Legislature(2001 - 2002)
02/28/2001 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 113-HEALTH CARE INSURANCE PAYMENTS Number 0453 CHAIR MURKOWSKI announced that the first bill to be heard today would be HOUSE BILL NO. 113, "An Act relating to health care insurance payments for hospital or medical services; and providing for an effective date." CHAIR MURKOWSKI mentioned that the committee should have received a proposed CS for HB 113, an amendment offered by Representative Green, testimony of Nicole Bagby from Aetna US Healthcare, and a letter from Doug Bruce from Providence Health Systems in Alaska. Number 0553 REPRESENTATIVE HALCRO made a motion to adopt the proposed CS as the work draft, 22-LS0418\F. There being no objection, Version F was adopted as the working document. KEVIN JARDELL, Staff to Representative Joe Green, Alaska State Legislature, speaking on behalf of the sponsor, said there has been one change from the last version of HB 113. In Section 1, subsection (a) the segregation between paper claims and electronic claims has been removed, as well as referring to working days. It now reads that a paper or an electronic clean claim must be paid within 30 calendar days. REPRESENTATIVE ROKEBERG asked why it had gone to 30 calendar days versus 20 working days. REPRESENTATIVE JOE GREEN, Alaska State Legislature, sponsor stated that it was at the request of the insurance companies, which preferred to use calendar days because states may have different holidays and so forth. Number 0632 REPRESENTATIVE ROKEBERG said it could make a difference because if there were a holiday, it would extend it out [if one was using working days] beyond 30 days, in his opinion. MR. JARDELL said they went with working days because that was what the state has used in the past; however, most states use calendar days, and with computer programs for keeping up with billing, it is easier to incorporate calendar rather than working days. REPRESENTATIVE HALCRO asked about a handout regarding the physician survey results regarding timeliness of claims payment submitted by the Alaska State Medical Association. He said it compares Medicare, Medicaid, and private health insurance. He referred to information on the handout, the average, high, low, and medium. He asked for clarification of what this meant. Number 0728 MR. JARDELL responded that the person who drafted it [was not present] and didn't want to speak definitively on this. He said he could get that information for the committee. He said the average, high, low, and medium referred to payments made by the three carriers. REPRESENTATIVE HALCRO said he assumes that this represents the average length of a claim, the average time of payout. He asked if there was rhyme or reason to this. MR. JARDELL said the person drafting this sent out a survey. The Alaska State Medical Association sent out this survey to the doctors, and he believed there was someone online at the Legislative Information Office (LIO) that could speak to this. He said he didn't have the actual definition of the terms. REPRESENTATIVE HALCRO said he assumes that the "high" are those claims that are appealed or are more questionable in nature. REPRESENTATIVE GREEN said these claims go back and forth and on and on. REPRESENTATIVE HALCRO said even for claims of the most contentious nature, private industry still responds 40 days faster than government; it takes 56 days for Medicaid [payments]. MR. JARDELL deferred the questions to the drafters and the people who submitted this. REPRESENTATIVE HALCRO verified that the legislation only applies to private companies, private carriers, and so forth. MR. JARDELL responded that it doesn't apply to Employee Retirement and Income Security Act (ERISA) policies. REPRESENTATIVE HALCRO said "we" are holding those in the private sector to a higher standard than we do government. MR. JARDELL said not necessarily. Government has its own regulations and rules. For example, the state policy with Aetna has a 15-day incentive turnaround. It is a shorter time period than 30 days for their turnaround. He clarified that these rules don't apply to them. MR. JARDELL, in further response to Representative Halcro, related his understanding that currently Medicare has 30 days and 15 days for a non-clean claim in order to obtain additional information on top of that. However, he offered to review that because Representative Green was only addressing the 30 working days and attempting to shorten that time and not deal with the ERISA claims. Number 0999 REPRESENTATIVE ROKEBERG asked if this bill would cause a marginal health underwriter in the state to leave or would be a barrier to the entry into the state of a health insurance underwriter. He inquired as to whether that was given consideration. MR. JARDELL answered that some consideration on that was given, with the understanding that the potential population for a market in Alaska is somewhat smaller than in some states. There can be a level at which it would not be marketable to come here. However, this doesn't seem to be an additional requirement beyond what is required in other states. Furthermore, [the bill] will potentially decrease costs in Alaska and thus make it more marketable and efficient to do business in Alaska. REPRESENTATIVE ROKEBERG pointed out that the proposed CS does not distinguish between claim types. MR. JARDELL agreed. Number 1097 REPRESENTATIVE HALCRO remarked that many physicians' offices do not bill an individual's insurance company, and payment is due at the time the service is rendered. The individual has to submit the claim. Representative Halcro asked if this applied to the [insurance company's] response to the individual's submission. MR. JARDELL clarified that the intent of the bill is to apply it to any claimant. He agreed with Representative Halcro that when an individual submits a claim, the insurance company would need