03/28/2017 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings | |
| HB48 | |
| SB93 | |
| SB38 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 48 | TELECONFERENCED | |
| *+ | SB 38 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 93 | TELECONFERENCED | |
| += | SB 51 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 28, 2017
1:29 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Shelley Hughes, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARINGS
Real Estate Commission
David Pruhs - Fairbanks
Guy Mickel - Ketchikan
CONFIRMATIONS HELD
Board of Certified Direct-Entry Midwives
Dr. Kathryn Ostrom - Homer
Dana Brown - Fairbanks
Kathryn Roberts - Anchorage
CONFIRMATIONS HELD
Board of Professional Counselors
Anne Brainerd-Marko - Fairbanks
CONFIRMATIONS HELD
HOUSE BILL NO. 48
"An Act relating to the composition of the State Board of
Registration for Architects, Engineers, and Land Surveyors;
extending the termination date of the State Board of
Registration for Architects, Engineers, and Land Surveyors; and
providing for an effective date."
- MOVED HB 48 OUT OF COMMITTEE
SENATE BILL NO. 93
"An Act relating to security freezes on the credit reports or
records of incapacitated persons and certain minors."
- HEARD AND HELD
SENATE BILL NO. 38
"An Act relating to the registration and duties of pharmacy
benefits managers; relating to procedures, guidelines, and
enforcement mechanisms for pharmacy audits; relating to the cost
of multi-source generic drugs and insurance reimbursement
procedures; relating to the duties of the director of the
division of insurance; and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 51
"An Act extending the termination date of the Board of
Veterinary Examiners; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 48
SHORT TITLE: ARCHITECTS, ENGINEERS, SURVEYORS: EXTEND BD
SPONSOR(s): REPRESENTATIVE(s) KITO
01/18/17 (H) READ THE FIRST TIME - REFERRALS
01/18/17 (H) L&C, FIN
02/08/17 (H) L&C AT 3:15 PM BARNES 124
02/08/17 (H) Heard & Held
02/08/17 (H) MINUTE(L&C)
02/10/17 (H) L&C AT 3:15 PM BARNES 124
02/10/17 (H) Moved HB 48 Out of Committee
02/10/17 (H) MINUTE(L&C)
02/13/17 (H) L&C RPT 6DP
02/13/17 (H) DP: SULLIVAN-LEONARD, JOSEPHSON, BIRCH,
KNOPP, STUTES, KITO
02/22/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/22/17 (H) Moved HB 48 Out of Committee
02/22/17 (H) MINUTE(FIN)
02/24/17 (H) FIN RPT 9DP
02/24/17 (H) DP: GARA, WILSON, KAWASAKI, PRUITT,
ORTIZ, THOMPSON, GUTTENBERG, TILTON,
02/24/17 (H) SEATON
03/06/17 (H) TRANSMITTED TO (S)
03/06/17 (H) VERSION: HB 48
03/08/17 (S) READ THE FIRST TIME - REFERRALS
03/08/17 (S) L&C, FIN
03/21/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/21/17 (S) Heard & Held
03/21/17 (S) MINUTE(L&C)
03/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 93
SHORT TITLE: CREDIT REPORT SECURITY FREEZE
SPONSOR(s): SENATOR(s) COGHILL
03/13/17 (S) READ THE FIRST TIME - REFERRALS
03/13/17 (S) L&C
03/28/17 (S) L&C AT 9:00 AM BELTZ 105 (TSBldg)
03/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 38
SHORT TITLE: PHARMACY BENEFITS MANAGERS
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
01/25/17 (S) READ THE FIRST TIME - REFERRALS
01/25/17 (S) L&C, FIN
03/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
DAVID PRUHS, Appointee
Real Estate Commission
Fairbanks, Alaska
POSITION STATEMENT: Testified as nominee to the Real Estate
Commission.
GUY MICKEL, Appointee
Real Estate Commission
Ketchikan, Alaska
POSITION STATEMENT: Testified as nominee to the Real Estate
Commission.
DR. KATHRYN OSTROM, Appointee
Board of Certified Direct-Entry Midwives
Homer, Alaska
POSITION STATEMENT: Testified as nominee to the Board of
Certified Direct-Entry Midwives.
DANA BROWN, Appointee
Board of Certified Direct-Entry Midwives
Fairbanks, Alaska
POSITION STATEMENT: Testified as nominee to the Board of
Certified Direct-Entry Midwives.
KATHRYN ROBERTS, Appointee
Board of Certified Direct-Entry Midwives
Anchorage, Alaska
POSITION STATEMENT: Testified as nominee to the Board of
Certified Direct-Entry Midwives.
ANNE BRAINERD-MARKO, Appointee
Board of Professional Counselors
Fairbanks, Alaska
POSITION STATEMENT: Testified as nominee to the Board of
Professional Counselors.
REPRESENTATIVE SAM KITO
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 48.
SENATOR CATHY GIESSEL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 38.
RYNNIEVA MOSS, Staff
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 93 on behalf of the sponsor.
ERIC ELLMAN
Consumer Data Industry Association (CDIA)
Washington, D.C.
POSITION STATEMENT: Offered supporting testimony for SB 93.
CARLIE CHRISTENSEN, Director of Government Relations
Equifax
Atlanta, Georgia
POSITION STATEMENT: Testified in support of SB 93.
JANE CONWAY, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions and provided information
related to SB 38.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Testified that she does not expect passage
of SB 38 to be a burden on the Division of Insurance.
EMILY RICCI, Chief Health Policy Administrator
Division of Retirement and Benefits
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 38.
MICHELE MICHAUD, Chief Health Official
Division of Retirement and Benefits
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 38.
