MR. BAILEY said the amendment removes negotiation of medical
providers under the collective bargaining agreement.
2:11:51 PM
SENATOR PASKVAN clarified that it has no one with which to
negotiate reduced prices.
SENATOR DAVIS said she would feel comfortable acting on the bill
if Mr. Bailey could answer the question.
MR. BAILEY said the amendment does one thing: it removes the
negotiation of medical providers under the collective bargaining
agreement. The results of the provisions of the existing
workers' compensation statute, which allows you to choose your
own treating physician in a claim would continue to apply as
they normally do. Section (c) (about competing physicians
negotiating) doesn't apply anymore because there wouldn't be any
specified physicians under the collective bargaining agreement.
SENATOR PASKVAN remarked so this removes any negotiation between
an employer and physicians with respect to providing services,
and asked if it also means that the employer has no one with
whom they can negotiate reduced prices as a package for their
employees.
MR. BAILEY replied that the employer and the employee under the
existing bill without the amendment negotiate that. If that
section is removed, there isn't going to be a negotiation under
the collective bargaining agreement for selecting particular
employees. So the employer would not be in a position to
negotiate with physicians about what they provide or what the
costs of their services are.
SENATOR PASKVAN agreed that no price negotiation follows, but
pointed that out as a potential loss to the employees when the
employers' superior bargaining strength might be able to obtain
a discounted price.
MR. BAILEY said there is no negotiation by the employer for the
cost of paying for the employee's physician and that wouldn't
change if the amendment is adopted. If it doesn't pass, then
both the employer and employee negotiate that already in the
collective bargaining agreement.
SENATOR GIESSEL said the strength of having a person being able
to choose their own health care provider is that they will be
continuing to see that person and that healthcare provider knows
their physical condition both before the injury and after, how
they are progressing through it, family history and things like
that.
CHAIR EGAN said he would hold SB 116 for a future meeting.
SB 199-VOCATIONAL EDUCATION FUNDING FACTOR
2:16:20 PM
CHAIR EGAN announced consideration of SB 199.
2:16:24 PM
SENATOR KEVIN MEYER, sponsor of SB 199, said he and Senator Joe
Thomas introduced SB 84 last year that created a separate
funding factor for vocational education programs for grades 9-
12. Voc-Ed funding was 1 percent of the base student allocation
(BSA) and since this bill was signed, the school districts have
said it was a good program. The only problem is that it didn't
include middle school. So, SB 199 expands the program to include
middle school.
2:17:46 PM
EDRA MORELEDGE, staff to Senator Meyer, had nothing further to
add.
2:18:03 PM
SENATOR PASKVAN moved to report SB 199 from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
2:18:42 PM
At ease from 2:18 to 2:20 p.m.
SB 217-PHARMACY AUDITS
2:20:34 PM
CHAIR EGAN announced consideration of SB 217.
DANA OWEN, staff to the Senate Labor and Commerce Committee,
sponsor of SB 217, said the issue of pharmacy audits has been
brought forward numerous times by local pharmacists, and an
identical bill was introduced into the other body. He said
Alaskan pharmacists are being bombarded with audits from the
pharmacy benefits management companies (PBM), insurance
companies and other state health care providers. SB 217 attempts
to standardize the audit process in order to allow pharmacists
to spend less time on paperwork and focus more time on patient
health.
Additionally, this legislation seeks to bring fairness to the
unregulated and expanding practices of pharmacy audits by ending
abusive practices that have harassed and harmed pharmacy
businesses. While audits are necessary and even a welcome part
of a good business practice, pharmacy audits have become unduly
burdensome and, in many cases, predatory. So acute has this
problem become that national companies have been formed to help
pharmacists with audits recover millions of dollars of
inappropriate audit charge backs.
