Legislature(2009 - 2010)CAPITOL 120
02/24/2010 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB314 | |
| HB71 | |
| HB331 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 314 | TELECONFERENCED | |
| + | HB 71 | TELECONFERENCED | |
| *+ | HB 331 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 314 - WORKERS' COMPENSATION
1:08:25 PM
CHAIR RAMRAS announced that the first order of business would be
HOUSE BILL NO. 314, "An Act relating to fees and charges for
medical treatment or services, the crime of unsworn
falsification, investigations, and penalties as they relate to
workers' compensation; and providing for an effective date."
1:09:09 PM
KONRAD JACKSON, Staff, Representative Kurt Olson, Alaska State
Legislature - on behalf of the sponsor, the House Labor and
Commerce Standing Committee, which is chaired by Representative
Olson - offered his understanding that HB 314 addresses the
issue of fraud and a small portion of the recommendations
outlined in a report produced by the Medical Services Review
Committee (MSRC) as it pertains to the medical services fee
schedule; and that a forthcoming amendment also addresses the
issue of fraud.
1:11:12 PM
CHAIR RAMRAS made a motion to adopt Amendment 1, labeled 26-
LS1354\A.3, Bailey, 2/17/10, which read:
Page 1, lines 1 - 2:
Delete "the crime of unsworn falsification"
Insert "civil damages"
Page 1, lines 5 - 9:
Delete all material.
Page 1, line 10:
Delete "Sec. 2"
Insert "Section 1"
Renumber the following bill sections accordingly.
Page 2, lines 15 - 16:
Delete "usual, customary, and reasonable"
Page 2, lines 17 - 21:
Delete "include the most recent Current
Procedural Terminology codes for both category I and
category II medical treatment or other services
published by the American Medical Association;
notwithstanding AS 44.62.010 - 44.62.290, the board
shall update the schedule annually by order"
Insert "be based on statistically credible data,
including charges for the most recent category I, II,
and III medical services maintained by the American
Medical Association and the Health Care Procedure
Coding System for medical supplies, injections,
emergency transportation, and other medically related
services, and must result in a schedule that (i)
reflects the cost in the geographical area where
services are provided; and (ii) is at the 90th
percentile"
Page 2, line 26, through page 3, line 2:
Delete all material and insert:
"* Sec. 2. AS 23.30.250(a) is amended to read:
(a) A person who (1) knowingly makes a false or
misleading statement, representation, or submission
related to a benefit under this chapter; (2) knowingly
assists, abets, solicits, or conspires in making a
false or misleading submission affecting the payment,
coverage, or other benefit under this chapter; (3)
knowingly misclassifies employees or engages in
deceptive leasing practices for the purpose of evading
full payment of workers' compensation insurance
premiums; or (4) employs or contracts with a person or
firm to coerce or encourage an individual to file a
fraudulent compensation claim is guilty of workers'
compensation fraud, which may be punished under
AS 11.46.120 - 11.46.150, and may also be guilty of
perjury and related offenses under AS 11.56.200 -
11.56.230 [CIVILLY LIABLE TO A PERSON ADVERSELY
AFFECTED BY THE CONDUCT, IS GUILTY OF THEFT BY
DECEPTION AS DEFINED IN AS 11.46.180, AND MAY BE
PUNISHED AS PROVIDED BY AS 11.46.120 - 11.46.150].
* Sec. 3. AS 23.30.250(c) is repealed and reenacted
to read:
(c) In addition to criminal penalties under this
section, a person who violates this chapter is liable
in a civil action brought by or on behalf of a person
who suffers economic damages as a result of the
violation for an award of three times the amount of
compensatory damages resulting from the violation,
subject to adjustment under AS 09.17, and an award of
reasonable attorney fees."
Renumber the following bill sections accordingly.
Page 3, line 19:
Delete all material.
Renumber the following bill section accordingly.
REPRESENTATIVE HOLMES objected for the purpose of discussion.