LEIF HOLM, Pharmacy Owner
North Pole, Alaska
POSITION STATEMENT: Testified in support of SB 38.
MATTHEW KEITH, Vice President of Pharmacy Services
Geneva Woods Pharmacy, Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 38.
SCOTT WATTS, Pharmacist and Independent Pharmacy Owner
Juneau, Alaska
POSITION STATEMENT: Testified in support of
SB 38.
GERALD BROWN, Pharmacist and Independent Pharmacy Owner
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 38.
ERIC DOUGLAS, CVS Health
Illinois
POSITION STATEMENT: Expressed concern with SB 38.
TOM WADSWORTH, Associate Clinical Professor
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 38.
BARRY CHRISTENSEN, RPh
Co-Chair Legislative Committee
Alaska Pharmacists Association
Ketchikan, Alaska
POSITION STATEMENT: Stated that the passage of SB 38 is
important for Alaska pharmacies to remain viable.
FRED BROWN
Health Care Cost Management Corporation of Alaska
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 38.
ACTION NARRATIVE
1:29:47 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:29 p.m. Present at the call to
order were Senator Gardner and Chair Costello. Senator Hughes
arrived soon thereafter, and Senators Stevens and Meyer joined
the committee during the course of the meeting.
^Confirmation Hearings
CONFIRMATION HEARINGS
Real Estate Commission
Board of Certified Direct-Entry Midwives
Board of Professional Counselors
1:30:23 PM
CHAIR COSTELLO announced the first order of business would be
confirmation hearings of governor appointees to boards and
commissions. She thanked the nominees for their service.
She asked David Pruhs of Fairbanks to express his interest in
serving on the Real Estate Commission in a broker seat.
1:32:09 PM
DAVID PRUHS, Appointee, Real Estate Commission, Fairbanks,
Alaska, said he was born and raised in Fairbanks and has had a
career in real estate since 1982. He started as a commercial and
residential real estate appraiser and received his broker
license in 2001. He also has a license in real estate
instruction. He advised that he served on the Fairbanks North
Star Borough Planning Commission from 2007-2014, the Board of
Equalization for the Fairbanks North Star Borough for seven
years, and is a current member of the Fairbanks City Council.
1:32:50 PM
SENATOR MEYER and SENATOR STEVENS joined the committee.
CHAIR COSTELLO asked him to comment on the fact that the Real
Estate Commission has failed to meet its statutory obligation to
adopt an errors and omissions (E&O) insurance policy for
licensees. She noted that this requirement was placed in statute
about 10 years ago when the legislature did away with the surety
fund.
MR. PRUHS said he has had an E&O policy since he started in real
estate. He maintained that brokers should be required to list
their E&O policy on their license renewals and then Real Estate
Commission staff can use that information to do spot audits just
as they do now to spot check that a licensee has fulfilled their
educational requirements.
SENATOR GARDNER asked what can be done to help part time
licensees who can't afford the cost of the E&O policies that are
required.
MR. PRUHS clarified that it is the broker who must carry the E&O
policy. The licensees working under that broker are covered by
that policy.
SENATOR GARDNER asked if every licensee works under a broker.
MR. PRUHS said yes.
1:36:54 PM
SENATOR HUGHES joined the committee.
CHAIR COSTELLO found no further questions or public testimony
and thanked Mr. Pruhs for being willing to serve.
CHAIR COSTELLO asked Guy Mickel of Ketchikan to express his
interest in serving on the Real Estate Commission in a broker
seat.
1:37:57 PM
GUY MICKEL, Appointee, Real Estate Commission, said he is a
lifetime Ketchikan resident and has had a real estate license
since 1987. He noted that a current commission member asked him
to put his name forward and he did so in the belief that he
could be of service to the state.
CHAIR COSTELLO found no questions or public testimony and
thanked Mr. Mickel for being willing to serve.
1:38:48 PM
CHAIR COSTELLO asked Kathryn Ostrom of Homer to express her
interest in serving on the Board of Certified Direct-Entry
Midwives in the physician/OB practice seat. She also asked her
to address any challenges the board will be addressing.
1:39:39 PM
DR. KATHRYN OSTROM, Appointee, Board of Certified Direct-Entry
Midwives, Homer, Alaska, said she has been an OB/GYN in Alaska
since 2006. Initially she worked for the Alaska Native Medical
Center for three years followed by seven years in a private
practice. For the last year she has been the OB/GYN in Homer.
Some of the current issues include building the number of
direct-entry midwives in the state. While she was in Anchorage
she helped start a program to have an OB/GYN on staff at all
times. That provided a good way to work with the lay midwives in
the community. When she moved to Homer, she knew she would work
with certified nurse midwives in her fulltime job, but she also
knew that she could be a direct referral source and consultant
for the community of direct-entry midwives. That was the impetus
to apply to serve on this board, she said.
She advised that one of the issues the board will address is the
very high professional license fees. She explained that one
reason the licensing fees went up is that the board is
responsible for investigating the cases where somebody comes to
the state and is not licensed but nevertheless does a home
delivery. Last year 13 people did not renew their licenses and
she predicted that the repercussions of high licensing fees
would be more dramatic in the coming year.
CHAIR COSTELLO asked the size of the deficit and the current
cost of a license.
DR. OSTROM replied the licensing fee is about $3,800 every two
years and the deficit is about $60,000.
SENATOR HUGHES asked what the board plans to do to eliminate the
deficit.
DR. OSTROM said the board hopes to increase the number of
licensees by keeping the apprentices currently working in the
state after they graduate their program. They are also working
to cut the cost of meeting by using teleconferencing, which
should save about $5,000 a year.
SENATOR HUGHES asked if the board is having to pay for
investigations related to individuals who are practicing but are
not licensed in the state.