SB 217 will ease the burden on pharmacists by requiring uniform
common sense standards and criteria for all pharmacy audits,
requiring written notice of at least two weeks before an on-site
pharmacy audit, requiring that an on-site audit not interfere
with the health care services being provided by pharmacists by
banning audits during the first seven calendar days of each
month when patient volume is highest unless the pharmacy and
auditor agree otherwise.
MR. OWEN said that SB 217 will further eliminate the highly
questionable practice of extrapolation as justification for
taking back claim money. It will eliminate the unfair take back
of money in cases of simple typographical errors when no
financial harm has occurred to the plan's sponsor, the PBM or
the patient. It will further require that audits involving
clinical or professional judgment be conducted by or in
consultation with a pharmacist licensed in the state.
For small pharmacies, especially, audit practices that have
become common are much more than mere nuisances. The time and
money lost can threaten the very viability of these businesses,
and SB 217 seeks to bring fairness and predictability back to
the practice of pharmacy audits.
SENATOR PASKVAN moved to bring SB 217, version 27-LS1411\A,
before the committee for discussion purposes.
CHAIR EGAN objected.
2:25:44 PM
MARGARET SODEN, Alaska Pharmacists Association, said she is
mostly retired as a community pharmacist in Fairbanks. She
supported SB 217. When she started being a pharmacist 45 years
ago, most patients paid cash for their prescriptions. Now the
majority of prescriptions are billed to third parties and along
with that has come audits of prescription records. SB 217 just
brings some standardization and fairness into the audit process.
The provisions of this bill allow pharmacists time to comply
with this audit request but cause less disruption to patient
care that pharmacies provide every day.
2:26:43 PM
BARRY CHRISTENSEN, Co-Chair, Legislative Committee, Alaska
Pharmacists Association, Ketchikan, supported SB 217. He said
their members work hard every day in retail pharmacies,
hospitals, nursing homes and medical clinic settings throughout
the state. This legislation would help create a level playing
field for pharmacists when dealing with pharmacy audits. Their
membership has made this their number one legislative priority.
They support the needs for audits to ensure that fraud, waste
and abusive activities are checked, but they must be conducted
in a fair and balanced manner allowing for a fair appeal and
payment for all services performed within the patient's benefit
structure.
He said pharmacies generally contract with PBMs in order to fill
and bill for consumers as part of the health benefit plan. PBMs
are names like Express Scripts, Medco and Caremark. Nearly all
prescriptions are filled electronically in real time. That is,
the pharmacy sends prescription information to the PBM and in
turn it sends back authorization for payment and other clinical
edits of concern like high dose warnings, drug interactions et
cetera. Pharmacies are reimbursed back for the cost of
medication plus a dispensing fee that covers the pharmacy's cost
of doing business. Typically, either the PBM or an entity
contracted by the PBM will perform audits on contracted
pharmacies to legitimately protect against fraud and abuse.
MR. CHRISTENSEN said it has been suggested by some that
pharmacies should be able to contractually deal with their
auditing concerns directly with a PBM, but most Alaskan
pharmacists have never been able to alter the terms of the
contract given to them except for the dispensing fees. It is
usually a take it or leave it offer. That is why they are asking
for some standardization in auditing practices to be applicable
to all plans and pharmacies in the state.
2:30:25 PM
DIRK WHITE, Vice Chairman, Board of Pharmacy, Sitka, said he
also serves on the Legislative Committee for the Alaska
Pharmacists Association. He supported SB 217. At their February
meeting they voted unanimous support for the House bill on this
issue. He said the audits are onerous and emphasized that there
are no errors on these prescriptions. They are valid
prescriptions, and the patient has received it from their
physician and brought it to the pharmacist who has filled it; it
has been legally transposed and complies with the patient,
pharmacist and physician triad working together to improve the
health of the patient.