1:13:19 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community, & Economic Development (DCCED), indicated
that HB 314 would address some concerns that have arisen [with
regard to current statute]. She recounted that in 2005, the
legislature amended the Alaska Workers' Compensation Act, but in
so doing inadvertently deleted the basis for the Workers'
Compensation Board to adopt a fee schedule, though there was an
expectation at the time that the stakeholders would propose
legislation before August 1, 2007, to address that issue. When
that didn't occur, medical fees were frozen until August 1,
2007, and the division subsequently provided for two Consumer
Price Index (CPI) increases - one in 2006 and one in 2009 - with
the existing extension due to expire on December 31, 2010,
though the medical fee schedule is currently missing
approximately 2,000 procedure codes. Once that last extension
expires, there will be no cap of any kind on medical fees
[related to workers' compensation].
MS. HALL noted that a chart in members' packets illustrates that
in 2008, medical expenses made up 58 percent of the workers'
compensation benefit system in all states for which National
Council on Compensation Insurance, Inc. (NCCI), provides
ratemaking services. Another chart illustrates that in Alaska,
in 2008, medical expenses made up 72 percent of the workers'
compensation benefit system, though in 1988 and 1998, it made up
only 52 percent and 63 percent respectively. In response to
questions, she surmised that the entire cost of Alaska's
workers' compensation benefit system has probably grown due to
Alaska having a larger premium base - though the actual incident
rate has decreased substantially - and it is the aforementioned
growth in medical expenses which illustrates the importance of
implementing a new medical fee schedule, as HB 314 is proposing
to do.
MS. HALL noted that yet another chart illustrates the average
yearly medical cost per case in Alaska - from 2004 through 2008
- versus the average yearly medical cost per case in the rest of
the country; for example, in the rest of the country, the
average yearly medical cost per case is $26,000, whereas in
Alaska, it's $40,000 - substantially higher. Members' packets
also include a handout illustrating workers' compensation
premium rate rankings for all 50 states plus the District of
Columbia; Alaska, for example, is ranked number one with an
index rate of 3.97. Costs drive premiums, and the major costs
of Alaska's workers' compensation benefit system are those
pertaining to medical care. For these reasons, she remarked,
"We need this fee schedule to be in place."
1:19:48 PM
MS. HALL acknowledged, however, that HB 314 is not a fix for
Alaska's workers' compensation system, and won't lower premiums.
Instead, HB 314 would provide for a sustainable fee schedule
that could be renewed each year using data collected from
individual vendors that collect "bill/charge" data. A fee
schedule based on the CPI is simply not sustainable, whereas the
methodology that was in place in 2004 - which HB 314 proposes to
revert back to - is. She then noted that in addition to the
provisions that address Alaska's workers' compensation fee
schedule, other provisions of HB 314 would update the statutes
pertaining to the prosecution of workers' compensation fraud,
which, obviously, adds costs to the system. In the
aforementioned 2005 legislation, authority to investigate and
prosecute workers' compensation fraud was granted, but recent
experience has shown that clarification of those statutes is
warranted in order for the State to successfully prosecute such
fraud.
MS. HALL explained that by changing the title and deleting the
bill's proposed change to AS 11.56.205(a) - existing Section 1 -
Amendment 1 would remove from the bill language regarding the
crime of unsworn falsification. Amendment 1 would also provide
more specificity to proposed AS 23.30.097(a)(1)(D) such that the
fee schedule must be based on statistically credible data and
must result in a schedule that reflects the cost in the
geographical area where the services are provided, and is at the
90th percentile. She predicted that Amendment 1's proposed
change to AS 23.30.097(a)(1)(D) would provide for a more
accurate fee schedule. In response to a question, she said that
passage of Amendment 1 wouldn't lower medical costs or workers'
compensation insurance premiums; passage of Amendment 1 would,
instead, merely provide a methodology for establishing a fee
schedule, a methodology that could stay in place until an
alternative is developed.