DR. OSTROM said that is correct; the cost to investigate cases
of a provider who practices without a license falls to the Board
of Direct-Entry Midwives.
SENATOR GARDNER noted that Dr. Ostrom indicated on her
application that she was not willing to disclosure personal
financial data. She asked if this board requires that.
DR. OSTROM said she didn't know and didn't recall answering "no"
to that question.
SENATOR GARDNER noted that Dr. Ostrom indicated on her
application that she or her family could potentially gain
financially by serving on the board but declined to explain the
potential financial benefit. She asked if this was a matter of
mixed signals.
DR. OSTROM answered yes and added that she did have trouble with
the online application and is surprised at the answers because
neither she nor her family would have a direct financial
benefit.
CHAIR COSTELLO suggested Dr. Ostrom submit a corrected
application. Finding no further questions or public testimony,
she thanked Dr. Ostrom for being willing to serve.
1:47:31 PM
CHAIR COSTELLO asked Dana Brown of Fairbanks to express her
interest in serving on the Board of Certified Direct-Entry
Midwives in the certified direct-entry midwife seat. She also
asked her to comment on the licensing fees and efforts to
address the deficit.
DANA BROWN, Appointee, Board of Certified Direct-Entry Midwives,
Fairbanks, Alaska, said she was licensed in 1993 as part of the
first group of midwives to be licensed in Alaska. She said she
helped Alaska develop its licensing program for midwives and
served on the board from 2000 to 2009. Unlicensed practitioners
were an issue at that time, so the board has been paying for
investigations since its inception. She opined that a previous
licensing examiner contributed to the size of the debt and
stated support for the current one. She described the current
board as strong and said it is looking at ways to streamline the
application process and conducting meetings via teleconference.
CHAIR COSTELLO commented on the importance of institutional
memory on boards and commissions.
SENATOR HUGHES asked if she had any ideas about how to get the
people who are investigated to pay the cost of their
investigation.
MS. BROWN said she believes that HB 90 will help direct-entry
midwives if it passes. She highlighted that midwives are willing
to pay the high fees in the interest of paying down the debt.
She also commented on fluctuating licensing fees and past legal
advice that licensing fees could not be held high artificially
because that would amount to "paying ahead."
CHAIR COSTELLO said the legislature is aware of fluctuations in
licensing fees. Finding no further questions or public
testimony, she thanked Ms. Brown for being willing to serve.
1:58:53 PM
CHAIR COSTELLO asked Kathryn Roberts of Anchorage to express her
interest in serving on the Board of Certified Direct-Entry
Midwives in the certified nurse midwife seat.
KATHRYN ROBERTS, Appointee, Board of Certified Direct-Entry
Midwives, Anchorage, Alaska, said she has been practicing for
about three years and started working alongside direct-entry
midwives on out-of-hospital births. She said she now works at
the Alaska Native Medical Center. She has served on the board
for a little over a year and is interested in continuing this
important and interesting work helping the women and families in
this state.
CHAIR COSTELLO commented on Ms. Roberts qualifications and
tremendous experience. Finding no further questions or public
testimony, she thanked Ms. Roberts for being willing to continue
to serve.
CHAIR COSTELLO asked Anne Brainerd-Marko of Fairbanks to express
her interest in serving on the Board of Professional Counselors
and to comment on any challenges the board faces going forward.
2:02:15 PM
ANNE BRAINERD-MARKO, Appointee, Board of Professional
Counselors, Fairbanks, Alaska, said she has been a licensed
professional counselor in Alaska for 14 years and is also an
approved counselor supervisor. She related that this will be her
second term and she was compelled to apply initially because of
her broad experience and interest in mental health in Alaska.
She worked in the village of Galena for five years and then
moved to Fairbanks and ran a residential treatment center for
women with addictions for a year. She now works for Hope
Community Resources. She opined that her experience has been and
will continue to be helpful to the board.
SENATOR GARDNER commented that Ms. Brainerd-Marko's resume is
exhaustively long and has widely varied.
CHAIR COSTELLO asked Ms. Brainerd-Marko to comment on the
board's $264,000 surplus and if licensing fees will be reduced
in the future.
MS. BRAINERD-MARKO explained that the board increased the fees
significantly when an earlier audit found a $125,000 deficit.
She estimated that the board would be at or a bit over breakeven
by the end of FY17.
CHAIR COSTELLO found no further questions or public testimony
and thanked Ms. Brainerd-Marko for being willing to continue to
serve.
2:06:12 PM
CHAIR COSTELLO stated that the committee's review of nominations
for boards and commissions is complete for today.
HB 48-ARCHITECTS,ENGINEERS,SURVEYORS: EXTEND BD
2:06:24 PM
CHAIR COSTELLO announced the consideration of HB 48. She noted
that this is the second hearing and public testimony is closed.
REPRESENTATIVE SAM KITO, Alaska State Legislature, sponsor of HB
48 summarized the bill extends the termination date of the State
Board of Registration for Architects, Engineers, and Land
Surveyors the full eight years to 2025. The bill also changes
the status of the current landscape architect board member from
nonvoting to voting. There is no cost associated with this
change because the board is self-sustaining with all costs borne
by the licensees. There are currently about 50 landscape
architects who are licensed and the same number of mining
engineers. He noted that the size of the board will change in
statute from 10 to 11 in recognition of the new voting member.
CHAIR COSTELLO found no questions and solicited a motion.
2:08:21 PM
SENATOR HUGHES moved to report HB 48 from committee with
individual recommendations and attached fiscal note(s).
CHAIR COSTELLO announced that without objection, HB 48 is
reported from the Senate Labor and Commerce Standing Committee.
