04/15/2010 09:00 AM Senate FINANCE

CS FOR HOUSE BILL NO. 314(FIN)                                                                                                
                                                                                                                                
     "An Act relating to fees and charges for medical                                                                           
     treatment or services, civil damages, and penalties as                                                                     
     they relate to workers' compensation; and providing                                                                        
     for an effective date."                                                                                                    
                                                                                                                                
CONRAD JACKSON,  STAFF, REPRESENTATIVE KURT  OLSON, SPONSOR,                                                                    
explained  that  the  bill  relates  to  medical  treatment,                                                                    
service  fees,  and penalties  as  they  relate to  Workers'                                                                    
Compensation.  Last   year,  the  bill  moved   through  the                                                                    
legislature to  extend the current fee  schedule cap another                                                                    
year and to add a CPI  modifier to the schedule. The current                                                                    
cap  will expire  on December  31, 2010.  The extension  was                                                                    
done to give the Medical  Services Review Committee a little                                                                    
more time  to meet and  plan a new schedule.  Currently, the                                                                    
fee  schedule   lacks  up-to-date  medical  codes.   At  the                                                                    
conclusion  of  the   Medical  Services  Review  Committee's                                                                    
meeting,  a recommendation  to revise  the fee  schedule was                                                                    
made.                                                                                                                           
                                                                                                                                
Mr. Jackson explained  that Section 1 outlines  the basis of                                                                    
the  new  schedule,  which will  include  services  such  as                                                                    
emergency transportation, medical  supplies, and injections.                                                                    
Sections 2 and 3 clarify  the criminal and civil prosecution                                                                    
and penalties for Workers' Compensation fraud.                                                                                  
                                                                                                                                
10:16:34 AM                                                                                                                   
                                                                                                                                
Senator   Thomas   voiced   concerns  about   the   Workers'                                                                    
Compensation system as it pertains  to fraud. He thought the                                                                    
focus was  on the  injured worker.  Mr. Jackson  deferred to                                                                    
others to address criminal law concerns.                                                                                        
                                                                                                                                
SUE MCLEAN, DIRECTOR, CRIMINAL  DIVISION, DEPARTMENT OF LAW,                                                                    
clarified  that HB  314 is  not an  expansion into  criminal                                                                    
law,  but  rather  a  clarification  of  criminal  law.  She                                                                    
referred to page  3, line 1, "is civilly liable  to a person                                                                    
adversely affected  by the  conduct, is  guilty of  theft by                                                                    
deception". She  stated that  the proposed  change separates                                                                    
the civil  liability, which  is now in  Section C,  from the                                                                    
criminal  liability. It  simply says  that a  person may  be                                                                    
prosecuted under  AS 11.  It specifically  addresses Senator                                                                    
Thomas's  question.  Broadening  the  statute  ensures  that                                                                    
fraudulent  conduct  by other  than  the  employee is  dealt                                                                    
with.                                                                                                                           
                                                                                                                                
10:21:15 AM                                                                                                                   
                                                                                                                                
Senator  Thomas was  still concerned  about prosecuting  for                                                                    
fraud under  Workers' Compensation. Ms. McLean  spoke of the                                                                    
difficulty   of  prosecuting   when  the   statute  provides                                                                    
otherwise.                                                                                                                      
                                                                                                                                
Senator  Thomas  asked  if  this was  the  simplest  way  to                                                                    
approach the  issue. Ms.  McLean did not  know of  any other                                                                    
statute that addressed the issue.                                                                                               
                                                                                                                                
10:24:14 AM                                                                                                                   
                                                                                                                                
Senator Olson inquired if medical  providers are affected by                                                                    
the expansion in  the bill. Mr. Jackson said  there had been                                                                    
a number  of contacts from  the medical community,  which is                                                                    
why subsection  (D) of Section  1 includes  suggestions from                                                                    
the medical community.  It is not the intention  of the bill                                                                    
to limit services to injured workers.                                                                                           
                                                                                                                                
Senator Olson  asked if the  medical community  is satisfied                                                                    
with the bill. Mr. Jackson said they were.                                                                                      
                                                                                                                                
Co-Chair  Hoffman  noted  a  fiscal   note  for  $75,000  in                                                                    
Workers'  Safety   Account  Funds  to  cover   the  cost  of                                                                    
producing a Workers' Compensation  medical fee schedule from                                                                    
the  Department of  Labor and  Workforce  Development and  a                                                                    
zero fiscal note from the Department of Law.                                                                                    
                                                                                                                                
LINDA HALL,  DIRECTOR, DIVISION OF INSURANCE,  DEPARTMENT OF                                                                    
COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  spoke  in                                                                    
support of  the bill, but  voiced concern about  the medical                                                                    
fee  schedule  that  expires  on   December  31,  2010.  She                                                                    
referred  to  charts  in  the bill  packet  that  show  that                                                                    
medical expenses  and premiums  in Alaska  are significantly                                                                    
higher in  the Workers'  Compensation arena.  She maintained                                                                    
that the fee schedule will  not solve the problem, but would                                                                    
help. She  responded to Senator  Olson's question  about the                                                                    
involvement  of  the  medical  community,  who  now  are  in                                                                    
agreement with  the fee schedule.  She testified  in support                                                                    
of the bill.                                                                                                                    
                                                                                                                                
10:28:29 AM                                                                                                                   
                                                                                                                                
DON  ETHERIDGE, ALASKA  STATE AFL/CIO,  spoke in  support of                                                                    
the  legislation. He  stated that  his concerns  about fraud                                                                    
issues and medical coverage have been assuaged.                                                                                 
                                                                                                                                
FRED BROWN, EXECUTIVE DIRECTOR,  HEALTH CARE COST MANAGEMENT                                                                    
CORPORATION  OF  ALASKA, reported  that  he  was a  Workers'                                                                    
Compensation  hearing  officer for  25  years.  He voiced  a                                                                    
concern  similar  to  Senator   Thomas's,  when  a  case  is                                                                    
reaching a settlement and the  insurance company is put in a                                                                    
position  of using  the  criminal code  to  use leverage  to                                                                    
drive down the  value of the settlement.  The consequence is                                                                    
a reduction in the value of  the claim, but also a reduction                                                                    
to the health trust funds.  In the settlement phase there is                                                                    
often  a  desire by  the  parties  to waive  future  medical                                                                    
benefits, and in that case  the health benefit funds are put                                                                    
in a position of picking up costs.                                                                                              
                                                                                                                                
Mr.  Brown  concluded  with a  suggestion  to  simplify  the                                                                    
system by omitting Section 2 (b) in HB 314.                                                                                     
                                                                                                                                
HB  314  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:34:28 AM