to respond to the individual. Mr. Jardell explained that the rights are assigned to the hospital or doctor and thus the rights are actually part of the contract with the insurer. Number 1162 MR. JARDELL turned to the committee's previous discussion regarding the deletion of the language on page 2, beginning with line 21. The language being referred to is as follows: "The policy may not contain a provision requiring that services be provided by a particular hospital or person, except as applicable to a health maintenance organization under AS 21.86." He noted that he had drafted an amendment that would amend the provision. However, after speaking with Representative Green, Mr. Jardell understood that Representative Green didn't want to offer the amendment. After speaking with the Division of Insurance, Mr. Jardell related his understanding that there is no conflict with the current statute and the so-called patient's bill of rights that was passed or with managed care plans. The division interprets the provision as preventing any insurance company from mandating a client or an insured to go to a specific physician. He explained that under managed care plans, although a client may be persuaded to go to a certain provider under the plan, those statutes specifically precluded those plans from exclusive contracts. Therefore, an individual under a managed care plan can always go outside that plan, although that individual may not receive the same benefits. So, removing the provision entirely could be interpreted as saying that insurers can draft a policy requiring the insured see a specific physician and thus remove the choice of physician from the insured. Number 1306 CHAIR MURKOWSKI recalled that there was some concern that keeping the language would somehow be contradictory to last year's patient's bill of rights. Chair Murkowski requested that Mr. Lohr enlighten the committee as to why the language on page 2, lines 19-21, was included. Number 1349 BOB LOHR, Director, Division of Insurance, Department of Commerce & Economic Development, testified via teleconference. Mr. Lohr informed the committee that the provision in question is currently found in AS 21.54.020(a). The division interprets that provision as preventing a policy from requiring a particular provider and preventing the customer the choice of going to a different provider. Although there may be a financial incentive to obtain services from a provider that is part of the plan, the customer cannot be prohibited access to an alternative provider. Therefore, if that provision was repealed or deleted, then Mr. Lohr believes that there would be no prohibition and thus plans could discriminate against other providers by providing no reimbursement for those services. MR. LOHR turned to last year's patient's bill of rights, HB 211, and noted that he didn't see any conflict because of the exception provided in the provision. The provision includes the following language: "except as applicable to a health maintenance organization under AS 21.86." That language resolves any conflict that might exist in terms of reading the two consistently. CHAIR MURKOWSKI asked if that was the case even though Alaska doesn't have health maintenance organizations (HMOs). MR. LOHR replied yes and pointed out that HMOs are provided for and fully authorized. However, none have elected to come to Alaska yet. REPRESENTATIVE ROKEBERG acknowledged that there is case law that says one can "step out," which is why there is the service option mandated in the underwriting. He asked if that is why this is acceptable. MR. LOHR deferred to Katie Campbell. Number 1511 KATIE CAMPBELL, Actuary of Life and Health, Division of Insurance, Department of Community & Economic Development, echoed earlier testimony that the provision is included in order to ensure that individuals have a choice. Therefore, an insurance provider can't have an exclusive provider arrangement that restricts the physicians that can be seen [unless it is an HMO]. She pointed out that the language was never part of the "prompt pay" part of the statute. Regulations on fair claim practices specify the timeframes for payment of a claim. That provision was included in order to address direct payment to a provider. MS. CAMPBELL, in response to Representative Rokeberg, explained that a preferred provider option allows an individual to see anyone, but there is an incentive in the contract. REPRESENTATIVE ROKEBERG interjected that there could be a closed panel. MS. CAMPBELL said, "Not in Alaska." REPRESENTATIVE ROKEBERG asked if that was because of last year's HB 211, which includes a point-of-service option that will take effect in July. MS. CAMPBELL remarked, "That's an HMO; this is referring to an indemnity fee for a service plan, which all of the plans in Alaska are." REPRESENTATIVE ROKEBERG acknowledged that, but related his understanding that the new law in July will be such "that you can have a closed panel, but it's a point-of-service option where you can step out of it and you can underwrite it separately." MS. CAMPBELL pointed out, "That point-of-service option is applicable only within the HMO." REPRESENTATIVE ROKEBERG said, "No, it's not." He expressed concern because that was the entire intention of [HB 211], which does impact preferred provider organizations (PPOs) because they are underwritten in Alaska by indemnity companies and a point- of-service option must be provided due to case law. However, that would not exclude the ability to have a closed panel if a different premium is paid. Representative Rokeberg clarified that a closed panel premium at a lower rate can be paid, but the [individual] must have the ability to step out of it. MS. CAMPBELL said she would have to review the specific provision to which Representative Rokeberg is referring. She didn't recall that provision being included in the bill [HB 211]. However, she