2:08:37 PM
At ease
SB 93-CREDIT REPORT SECURITY FREEZE
2:11:30 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 93. She stated that intent is to hear the
introduction, take questions and public testimony, and hold the
bill for further consideration.
2:11:48 PM
RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State
Legislature, explained that SB 93 supplements Senate Bill 121
that passed last year. It establishes a process for setting up
security freezes for minors who are [16] years of age and
younger that mirrors the process that 26 other states have
adopted.
She presented SB 93 speaking to the following PowerPoint:
Sec. 1
Who is a protected consumer?
A person who is an incapacitated person or under 16
years of age.
Definition of incapacitated person
An incapacitated person is a person whose ability
to receive and evaluate information or to
communicate decisions is impaired to the extent
that the person lacks the ability to provide or
arrange for the essential requirements for the
person's physical health or safety without court-
ordered assistance.
Why Sixteen?
Consumers at 16 years of age typically begin working,
own a cell phone, have a bank account, and have
established active credit. 26 other states have
reduced the age from 18 to 16.
A credit freeze for a minor and a credit freeze for an
adult, while similar in name, in practice they operate
in very different ways.
A credit freeze for an adult is placed to
temporarily turn off the availability of already
established credit for that individual. The request
for a freeze could be due to a recent identity theft
or for other purposes. Because a credit report was
previously created by a lending agency and therefore
currently exists for an adult, one can turn on and
off their credit by placing a freeze.
In the case of a minor, a credit report should not
exist for a person under the age of 16. Therefore,
in order to place a freeze, a credit reporting
agency must (1) verify and authenticate the
identities of both the minor and the requester, (2)
verify the relationship of the person requesting the
freeze for the minor, and (3) create a new record
(prohibiting a credit report from being created in
the future for the minor)
Sec. 2
Creates Article 2A. Security Freeze for Protected
Consumers
Article 2A sets up a system in state statute for
placement of and removal of a security freeze for
minors and incapacitated consumers. The bill puts in
place requirements for identification of parties
involved, verification of authority of personal
representatives, accessing the record by the
representative or other entities with legal purpose,
and the lifting of a security freeze.
2:16:28 PM
Placement of a Security Freeze
AS 45.48.300 - A consumer credit reporting agency is
mandated to place a freeze on a protected consumer's
report if:
A protected consumer's representative requests one.
The protected consumer's representative
Submits the request in a manner specified by the
agency
Submits proof of identification of the protected
consumer
Submits proof of identification of the
representative and proof of authority
Pays the fee of not more than $5.00
Creation of a Record for a Protected Consumer
AS 45.48.310 Record
If a protected consumer does not have a credit report
with the agency, the agency will create a record for
the protected consumer and place a freeze on it.
Proof of Identification and Authority
AS 45.48.320 - Proof of Identification
Proof of identification includes:
Social Security number or copy of SS Card
Certified or official birth certificate
A driver's license or identification card issued by
the Division of Motor Vehicles
Other identification issued by a government agency
Proof of Authority Includes:
A court order
A written, notarized statement expressly describing
the authority that the representative has signed
Time of Placement of Security Freeze
AS 45.48.330 - Placement of Freeze
The agency must place a freeze on the credit report
of record no later than 30 days after receiving the
request.
Operation of Security Freeze
AS 45.48.340 - Operation of Freeze
Once a freeze is placed on the report or record, the
agency cannot release information about the record
without permission from the representative or
consumer unless the freeze was placed based on
misrepresentation of fact or the agency has received
a request for removal of the security freeze from
the representative.
Duration of Security Freeze
AS 45.48.350 - Duration of Freeze
A security freeze remains in effect until the
representative requests the freeze be removed or if
the agency determines the freeze occurred because of
a misrepresentation of facts.
Effect of Material Misrepresentation of Fact
AS 45.48.370 - Material Misrepresentation of Fact
The agency may remove a security freeze or delete
the record if the security freeze was obtained using
a material misrepresentation of fact.
Removal of Security Freeze
AS 45.48.360 - Removal of Security Freeze.
(a) The protected consumer or his representative can have a
freeze removed by:
Submitting a request in the manner prescribed by the
agency
Providing sufficient proof of:
Identification of protected consumer
Identification of representative
Authority for the representative
Paying the agency a fee of not more than $5.00
(b) The agency has not more than 30 days to remove the
freeze.
Charges
AS 45.48.380 - Charges.
A consumer credit reporting agency may not charge
more than $5.00
The agency may not charge a fee when:
The protected consumer's representative submits a
police report, investigative report of complaint
involving criminal impersonation in the 1st
degree
The protected consumer is under the age of 16 and
the agency has created a credit record for that
consumer
2:18:36 PM
Exemptions
AS 45.48.390 - Exemptions. Under the following
conditions a frozen report of a protected consumer
will be made available to the requestor:
A person with a court order
A government agency establishing and enforcing child
support orders
Dept. of Health & Social Services and its agents in
investigating fraud
Dept. of Revenue and its agents when investigating or
collecting delinquent taxes, unpaid court orders, or
other statutory responsibilities
A credit file monitoring service the protected
consumer is a subscriber to
A person preparing a credit report for an inquiring
bank or financial institution regarding account
closures because of fraud, substantial overdrafts,
automated teller machine abuse, or similar information
regarding a protected consumer
Exemptions (continued)
AS 45.48.390 - Exemptions. Under the following
conditions a frozen report of a protected consumer
will be made available to the requestor:
If the report of the agency consists entirely of
information used solely for one or more of the
following:
Criminal records information
information
Fraud prevention or detection
Tenant screening
Employment screening
Definitions
AS 45.48.395 - Definitions
"consumer credit reporting agency" - a person who, for
monetary fees, dues, or on a cooperative nonprofit
basis, regularly engages, in whole or part, in the
practice of assembling or evaluating consumer credit
information or other information on consumers to
furnishing credit reports to third parties, but does
not include a person who issues the report.