He said the PBMs, on their own, have come up with arbitrary
reasons for bringing these errors up, and a lot of times it's
fishing expeditions for more money for them. It doesn't apply
just to pharmaceuticals; he and his wife, who works with him as
a pharmacist (and providing durable medical equipment), received
a bench audit for information on two wheel chairs from 2008. One
of them was $3,500 and the other was $3,800. These prescriptions
came from a physician; they measured and got the wheel chair;
the patients received the wheel chair and they received
wonderful benefit from them. Now if he cannot produce all the
paperwork that the PBM wants, they will take that money back. It
may very well close down that portion of his business because
they made only about $500 on each one of those wheel chairs.
SENATOR PASKVAN asked if there is any regulation or control on
how much of the savings is passed on to the employer/consumer
when they negotiate prices. How transparent is that?
MR. WHITE said he didn't know if any of that money even goes
back to the insurance companies. It's not transparent to him.
SENATOR GIESSEL asked how many other states have these kinds of
sidebars on an audit process.
MR. WHITE replied 15 other states.
SENATOR MENARD said she personally thought two weeks' notice
before the audit is too little time and asked what other states
are doing.
MR. WHITE answered that he was speculating, because this is
model legislation that came from the National Community Pharmacy
Association. He would think that it's fairly similar. He agreed
with her.
CHAIR EGAN said he assumed it's no time now.
MR. WHITE responded that they generally try to give some notice;
it could be an hour or two.
SENATOR MENARD asked him to clarify what happens if the
prescription is for 30 pills but at some point you give 31
because a person might traveling or something.
MR. WHITE replied that they might have been talking more about
the number of days' supply. A pharmacist may put it down as a 31
day supply or the physician has written a prescription for just
a 30 day supply and the patient has asked for more because he
would be gone longer. In that case, he would call the physician
and explain and ask for an extra week or so. For whatever reason
the PBMs might not like that.
SENATOR MENARD thanked him for that clarification. She missed
the step that the physician is directing him that he may add one
or two pills.
MR. WHITE said taking it upon himself to do that would be a
violation of the Board's rules and regulations.
2:37:08 PM
CINDY LAUBACHER, Senior Director of Government Affairs, Medco
Health Solutions, opposed SB 217. She said Medco is one of the
PBMs they have been hearing about this afternoon. They currently
manage the pharmacy benefit for approximately 20 percent of the
residents of Alaska. They are here today because they have a
responsibility to their clients who rely on them to protect them
from fraud, waste and abuse that may occur within the pharmacy
network they contract with Medco to use. The auditing of
prescription claim reimbursement is a necessary component of
participation in that prescription drug program. Their plan
sponsors, which include labor unions, health plans, state and
federal governments require them to perform a number of services
including monitoring of prescription claim reimbursements,
conducting audits of prescription claims and the recovery of
overpayments to the pharmacy by the plan's sponsor.
She said they are required to audit not only to the State Board
of Pharmacy rules but also to the plan requirements. That
includes Medicare Part B and maybe 30 other clients. Their
pharmacy audit program focuses on a number of activities
including on-site and desk audits, patient and physician
analysis of Medicare Part B claims and claims analysis to
identify potentially aberrant trends. Their clients demand that
they minimize the number prescriptions claims that are
inaccurate, involve fraud, waste or abuse or are not in
accordance with plan requirements. An effective audit program
helps to protect the financial integrity of the pharmacy network
by identifying those claims that resulted in overpayments and
recovering overcharges where appropriate. She emphasized, "When
we recover, we're recovering on behalf our clients; the money
doesn't go to us. This is money owed to our clients."
SENATOR MENARD asked if they act like a collection agency or do
they have to pay someone to go through that process.
MS. LAUBACHER replied that their auditors are internal and the
auditors are paid pursuant to the contract as set forth by the
client.
SENATOR PASKVAN asked what percentage of the audits uncover
fraud.
MS. LAUBACHER replied that she would have to get a number for
him, but it is a big problem in the Medicaid business. They have
a pharmacy network of some 58,000 pharmacies and do quarterly
analyses to look for trends.