MS. HALL, in response to another question, noted that
establishing a more permanent fee schedule is dependent upon the
will of the legislature, and is clearly a policy call.
1:27:11 PM
CHAIR RAMRAS questioned what would occur with regard to injured
workers, workers' compensation insurance premiums, and employers
if Amendment 1 is adopted but a permanent solution is not then
forthcoming.
MS. HALL opined that with regard to injured workers, having a
fee schedule that is reflective of the average fees in a
particular geographical area - and currently there are three
such areas [in Alaska] - would allow injured workers access to
medical care, thus addressing one of the division's primary
concerns, particularly given that adopting "multiples of
Medicare, for example," is not likely to occur in Alaska and, in
any case, would not be in the best interest of injured workers
attempting to access medical care. She surmised that employers,
too, want their injured employees to have access to medical care
so that they can come back to work. Again, the methodology
proposed by Amendment 1 is sustainable and has already been
proven to work, though it won't control costs or premiums.
CHAIR RAMRAS asked whether the cost of medical care is different
for injuries that occur on the job than it is for injuries that
don't occur on the job.
MS. HALL said that the cost of the medical care wouldn't be
different, though what the medical care provider ultimately gets
paid by the person, or his/her health insurance company, or the
workers' compensation benefit system could vary depending on the
situation.
CHAIR RAMRAS questioned what would result if Amendment 1 were to
be amended such that in its change to proposed AS
23.30.097(a)(1)(D), the words, "90th percentile" were replaced
with the words, "70th percentile".
MS. HALL, acknowledging that a 90th percentile is high,
cautioned that in deciding what constitutes an acceptable
reimbursement rate, the committee should keep in mind that
ensuring injured workers have access to medical care is the
primary goal.
1:34:35 PM
MR. JACKSON, in response to a question, offered his
understanding that the words, "90th percentile" came from
regulation.
MS. HALL concurred, adding that the medical fee schedule in the
workers' compensation regulations has been at the 90the
percentile for a significant number of years, and that's why the
division is seeking to include that percentile in statute.
CHAIR RAMRAS expressed dissatisfaction with that rationale, and
questioned whether reducing the percentile to an 80th percentile
would both reduce workers' compensation insurance rates and
ensure that injured workers have access to medical care.
MS. HALL said she is unable to predict whether such a change
would still ensure that injured workers have access to medical
care, surmised that medical care providers would be harmed by
establishing the fee at an 80th percentile, but acknowledged
that such a change might eventually translate into a benefit for
employers because the division bases its premiums on the
historical cost of claims. Various studies, she noted, conflict
with regard to whether changing a fee schedule has resulted in a
significant impact on the states that did so.
CHAIR RAMRAS offered his belief that reducing the percentile
would be of benefit to employers, and said he would be seeking
to amend Amendment 1 to that effect.
MR. JACKSON, in response to questions, said that there have been
two CPI increases to the existing fee schedule, and that the
bill doesn't contain a sunset provision.
REPRESENTATIVE GRUENBERG indicated that he would prefer to see
the percentile increased to a 95th percentile, and would
therefore be opposing a reduction to an 80th percentile.
[Chair Ramras turned the gavel over to Representative Herron.]
MS. HALL, in response to a question, explained that prior to the
statutory change that occurred in 2005, the fee schedule was
updated annually, and that such updates have not occurred since.
REPRESENTATIVE GRUENBERG asked for further information about the
criminal provisions of the bill, of Amendment 1, and of existing
statute.
MS. HALL indicated that the DOL found that the "fraud
prosecution language" of existing AS 23.30.250(a) was
insufficiently clear for prosecuting cases of fraud; that the
language contained in the bill appears to address fraud only
from a civil standpoint and then only as perpetrated by the
employee; and that Amendment 1 would allow all those who commit
fraud to be subject to both criminal and civil prosecution.
[Representative Herron returned the gavel to Chair Ramras.]