2:19:19 PM
Sec. 3 - Transition
This transition language provides that security freezes put
in place prior to the effective date of this Act, will
remain enforced under the same statutes as they did when
the freeze was placed on the record.
SENATOR MEYER commented that age 16 as opposed to age 18 can be
discussed as a policy call. He asked if all the provisions that
passed last year remain the same, but that this bill is directed
at minors and incapacitated people.
MS. MOSS said that's correct.
SENATOR GARDNER asked if adolescents would need to go through
the process of removing a freeze placed by their parents once
they reach age 16.
MS. MOSS said she believes they would be allowed to remove the
freeze once they turn 16. She deferred further comment to
invited expert testimony.
2:21:47 PM
CHAIR COSTELLO opened public testimony on SB 93.
2:21:59 PM
ERIC ELLMAN, Consumer Data Industry Association (CDIA),
Washington, D.C., stated that CDIA represents over 100 consumer
reporting agencies including the three major credit bureaus.
They have worked with legislators in 26 other states to
establish minor credit freezes and SB 93 will make Alaska law
consistent with those states.
Addressing the question regarding age 16 versus age 18, he
explained that all the minor credit freeze statutes that have
passed apply to individuals below 16 years-of-age. The reasoning
is that 16-year-olds get jobs and are essentially credit active
consumers. That is why CDIA is asking that SB 93 follow what
other states have done and adopt age 16. Responding to Senator
Gardner's question, he explained that once the minor turns 16
he/she can affirmatively request the credit bureau remove the
freeze.
2:25:10 PM
SENATOR MEYER continued to question the age 16 provision and
pointed out that a parent or guardian is legally responsible for
their child or ward.
MR. ELLMAN argued that those in the credit reporting community,
the banking and financial services community, and schools
encourage the pursuit of credit education for youngsters. He
agreed that a parent or guardian might need to step in if a
minor fails financially, but maintained it is not appropriate to
address that through a minor freeze. The goal in establishing
age 16 as the threshold is to protect individuals who should not
be credit active. Once they reach the age of 16 many consumers
will become credit active and we want to meet their needs and
their parents' needs, he said.
SENATOR MEYER questioned the notion of encouraging his 17-year-
old to be credit active. He observed that she could get a job,
but she could not get a credit card or a bank loan on her own.
MR. ELLMAN reminded members that the goal of the minor freeze is
to prevent commerce from occurring, whereas the goal of the
adult freeze is to allow adult consumers to turn their credit on
and off as needed.
CHAIR COSTELLO asked if there is a way to communicate with a
minor's parent if someone steals a minor's identity and there is
a freeze on their credit.
MR. ELLMAN said yes. He explained that 99 percent or more of
minors under age 16 do not and should not have a credit report.
If they do, it is most certainly due to fraud and the bill will
allow a parent or guardian to lock down the minor's credit
history. Procedures are also in place to allow the parent or
guardian to monitor activity on the credit report.
2:31:41 PM
CARLIE CHRISTENSEN, Director of Government Relations, Equifax,
Atlanta, Georgia, testified in support of SB 93. She agreed with
previous testimony that SB 93 would amend Alaska law to bring it
in line with minor freeze laws in other states. It specifies the
way a protected consumer's representative must place a request
to place or remove a security freeze. It also clarifies what
constitutes sufficient proof of identification for the
representative to act on behalf of the protected consumer. She
also stated support for the bill covering minors 16 years of age
and younger.
SENATOR GARDNER asked if she's aware of any dueling parents who
have placed a credit freeze on a minor's record.
MS. CHRISTENSEN said she isn't aware of any specific instance,
but the company likely has an established procedure to deal with
that circumstance.
CHAIR COSTELLO asked Mr. Ellman to respond to the question.
MR. ELLMAN said he suspects that there would be times when it
might be necessary to arbitrate between dueling parents. He
offered to do some research and provide a more definitive
answer.
SENATOR GARDNER commented that this could be both a bug and a
feature.
2:36:20 PM
CHAIR COSTELLO closed public testimony on SB 93 and held the
bill in committee.
SB 38-PHARMACY BENEFITS MANAGERS
2:36:36 PM
CHAIR COSTELLO announced the consideration of SB 38. She stated
that the intent is to hear the introduction, take questions and
public testimony, and hold the bill for further consideration.
2:37:21 PM
SENATOR CATHY GIESSEL, Alaska State Legislature, sponsor of SB
38, stated that SB 38, which is about pharmacy benefit managers
(PBMs), covers: 1) the cost of health care in Alaska, 2) Alaska
hire, and 3) Alaska's small businesses.
She recognized that a group of pharmacy students from the
University of Alaska, Anchorage were in the audience.
CHAIR COSTELLO welcomed the students.
SENATOR GIESSEL displayed a graphic to show that pharmacy
benefit managers are the middlemen between the insurance company
and the pharmacy and leave the pharmacy in a position to be
reimbursed less than it pays for a prescription. She cited an
example of an insurance company that pays out $100 for a
prescription for which a pharmacy pays $60. The PBM captures $50
off the top and pays the pharmacy $50, essentially telling the
pharmacy to "eat" the $10 difference.
She stated that PBMs also audit pharmacies and sometimes make
egregious finds that can result in significant fines. She
highlighted that she is offering the bill by request of
pharmacists. She directed attention to articles in the packets
from Newsweek and Bloomberg. She concluded saying the bill will
allow the state to license PBMs and constrain action on minor
technical errors found during audits.
