SB 159-AIR AMBULANCE SERVICES  3:36:02 PM CHAIR OLSON announced that the next order of business would be SENATE BILL NO. 159, "An Act relating to air ambulance service providers, air ambulance membership agreements, and regulation of air ambulance service providers and air ambulance membership agreements by the division of insurance; and providing for an effective date." 3:36:08 PM SENATOR BERT STEDMAN, Alaska State Legislature, as sponsor of SB 159, explained that many rural Alaskans are trying to get medical services quickly, especially in smaller communities. He said he has been working with Representative Munoz on this topic and between them their districts cover most of Southeast Alaska. 3:37:24 PM CHRISTIE JAMIESON, Staff, Senator Bert Stedman, Alaska State Legislature, stated that SB 159 would allow all life-saving air medical transport companies such as Airlift Northwest to provide air care membership program coverage for air ambulance services. The purpose of a membership program is to cover all out-of- pocket expenses that may not be covered by a primary payor. The cost to transport patients has been estimated to range from $70- $100 thousand per flight. The air care membership program was discontinued by the Division of Insurance (DOI), who deemed the membership program no longer exempt from insurance regulations due to Airlift Northwest's restructuring. Presently, Airlift Northwest has been allowed to honor existing memberships, but it cannot offer any renewals. Airlift Northwest, a Seattle-based provider of life-saving air medical transport services, has offered the popular air care membership program to Southeast Alaska residents since 2009 and approximately 3,000 Southeast Alaska households are enrolled in the membership program. MS. JAMIESON related that air medical transportation insurance is expensive and may not cover all the costs. She stated the purpose of a membership program is to cover all out-of-pocket expenses, including deductibles and co-insurance amounts not covered by the primary payor. Thus, as an "air care" member, the insurance company would receive the bill. Airlift Northwest is secondary to all payors and works directly with the insurance company for claims processing. The "air care" program directly helps fund Airlift Northwest so it can transport critically ill or injured patients to hospitals for care not locally available. She said that SB 159 will exempt air ambulance services from the state's insurance code, thereby allowing Airlift Northwest to continue offering the "air care" program to Alaskans. 3:40:03 PM REPRESENTATIVE SADDLER asked for the approximate cost per household of the current 3,000 members for the secondary air transport insurance. SENATOR STEDMAN answered the cost is approximately $100 per year and offered his belief that the cost is per household. 3:40:51 PM REPRESENTATIVE SADDLER asked whether Airlift Northwest is the only company affected by this bill. SENATOR STEDMAN answered that was his understanding. REPRESENTATIVE MILLETT offered her belief that Anchorage offers similar service. MS. JAMIESON commented that Apollo [MedFlight] offers service in Fairbanks. 3:41:49 PM SHELLY DEERING, Alaska Regional Manager, Airlift Northwest, testifying in support of SB 159, stated that Airlift Northwest has offered services in Alaska for 21 years. She commented she is also a 21-year Alaska resident. She explained that Airlift Northwest seeks to provide Alaskans the ability to participate in subscription membership programs for air medical transportation. Airlift Northwest has successfully transported patients for 32 years and is currently staffed with 19 nurses and pilots who live and work in Juneau. Airlift Northwest has sold air care memberships in Alaska from 2008 until November 2013. Currently, Airlift Northwest has 4,066 members, including the previously mentioned households, but it was informed in 2013 to discontinue its membership due to restructuring, she said. 3:43:22 PM MS. DEERING reported that [SB 159] would resolve the discontinuation allowing any air ambulance provider to offer this membership program. It would also give appropriate oversight authority to the Alaska Division of Insurance. She stated that residents require air medical transportation when a hospital or first responder has determined they are critically ill or injured. This is a time filled with urgency, stress, and anxiety, so not worrying about transport costs is one less thing families need to worry about. She reported that the cost for the program is $99 per year per household. 3:44:18 PM REPRESENTATIVE SADDLER asked for clarification on the business structure. MS. DEERING answered that Airlift Northwest is a state tax exempt entity under the University of Washington (UW) medical system in Seattle. REPRESENTATIVE SADDLER asked whether Airlift Northwest operates elsewhere. MS. DEERING answered that Airlift Northwest also operates in Washington. In further response to a question, she said that it has two fixed-wing aircraft in Alaska and two fixed-wing aircraft and four helicopter aircraft in Washington; Airlift Northwest uses Learjet 31-A and Aero Commanders. 