REPRESENTATIVE GRUENBERG offered his understanding that in cases
involving fraud, changing current statute [as both the bill and
Amendment 1 propose] would result in less civil damages being
awarded.
MS. HALL concurred with that summation.
1:48:45 PM
ERIN POHLAND, Assistant Attorney General, Labor and State
Affairs Section, Civil Division (Anchorage), Department of Law
(DOL), also concurred.
REPRESENTATIVE GRUENBERG questioned who would benefit by such a
change.
MS. POHLAND indicated that such a change wouldn't benefit anyone
in particular.
1:51:32 PM
DON ETHERIDGE, Lobbyist, Alaska American Federation of Laborers
- Congress of Industrial Organizations (Alaska AFL-CIO), relayed
that although the Alaska AFL-CIO has a concern about the fraud
provisions of HB 314, Amendment 1 would address that concern by
making those provisions applicable to all who commit fraud. In
response to a question, he indicated that at this time, changing
the percentile listed in Amendment 1 won't alter the Alaska AFL-
CIO's position on either the bill or Amendment 1, and that in
addition to having its concern regarding fraud addressed, the
Alaska AFL-CIO simply wants to ensure that injured workers would
still be covered and still have access to medical care.
1:53:31 PM
KENTON BRINE, Assistant Vice President, State Government
Relations, Property Casualty Insurers Association of America
(PCIAA), indicated that the PCIAA supports HB 314, though has
not yet had a chance to review Amendment 1. He noted that
medical expenses are higher in Alaska than in other states, and
constitute a larger percentage of "lost cost" related to
workers' compensation than in other parts of the country. He
said he believes that the fraud provisions of the bill will help
insurers control costs while still providing adequate protection
for injured workers.
1:55:29 PM
STACY ALLAN, Officer, Laborers' Local 341, relayed that
Laborers' Local 341 appreciates Amendment 1, which addresses
concerns regarding the fraud provisions of the bill. She
offered her hope that the legislature would continue to address
the issues pertaining to workers' compensation and the effect
that system has on injured workers. In response to a question,
she indicated that the percentile provided for in Amendment 1 is
not of concern to Laborers' Local 341.
1:57:53 PM
BARBARA HUFF TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, said that Teamsters Local 959
supports HB 314. She indicated, though, that arbitrarily
lowering the percentile currently provided for in Amendment 1
would give Teamsters Local 959 great concern, because such a
change could result in physicians refusing to provide medical
care to injured workers, and could create some of the same
problems that have arisen with regard to Medicare/Medicaid.
2:03:47 PM
KEVIN B. DOUGHERTY, General Counsel, Alaska District Council of
Laborers, noted that 8 A.A.C. 45.082(i)(3) uses the words "90th
percentile"; that that percentile has been in place for at least
20 years; that his organization would have to conduct more
research before it could speak to whether it would support
lowering that number; and that it would be hard to say what
percentile would start to impact service, which would be of
concern. In conclusion, he asked the committee to be cautious
when considering changing the percentile, and suggested that the
issue warrants further study.
CHAIR RAMRAS, after ascertaining that no one else wished to
testify, closed public testimony on HB 314.
2:05:23 PM
CHAIR RAMRAS made a motion to amend Amendment 1 such that in its
proposed change to AS 23.30.097(a)(1)(D), the words, "90th
percentile" would be replaced with the words, "85th percentile".
REPRESENTATIVE GRUENBERG objected.
CHAIR RAMRAS explained that he is interested in striking the
right balance between medical care for the injured worker and
compensation for the medical community, and employer costs.
REPRESENTATIVE GRUENBERG said he opposes the amendment to
Amendment 1, and pointed out that it has not yet been fully
vetted with regard to how it would affect injured workers.
REPRESENTATIVE HOLMES agreed that the amendment to Amendment 1
merits further discussion, and relayed that absent that
discussion, she is reluctant to vote for the amendment to
Amendment 1.
REPRESENTATIVE HERRON questioned whether anyone has ever
considered providing for a different percentile.