2:42:39 PM
SENATOR STEVENS asked if some agencies can avoid the use of a
PBM.
SENATOR GIESSEL responded that PBMs work for insurance
companies. She noted that the PBM that Aetna uses will not allow
covered consumers to order prescriptions by mail order from a
local Alaska pharmacy. It requires the use of pharmacies from
out-of-state.
SENATOR MEYER asked if similar legislation is used in other
states.
SENATOR GIESSEL said she believes that 37 states have passed
similar legislation. She directed attention to the map in the
packet.
SENATOR MEYER asked if this has saved money for consumers.
SENATOR GIESSEL deferred the question to her aide, Jane Conway.
JANE CONWAY, Staff, Senator Cathy Giessel, Alaska State
Legislature, said there are claims that the legislation will
increase health care costs, but the sponsor has been unable to
find data to substantiate that claim. However, similar
legislation may have helped local pharmacies stay afloat.
SENATOR GARDNER observed that a variation of this legislation
has been offered before.
SENATOR GIESSEL agreed.
CHAIR COSTELLO asked if the auditing practices that PBMs use are
based on some guidelines.
MS. CONWAY replied that PBMs are largely unregulated and have
few sidebars on their procedures.
CHAIR COSTELLO asked for an explanation of how PBMs manage
prescriptions.
SENATOR GIESSEL said they essentially ensure the person is an
insured, that the quantity of the prescription is appropriate,
and when they do the audits they check to see that the pharmacy
has charged the appropriate amount. She highlighted the
complaint with the audits that small clerical errors often
result in a fine. She suggested the committee ask the
pharmacists about their experience with these audits.
CHAIR COSTELLO asked if PBMs have access to the prescription
database.
SENATOR GIESSEL said she didn't know.
2:48:36 PM
SENATOR HUGHES said she was surprised to see that the State
Chamber of Commerce has reservations with the bill. She asked if
the pharmacists have attempted to work directly with the PBMs to
resolve the audit problems and payment arrangements.
SENATOR GIESSEL said pharmacists have tried but the contracts
are offered as take it or leave it. The pharmacies have no power
to negotiate.
SENATOR HUGHES asked if she has asked the state chamber why it
is taking the position it has.
SENATOR GIESSEL said her understanding is the state chamber
wanted to see what Congress would do with the Affordable Care
Act. She noted that Congress did not act on the AFC last week
and she was unaware of whether the state chamber continues to
have reservations.
SENATOR HUGHES asked if the bills Congress is currently working
on related to changing the Affordable Care Act include the issue
of PBMs.
MS. CONWAY said she didn't know if they were related to the
Affordable Care Act, but Congress is considering four pieces of
legislation that try to shine a light on the activities of
pharmacy benefit managers.
SENATOR STEVENS asked if the bill would change the way Aetna
works with its PBM.
MS. CONWAY said the indeterminate fiscal note from the
Department of Administration (DOA) posits that SB 38 might
increase costs. However, a letter in the packet from Barry
Christensen, a pharmacist from Ketchikan, refutes many of the
points in the letter from the state chamber. "I don't think the
pharmacists agree that this would actually be increasing costs
or changing anything that Aetna is doing. However, there could
be some good suggestions to our health plan that could help our
local pharmacies rather than be to the detriment of them in
terms of the mail order component," she said.
2:52:47 PM
SENATOR STEVENS asked how this would cause Aetna to act
differently than it does now.
SENATOR GIESSEL said Aetna will likely continue to have the PBM.
SB 38 does not address their existence; it seeks to address
their conduct.
SENATOR GARDNER expressed surprise that PBMs could get half of
the retail cost of a prescription. "No wonder the consumer is
paying so much," she said. She wondered if anyone would be
testifying about why PBMs, that are essentially auditors, should
get so much.
SENATOR GIESSEL replied, "That's the point of the bill."
2:54:33 PM
CHAIR COSTELLO invited Lori Wing-Heier to testify and noted that
one of the two fiscal notes mentions the role of the director of
the Division of Insurance.
2:55:24 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), stated
that if SB 38 were to pass, pharmacy benefit managers would be
required under Alaska statute to register as a third-party
administrator (TPA) and pay a biannual licensing fee. The
division tracks TPA activity and would be able to follow up if
there were consumer complaints.
She advised that SB 38 is not expected to be a great burden on
the state because not many TPAs are operating in the state and
the first part of the bill is just a licensing or registration
matter for the division. While the division does not know how
many audit appeals there will be, they would be handled through
the established procedures for appeals within the division.
CHAIR COSTELLO asked if the administration has a position on the
bill.
MS. WING-HEIER replied the division looks on it as a process
that can be handled internally and within existing statute. She
added that the position of the administration is reflected in
the indeterminate fiscal note from the Department of
Administration.
CHAIR COSTELLO, noting that a fiscal note doesn't generally
reflect a philosophical position, asked if she was aware that
the administration supports or does not support the bill.
MS. WING-HEIER said she was not aware of the administration's
position.
SENATOR MEYER asked if the legislature could require Aetna to
stop using PBMs.
MS. WING-HEIER suggested that the Division of Retirement and
Benefits could best answer that question then pointed out that
every insurance company uses a pharmacy benefit manager. She
described the bill as a consumer protection which is something
the administration supports. The bill has two parts; first is
the audit piece for the PBMs, which resembles the Fair Audit Act
and the second part is about pricing of generic drugs and the
impact that would have on any employer plan as well as the
individual market.
SENATOR MEYER asked how many insurance companies in Alaska
provide health insurance.
MS. WING-HEIER said less than six insurance companies currently
are writing for the public. This does not include those that are
writing for one or two accounts or ConocoPhillips or Fred Meyer,
for example.
SENATOR STEVENS asked what the PBMs do.
