Legislature(2011 - 2012)HOUSE FINANCE 519
03/08/2011 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB13 | |
| HB126 | |
| HB80 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 13 | TELECONFERENCED | |
| + | HB 80 | TELECONFERENCED | |
| + | HB 126 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 13
"An Act relating to fees and charges for medical
treatment or services as they relate to workers'
compensation; and providing for an effective date."
9:08:33 AM
REPRESENTATIVE KURT OLSON, SPONSOR, discussed HB 13. He
explained that the existing extension to the workers'
compensation fee schedule would have expired on December
31, 2010, but it had been extended by emergency regulation
until June 30, 2011. He communicated that staff and
employees of the Department of Commerce, Community and
Economic Development (CCED) were available to discuss the
bill.
LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, addressed the
bill and the purpose of the fee schedule. In 2007
anticipated legislation, which would have addressed the
inadvertent deletion of the fee schedule, had not been
introduced. Over time three provisions had been implemented
that made cost of living increases to the fee schedule. The
procedure codes in the schedule had not been kept up-to-
date; currently there were approximately 2,000 fee codes
that were not covered. She referred to several charts (copy
on file) that showed current medical fees related to
workers' compensation in Alaska. The first handout was
titled "Medical Benefits Constitute the Majority of Total
Benefit Costs in Alaska." She shared that a significant
portion of workers' compensation cost was due to the high
cost of medical care; the chart showed that the total
medical costs in Alaska represented 75 percent of the
system costs compared to the countrywide average of 58
percent. The second graph from the National Council on
Compensation Insurance was titled "Alaska Medical Average
Cost per Case vs. Countrywide." The average cost in Alaska
for a workers' compensation case in 2009 was $37,000
compared to the average countrywide cost of $27,000, which
represented a 37 percent cost differential. She discussed
that it was important to restructure the fee schedule in
order to address the high costs. The third handout was the
"2010 Oregon Workers' Compensation Premium Rate Ranking
Summary." Alaska no longer held the number-one rank in the
study that it had occupied during the prior four years.
There had been rate decreases for the last five years.
Ms. Hall discussed the general overview of the provisions
in the legislation. She detailed that the bill would
replace the past Consumer Price Indexes (CPI) with a
sustainable schedule, which would limit the division's need
to request CPI increases from the legislature every year or
so. A full fee schedule that included the missing procedure
codes would be provided and was a step back to the
methodology that had been in place in 2004. The schedule
was adopted by the Workers' Compensation Board and was
constructed by an outside vendor that collected data based
on geographical areas. The fee schedule was a base schedule
that was not to exceed the usual reasonable and customary
fees that were established by the board; it was based on a
credible profile of billed charges to ensure actuarial
credibility. The schedule reflected the cost differences in
the four geographical areas in Alaska. Categories were
expanded under the bill to ensure that all types of medical
services were incorporated, including transportation costs.
9:16:06 AM
Ms. Hall detailed that some transportation costs such as
emergency medevac and ground transportation were extremely
expensive. She had received a number of anecdotal cases
from Alaskans related to high transportation costs for
health insurance and workers' compensation. She did not
think the transportation costs would be reduced through
their inclusion in the fee schedule. She added that the fee
schedule would be based on the 90th percentile of bill
charges. The number was higher than most medical health
insurance fee schedules and ensured that injured workers
would have access to good treatment.
Representative Neuman asked how the bill would impact
employer insurance costs. He had heard from employers that
unemployment benefits and workers' compensation contributed
to their high insurance costs.
Ms. Hall replied that the bill stabilized the fee schedule.
She did not think that it would reduce costs, but it had
the potential to cap costs. The 2,000 procedure codes that
were not covered in the fee schedule were currently paid at
100 percent and would be capped at the 90th percentile
under the legislation; therefore, a small cost increase
could occur initially. She opined that the stability of the
fee schedule would be beneficial to the system and the
system costs.
Representative Neuman wondered whether the Physicians Board
had been consulted on the proposed fee schedule. He
believed that the stability could help to bring more
insurance companies into the state, which would offer
increased competition and help to stabilize costs.
Ms. Hall responded that HB 13 was identical to a bill that
passed the House the prior year and changes had been made
to the language in response to concerns from the medical
society. She added that she had not heard the concerns
during the current year.
Co-Chair Stoltze observed that North Dakota had cheaper
premiums.
9:20:05 AM
Representative Guttenberg wondered whether there was an
analysis that showed how providers would be impacted by fee
schedule or capping cost shifts related to Medicaid and
other. He asked whether charges would increase in other
areas. Ms. Hall did not believe that an analysis had been
done, given that the division's statistical agent National
Council on Compensation Insurance had not conducted one.
She did not think that any significant cost shifting would
occur with a fee schedule at the 90th percentile. She noted
that a potential reduction to the rates of Medicare and
Medicaid could result in rates that were lower than the
service costs.
Co-Chair Stoltze OPENED and CLOSED public testimony.
Co-Chair Stoltze pointed to the $75,000 fiscal note.
MIKE MONAGLE, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT (DLWD),
discussed that the $75,000 estimated cost associated with
producing a medical fee schedule was based on the costs of
the last contractor the department had used in 2003
(Engenics).
Co-Chair Stoltze asked what the previous fee schedule had
cost. Mr. Monagle responded that it had been ten years
since the last fee schedule had been produced and the
department did not have record of the costs associated with
its production. The department had contacted Engenics for a
general quote on the costs, but did not have specific
details because DLWD was planning to submit a request for
proposal and anticipated that the company may enter a bid.
Co-Chair Stoltze was surprised about the missing record
because workers' compensation had not been a low profile
issue in 2003 and 2004.
Vice-chair Fairclough wondered whether the committee should
zero-out FY 13 through FY 17 on the fiscal note in order to
make it more relevant.
Co-Chair Stoltze thought the recommendation represented a
good compromise.
Representative Doogan wondered whether the first year would
help to provide information necessary for a more complete
fiscal note. Mr. Monagle replied in the affirmative. He
explained that after the department awarded its first
contract bid it would have more solid cost data.
Co-Chair Stoltze remarked that the cost would be at least
$75,000.
9:26:31 AM
Vice-chair Fairclough observed that it was possible the
awarded bid would come in higher than the projected cost on
the fiscal note, which would not look good; however, the
bid could be less than the projected amount.
Co-Chair Stoltze communicated that the fiscal note would be
modified to reflect the committee's changes. The FY 13
through FY 17 columns would be zeroed-out.
Representative Gara commented that medical costs in
workers' compensation and across the board were high in
Alaska. He had been told that most states allowed an
average insurance compensation at the 50th percentile and
that Alaska allowed compensation at the 70th percentile. He
did not know whether the insurance compensation played a
part in Alaska's high medical costs, but he thought it
would be worth hearing about as the committee discussed
Medicare and medical costs.
Vice-chair Fairclough MOVED to report HB 13 out of
committee with individual recommendations and the
accompanying fiscal note.
HB 13 was REPORTED out of committee with a "do pass"
recommendation and with new fiscal note by the House
Finance Committee for the Department of Labor and Workforce
Development.
9:29:34 AM
AT EASE
9:30:45 AM
RECONVENED