MS. HALL indicated that the division's focus has instead been to
get a fee schedule in place to replace the one that's due to
expire at the end of the year, and thereby prevent further
increases in "the system costs (indisc.) premiums for
employers."
CHAIR RAMRAS characterized the amendment to Amendment 1 as a
provocative change, and questioned why the committee shouldn't
adopt it if doing so might lower employer costs.
REPRESENTATIVE LYNN, commenting that the committee has not yet
heard why the percentile is currently set at a 90th percentile,
characterized an 85th percentile as just an arbitrary number
that was picked simply because it sounded good.
REPRESENTATIVE GRUENBERG again expressed a preference for not
adopting the amendment to Amendment 1.
CHAIR RAMRAS withdrew the amendment to Amendment 1.
2:13:46 PM
CHAIR RAMRAS then made a motion to adopt a conceptual amendment
to Amendment 1 such that in its proposed change to AS
23.30.097(a)(1)(D), the words, "is at the 90th percentile" would
be replaced with the words, "the amount paid by the preferred
provider network of insurers is not to exceed the 90th
percentile".
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.
MS. HALL cautioned against using that language, because there
are a lot of preferred provider networks as well as what she
called "rented networks."
CHAIR RAMRAS questioned whether that issue could be resolved by
specifying that it would be the average amount paid by the top
five preferred provider network of insurers. He expressed a
preference for changing the language of Amendment 1 to address
what he called ever-increasing workers' compensation insurance
premiums.
MS. HALL explained that the division only collects information
about billed charges, not paid charges, and surmised, therefore,
that using such information in the calculation would present a
big task.
CHAIR RAMRAS relayed that HB 314 would be set aside with the
motion of whether to adopt the conceptual amendment to
Amendment 1, and the motion of whether to adopt Amendment 1,
left pending.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01 HB314 Sponsor Statement ver A.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 02 HB314 Bill v. A.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 03 HB314 Sectional Analysis ver A.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 04 HB314 Amendment A 3.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 05 HB314-Law-Crim-02-11-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 06 HB314 - DOLWD-WC-01-28-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 07 HB314 Letter AK Spine Institute 2-2-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 08 HB314 Letter NFIB 1-31-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 09 HB314 NCCI AK Medical Cost Comparison.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 10 HB314 NCCI AK vs Countrywide Medical Cost per Case.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 11 HB314 NCCI All States Medical Cost Comparison.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 12 HB314 Letter ASMA 1-1-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 13 HB314 Suggested changes ASMA 1-1-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 14 HB314 Workers' Compensation Premium Rate Ranking cy 2008.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 314 |
| 15 HB314 8 AAC 45 082 Medical Treatment.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 314 |
| 01 HB71 propsed Bill CS v.T .pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 02 HB71 Sponsor Statement.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 03 HB71 Sectional.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 04 HB71 Changes to v. C.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 05 HB71(HSS) Bill v. C.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 06 HB71 Bill v. E.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 07 HB071CS(JUD)-DHSS-IPEMS-2-15-10.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 08 HB71CS(HSS) - DHSS FN 4-15-09.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 09 HB71 AARP Support Ltr.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 10 HB71 Relevant Statutes.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 71 |
| 01 HB331 Sponsor Statement.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
hb 331 |
| 02 HB331 Bill v. R.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
|
| 03 HB331-DHSS-YC-2-22-10.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
hb 331 |
| 04 HB331 AK Court Fines & Forfeitures Annual.htm |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 331 |
| 06 HB331 FAQs.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
hb 331 |
| 05 HB331-UYCA FactBrief.docx |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
HB 331 |
| 07 HB331 Fines in Statute.pdf |
HJUD 2/24/2010 1:00:00 PM HJUD 2/25/2010 1:00:00 PM |
hb 331 |
| 08 HB331 Support Letters.pdf |
HJUD 2/24/2010 1:00:00 PM |
HB 331 |