MS. WING-HEIER explained that a PBM negotiates the price from
the wholesaler or drug manufacturer to the pharmacist and the
insurance company is somewhere in the middle. She acknowledged
that the methodology of the charge is a little fuzzy regarding
what the PBM pays the pharmacist, what it receives from the
insurance company, and what it pays the wholesaler or drug
company.
SENATOR STEVENS said it's a shocking situation, but he would
hope that negotiating with the drug companies for a lower price
would ultimately benefit the consumer.
MS. WING-HEIER confirmed that their purpose is to obtain the
best possible cost so the consumer or the employer in an
employer-sponsored plan receives the benefit of the lowest cost.
SENATOR GARDNER asked if PBMs don't have an adverse incentive to
negotiate the lowest cost if they receive 50 percent of the
cost.
MS. WING-HEIER advised that rebates are common in
pharmaceuticals from providers to PBMs to the insurance
companies.
CHAIR COSTELLO asked if other states have similar legislation,
specifically regarding the role that the Division of Insurance
has in the bill.
MS. WING-HEIER said quite a few states have Fair Audit Acts and
most reside with insurance of licensing.
CHAIR COSTELLO invited Michele Michaud and Emily Ricci forward
to respond to the question relating to the Division of
Retirement and Benefits.
3:02:57 PM
EMILY RICCI, Chief Health Policy Administrator, Division of
Retirement and Benefits, Department of Administration (DOA),
introduced herself.
MICHELE MICHAUD, Chief Health Official, Division of Retirement
and Benefits, Department of Administration (DOA), introduced
herself.
CHAIR COSTELLO asked if they wanted to comment on the bill or
any questions or testimony they heard.
MS. MICHAUD answered no.
SENATOR MEYER asked if the state could ask Aetna not to use a
PBM.
MS. MICHAUD said if the Department of Law advised that would be
possible under the existing agreement with Aetna, it would still
take significant analysis to see if it would be in the best
interest of the plan.
SENATOR STEVENS asked how much the state's retirement programs
pay in pharmacy benefits each year.
MS. MICHAUD reported that the state spent $55 million on generic
medication last year and the overall pharmacy spend was close to
$300 million.
SENATOR STEVENS commented, "That would balance our budget right
there."
MS. RICCI added that she didn't know when the state health plans
first adopted PBMs to manage pharmacy benefits, but it is a
common practice among large employers. When she looked at other
options several years ago, she found that there isn't an easy
alternative to using a PBM to manage the pharmacy spend.
SENATOR GARDNER asked if a 50 percent cut is standard among
pharmacy benefit plans.
MS. RICCI deferred the question to Aetna or other pharmaceutical
experts in the room.
3:07:41 PM
CHAIR COSTELLO opened public testimony on SB 38.
3:08:03 PM
LEIF HOLM, Pharmacy Owner, North Pole, Alaska, testified in
support of SB 38. He reported that the three pharmacies he owns
in Interior Alaska are most affected by the MAC pricing that the
bill seeks to correct. He stated that passage of SB 38 will
regulate audit practices and correct questionable pricing
strategies which will be a step toward achieving transparency
with PBMs. It's the right thing to do to rein in PBMs and begin
to eliminate their abusive tactics that are ultimately costly
for health plan sponsors and patients, he said.
CHAIR COSTELLO advised that the committee would eagerly accept
any written testimony or response to questions that members
posed.
SENATOR STEVENS asked Mr. Holm to contact the committee to
describe abusive audit practices.
MR. HOLM agreed.
3:10:19 PM
MATTHEW KEITH, Vice President of Pharmacy Services, Geneva Woods
Pharmacy, Inc., Anchorage, Alaska, testified in support of SB
38. He said that Geneva Woods is a small independent pharmacy
that constantly struggles with the practices and abusive audits
that have been described. He questioned why the state shouldn't
regulate PBMs just as it regulates pharmacies, medical
practices, wholesalers, and insurance providers in the state. He
said SB 38 isn't about eliminating PBMs but rather it
establishes guardrails, so the negotiations are more reasonable
and fair. He noted that many PBMs own mail order pharmacies and
questioned whether the intent is to steer business in that
direction.
3:12:10 PM
SCOTT WATTS, Pharmacist and independent pharmacy owner, Juneau,
Alaska, said he has practiced pharmacy for 27 years and his
pharmacy daily dispenses medication below his cost because of
MAC price listing. He said that talking with the PBMs would be
the best way to resolve the issue, but most of the time these
departments do not have a phone number. He said that MAC price
listing is a way to keep costs down, but they need to be updated
more frequently to reflect the cost. It should not be borne on
the backs of the pharmacists to keep those prices down." He
explained that his out-of-town customers come in to have their
prescriptions filled when they are in town and would like to
have them refilled when they return home. However, some
contracts don't allow that, and the people must have their
prescriptions refilled from an out-of-state mail order pharmacy.
He cited an example of the pricing issue. When a customer
questioned their co-pay, he directed them to their health care
plan because the pricing is set by the PBMs when the
prescription is transmitted. The PBM responded that afternoon
telling the pharmacist he was in breach of contract by telling
the customer what the plan was paying for their prescription. He
said the PBMs have their reasons to not want the customer to be
aware of the price of their medication, but he feels customers
should have that information.
CHAIR COSTELLO said the committee would accept his written
testimony if he chose to submit it.