3:45:16 PM MS. DEERING stated that the company was founded in 1983 after Airlift Northwest's medical director, Dr. Michael Copus, was unable to transport three critically burned children from Sitka. He had decided that if patients couldn't get to care, it was possible to bring care to patients and transport them to facilities. CHAIR OLSON offered his belief that the helicopters allow them to pick up medical crews from five hospitals. MS. DEERING agreed. At the time, Providence Medical Center, Seattle Children's Hospital, Harborview, University of Washington, and Virginia Mason Hospital and Medical Center in Seattle were part of the consortium that started Airlift Northwest. REPRESENTATIVE JOSEPHSON asked for clarification between a medical service and benefit. MS. DEERING deferred to Chris Marten. 3:46:47 PM The committee took an at-ease from 3:46 p.m. to 3:50 p.m. due to audio issues. 3:50:58 PM REPRESENTATIVE JOSEPHSON understood that part of the reason for the change was finding that Airlift Northwest was not offering clients a "medical service" but offered a "benefit." CHRIS MARTEN, Executive Director, Airlift Northwest, stated that Airlift Northwest was previously designated a 501(c)(3) non- profit organization so it operated separately from the University of Washington system. Since Northwest Airlift is now part of the university, the company no longer fit any of the criteria to be a membership program. The Division of Insurance (DOI) suggested that it become its own insurance program; however, Airlift Northwest is an air medical service and not an insurance company. The company provides membership benefits so clients don't have to pay out-of-pocket expenses; however, he clarified that Airlift Northwest is not an insurance company. At that point, the DOI advised Airlift Northwest to cease and desist, which is when the company sought a statute change so it could sell memberships again. 3:53:25 PM REPRESENTATIVE JOSEPHSON asked why the stoppage was ordered. MARTIN HESTER, Deputy Director, Division of Insurance, Department of Commerce, Community, and Economic Development (DCCED), stated that the division enforces AS 21.87.010 and it came to the its attention that Airlift Northwest had restructured its air care program. He related that the statute requires the entity to be a municipality, a non-profit medical service corporation, or a non-profit association. The division consulted with Department of Law and determined the company no longer met the three criteria, and so it did not qualify for the exemption under the 2008 statute. 3:54:54 PM KARLA HART said she is an Airlift Northwest member and would like to continue to be a member. She initially bought a membership at the suggestion of her primary care nurse who had observed effects and burden on families whose members were airlifted, but the families did not have adequate coverage. She subsequently investigated the membership and found that paying $99 for a service that is really valuable to the region was a small price to pay and no more than the cost of a membership to her public radio station or other non-profit that she supported. She said many of her family and friends have purchased the service but have never needed to use it, although she does know people who have been medevaced. She said some people are still paying for the medevac a decade later. She said that Airlift Northwest provides a real financial assurance. She checked into the private insurance as an acceptable alternative, but found the policy was underwritten by a for-profit company. She expressed concern that the insurance companies had an exclusion in the event a foreseeable need existed for the medevac. The insurance company couldn't adequately answer whether terminal cancer, for example, or a heart stent would be considered a foreseeable need. The Airlift Northwest program doesn't try to cut the bottom line and disallow members, which is why she cares about this bill. She expressed concern that delays in passing SB 159 could cause problems. Since members cannot renew their memberships, anyone suffering a catastrophe would not have coverage and it could cost a substantial amount of money. She urged members to move this quickly. In Washington, universities are considered municipalities, but not in Alaska, so what's at issue is really just the spirit of the law, she said. 3:59:11 PM ED ZASTROW offered his support for SB 159. He said that sufficient number of medevac transports occur in Ketchikan that have kept Guardian Air and Northwest Airlift in business. He expressed surprise at the number of airlifts that land and take off from Ketchikan. 4:00:26 PM CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on SB 159. [SB 159 held over.]