2:41:23 PM
SENATOR PASKVAN said he understood this to be draft legislation
that has been adopted by a national organization and assumed
that this language does not violate Medicare or Medicaid
standards.
MS. LAUBACHER didn't agree. The rules under Medicare and
Medicaid are much different than what this allows for. This
would restrict how far back they can look, but they can go back
10 years for Medicare. This bill doesn't exempt Medicare and
Medicaid yet, but it probably will because of that.
SENATOR PASKVAN asked if state law can overrule the federal
standard of Medicare and Medicaid.
MR. LAUBACHER answered no. There are typically exemptions in the
law for Medicare and Medicaid, but even if there weren't they
would argue a claim involving Medicaid or Medicare would not be
subject to this statute.
2:43:29 PM
SENATOR GIESSEL said the sidebars of the audit seem quite
reasonable. Certainly, pharmacies are incredibly busy the first
seven days of a month and asked what specifically wouldn't work
for Medco.
MR. LAUBACHER replied that the problem with the timeframe is
that lots of states are restricting the time for audits. That
reduces the amount of time they have to go into all pharmacies
by about a week. The amount of notice has to do with preventing
fraud. They have had instances where they notify someone that
they're coming in to do an audit, and the "bad actors" disappear
or cover up by making changes in the "scrips." She wasn't saying
that happened in the State of Alaska, however.
2:45:36 PM
SCOTT WATTS, owner, Ron's Apothecary Shop, Juneau, said he
supported SB 217. He explained that contracts they sign with the
PBMs are "pretty much take it or leave it." This bill levels the
playing field so they can't be taken advantage of by these
audits.
CHAIR EGAN said that concluded public testimony on SB 217 for
today and that it would be held.
HB 168-INJUNCTION SECURITY: INDUSTRIAL OPERATION
2:48:27 PM
CHAIR EGAN announced consideration of HB 168 [CSHB 168(JUD) was
before the committee.].
2:48:55 PM
REPRESENTATIVE ERIC FEIGE, sponsor of HB 168, said over the past
several years a few courts have issued injunctions or stays
against companies engaged in the development of resource
extraction and other large legally permitted construction
projects. These court actions have had the effect of delaying
worthwhile projects and curtailing employment within the state
of Alaska. In some cases projects have been shut down and
employees laid off. More often than not, the litigation has
failed or had an extremely limited effect in hand with the
stated objectives of the original lawsuit. The overall objective
is not often what is stated in the suit but merely to delay a
project or prevent it from coming to fruition.
HB 168 seeks to remedy this situation by requiring a party
seeking a restraining order, a preliminary injunction or order
vacating or staying the operation of permit that affects an
industrial operation to give security in an amount the court
considers proper. HB 168 asks that part of the court's
deliberation shall take into account payment of wages and
benefits for employees and payment to contractors and
subcontractors of the industrial operation.
In this legislation an industrial operation is defined to
include a construction, energy or timber activity, an oil gas or
mineral exploration development and production.
He said that HB 168 parallels the requirements of Alaska Civil
Rule 65(c), which already requires a court to require a person
seeking an injunction to provide security to protect a person
who may be wrongfully restrained or enjoined. It does not
prohibit a person who is wrongly enjoined from relief or
otherwise limit the amount that a person may recover in the
action. It also does not specify an amount that is required and
does not affect the discretion of the judge to determine that
amount.
REPRESENTATIVE FEIGE offered his understanding that state courts
do not see very many of these cases since most involve federal
permits. For those few instances, HB 168 seeks to level the
legal playing field without infringing on any parties right to
bring a legitimate issue to court.
CHAIR EGAN said public testimony would be taken at the next
meeting.
[HB 168 was held in committee.]
2:53:08 PM
Finding no other business to come before the committee, Chair
Egan adjourned the Senate Labor and Commerce Standing Committee
meeting at 2:53 p.m.