did recall that there was a provider contracting provision, the majority of which dealt with external review. REPRESENTATIVE ROKEBERG maintained that it was in the bill [HB 211] and was a major part of the bill. He said, "That's the patient's right; they get to choose their own doctor, but the underwriter gets to underwrite for it. But it didn't necessarily restrict having a closed panel of physicians or providers. ... You can pay for it, though." CHAIR MURKOWSKI asked if that would suffice because "then it is not an exclusive provider -- you've got to pay for it." REPRESENTATIVE ROKEBERG clarified that one could pay for a cheaper one and have an exclusive provider. He pointed out that last week Blue Cross said that they had the cheap economy model of their plan with a closed panel. CHAIR MURKOWSKI pointed out that the language in part read as follows: "The policy may not contain a provision requiring that services be provided". Chair Murkowski related her understanding that the bill doesn't say that an individual is required to go to a person. Although there is an option to go outside, there is no requirement that says one may not do this. REPRESENTATIVE ROKEBERG said that there would be if there is the economy plan [under HB 211]. Number 1699 MR. LOHR suggested that the committee request an opinion from the Attorney General regarding whether there is a conflict between the provisions in question and the patient's bill of rights. CHAIR MURKOWSKI indicated the need for the sponsor to obtain an opinion from the Attorney General. She also indicated that public testimony on CSHB 113 would be closed. REPRESENTATIVE GREEN suggested that the bill could be moved out and if there is a conflict, that language could be removed in the House Health, Education and Social Services Standing Committee. CHAIR MURKOWSKI remarked that she would have no problem with deleting the sentence. However, after hearing Ms. Campbell's remarks, Chair Murkowski said that she could understand why it makes sense to maintain the language. Still, if the language is contradictory, she expressed the need to [delete the language]. REPRESENTATIVE ROKEBERG commented that it is a confusing issue. Representative Rokeberg said that he would not object to moving the bill if the sponsor agrees to let the committee know what is going on. REPRESENTATIVE GREEN pointed out that if [the bill were moved] and he, as the sponsor, didn't keep his word, then the committee could request that the bill be returned to the House Labor and Commerce Standing Committee. CHAIR MURKOWSKI indicated the need to hear from other committee members. She pointed out that HB 113 deals with the prompt pay issue, with the exception of this one sentence under discussion. She mentioned that she didn't have any objection to moving it out either. REPRESENTATIVE ROKEBERG suggested that the committee could remove the language and the sponsor could argue in the next committee of referral as to why the language should be included. Number 1973 REPRESENTATIVE ROKEBERG moved that the committee adopt a conceptual amendment on page 2, lines 19-21, to delete the following language: "The policy may not contain a provision requiring that services be provided by a particular hospital or person, except as applicable to a health maintenance organization under AS 21.86." MR. JARDELL pointed out that without that language it could be interpreted to allow insurers to write policies that require exclusivity with a provider. REPRESENTATIVE ROKEBERG expressed the need for the [Division of Insurance] and the Attorney General to ensure that the new law taking effect in July covers it or that "we" know what is going on. REPRESENTATIVE GREEN stated that he didn't object to the conceptual amendment. Number 2047 REPRESENTATIVE HALCRO recalled that Ms. Campbell's testimony expressed the importance of having that language. MR. JARDELL echoed his earlier statement regarding what would occur with the removal of the language. REPRESENTATIVE ROKEBERG noted that he didn't disagree with Mr. Jardell's interpretation. However, he added that the new statute [per HB 211] is such that there must be a point-of- service option menu provision to the policyholder. Therefore, it would be the [insured's] choice. REPRESENTATIVE GREEN remarked, "If this hinges on that, we can leave it out because what Representative Rokeberg says, 'It's covered in a different part of law.'" If this isn't covered in a different part of law, then the language could be reinserted in House Health, Education and Social Services Standing Committee. REPRESENTATIVE HALCRO commented that perhaps the committee should err on the side of caution and leave the language in. REPRESENTATIVE CRAWFORD said he agreed with Representative Halcro. CHAIR MURKOWSKI surmised that the committee is not in a position to make a recommendation on this without the assistance of the Attorney General's review. She didn't believe it necessary to hold the bill and wait for the Attorney General's review. She did point out that if the committee wishes to move out the bill, it should be done with the caveat that the Attorney General be requested to review whether there is a conflict; and if there is a conflict, the language should be adjusted. REPRESENTATIVE ROKEBERG withdrew his conceptual amendment. Number 2214 REPRESENTATIVE MEYER moved to report CSHB 113, Version 22- LS0418\F, Ford, 2/27/01, out of committee with individual recommendations and the accompanying fiscal note(s), with the caveat that the House Labor and Commerce Standing Committee has requested that the Attorney General provide an opinion regarding whether there the language on page 2, lines 19-21, is in conflict with the law passed last year. There being no objection, CSHB 113(L&C) and the aforementioned caveat were reported from the House Labor and Commerce Standing Committee.
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