3:14:40 PM
GERALD BROWN, Pharmacist, Fairbanks, Alaska, said he owns an
independent pharmacy with his wife and they too are experiencing
the problems that have been discussed earlier. The MAC pricing
list does not reflect price increases for six months to a year,
so they are constantly under-reimbursed. It amounts to about
$1,000 per month for their small pharmacy. He reported that a
large chain pharmacy in town has been under-reimbursed by
$30,000 a month. "This is a prevalent problem with PBMs." He
explained that PBMs are like a credit card; Alaska Airlines
sponsors the card and VISA administers the benefit. The VISA
card, for example, is setting the co-pay amount. He said the
problem is that the pharmacies are getting about $0.45 to
dispense the prescription plus 21 percent less than cost. A bank
would not lend on that business model. Referencing the 50
percent that the PBMs capture, he clarified that the rebates
from the pharmaceutical company to the PBMs are generally
between 30 percent and 60 percent. "So now your formulators are
based not on therapeutics, but they're based on who gives us the
bigger rebates." The pharmacies don't generally see that; they
are just told how much they will be reimbursed. Further, the
amount the pharmacy receives may not reflect the cost the
pharmacy paid. He highlighted that the PBMs are certainly making
money and their executives are as well. Last year the CEOs for
these PBMs received bonuses ranging from $9 million to $49
million. He summarized that SB 38 simply seeks to give the PBMs
structure, so they can't squash the small businesses. "We don't
have a problem with the audits; we have a problem with the take
it or leave it attitude." These large organizations at the very
least should be required to register with the state.
SENATOR GARDNER asked if the bill addresses either the issue
that the back prices are met but the increases to the pharmacy
don't follow timely or the issue that formulas can be based on
who gives the largest rebate.
MR. BROWN said no.
3:19:44 PM
ERIC DOUGLAS, CVS Health, Illinois, said he is calling to
express concern with SB 38. He said many of the comments today
have been off the topic that the bill addresses and PBMs have
been portrayed inaccurately. He said PBMs save money and they
wouldn't be utilized if they didn't. He said CVS Health is
concerned that SB 38 would unintentionally promote fraud, waste,
and abuse because it inserts the state in private audit terms
that are well addressed in current contracts. It is also
inappropriate that the bill charges the director of the Division
of Insurance to be the arbiter of private contract disputes when
that division does not have expertise regarding generic
pharmaceutical reimbursement. The bill also establishes
requirements that would be impossible to meet. For example,
insuring that a specific pharmacy can buy a specific product
from a specific wholesaler at a specific price. This would
increase costs just as setting up a no loss guarantee on MACS
would. Noting that the Board of Pharmacy is defined in the
definitions but isn't used in the legislation, he said CVS
Health would not support the Board of Pharmacy having anything
to do with PBMs if there is a financial relationship between
pharmacy benefit managers and pharmacies.
3:22:35 PM
TOM WADSWORTH, Associate Clinical Professor, University of
Alaska Anchorage (UAA), said UAA has a pharmacy program and he
is the assistant dean of the program. He introduced the pharmacy
students in the audience as Alaskans and highlighted that the
founding principles of the program is to train Alaskans in
Alaska, so they serve Alaskans living in the rural areas of
Alaska. He said he supports SB 38 because the largest issue with
sending these students into rural areas is that there won't be
any pharmacies to go to. Brick and mortar pharmacies are in
jeopardy and pharmacists see patients seven times more often
than a doctor. He highlighted that pharmacists in these rural
communities only make their money be selling prescriptions and
as the profit margins have shrunk, the sustainability of these
businesses is in question. He offered his belief that PBMs serve
a good role in controlling formularies but the money they save
goes into a pot also controlled by the PBMs.
He concluded, "We need to see that pharmacists are reimbursed
for what they do for these communities, so they can be there to
serve the patients of these communities, particularly rural
Alaska."
CHAIR COSTELLO invited the pharmacy students to talk with her
after the meeting for the committee's Facebook page. "That's an
important message to get out. That we need more Alaska born and
raised pharmacists here in our state."
3:24:42 PM
BARRY CHRISTENSEN, RPh, Co-Chair Legislative Committee, Alaska
Pharmacists Association, Ketchikan, Alaska, stated that the
passage of SB 38 is important for Alaska pharmacies to remain
viable. Responding to Senator Stevens' request for an example of
an audit abuse practice, he explained that his pharmacy received
a large desk audit from a PBM that required submitting over 100
pages of documentation. The only secure option for transmitting
the material was through FAX and their machine could only handle
50 pages at a time. They informed the auditor that the
transmission was in two parts, yet the results of the audit
showed that only half of the documentation was considered. The
pharmacy received permission to resend the material, but the
auditor allowed just five days on the final audit findings for
appeal. The final findings included a $400 claim for a
prescription that was not part of the original audit. The PBM
gave the pharmacy less than 24 hours to get their documents and
a letter from that prescriber in the mail. He maintained that
this was not a fair turnaround time.
MR. CHRISTENSEN summarized that SB 38 will set standards for
PBMs and that is all the bill asks for.
3:27:34 PM
FRED BROWN, Health Care Cost Management Corporation of Alaska,
Fairbanks, Alaska, advised that he would not reiterate the
written testimony he submitted but would respond to some of the
comments made earlier in the hearing. He reported that his
organization has over 100,000 covered lives in Alaska and is
comprised of more than 25 self-funded plans. They offer a myriad
of options for member plans to select, among which is access to
prescription benefit management (PBM) plan. Thirteen of the
plans in Alaska use the PBM program his organization offers. The
total gross drug valuation for those 13 plans in 2016 was $74.1
million. Noting that earlier testimony stated that 50 percent of
that goes to the PBM, he reported that in 2016 their plans saved
49 percent of that total or about $37.8 million. He added, "If
the earlier descriptions are correct, then the PBM only made 1
percent." The point, he said, is that there is more to the story
than has been told.
CHAIR COSTELLO held SB 38 in committee with public testimony
open.
3:29:49 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:39 p.m.