03/27/2000 09:07 AM Senate FIN

COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 256(HES)                                                                               
"An Act relating to regulation of managed health care                                                                           
and allowing physicians to collectively negotiate with                                                                          
a health benefit plan that has substantial market                                                                               
power."                                                                                                                         
                                                                                                                                
                                                                                                                                
This was the second hearing for this bill in the Senate                                                                         
Finance Committee.                                                                                                              
                                                                                                                                
BECKY CERNEY, Director of State Legislation, American                                                                           
Medical Association based in Chicago, Illinois testified to                                                                     
the alarming trend with the increased number of unfair                                                                          
contracting provisions that hamper the ability for                                                                              
physicians to provide proper care. She said some of the                                                                         
contract provisions related to the ability to refer                                                                             
patients to specialists, administer certain medications and                                                                     
interpreting what medically necessary care is in the best                                                                       
interest of the patient.                                                                                                        
                                                                                                                                
Ms. Cerney shared that the efforts to correct these                                                                             
provisions have been unsuccessful resulting in 13 states,                                                                       
including Alaska, that have introduced legislation to                                                                           
permit physicians to enter into contract negotiations as a                                                                      
collective group.                                                                                                               
                                                                                                                                
Ms. Cerney told the Committee it might hear from                                                                                
representatives of the insurance industry saying that                                                                           
physicians are already permitted to negotiate over                                                                              
contracts. That is not true, she stressed, citing that two                                                                      
or more physicians are prohibited under the anti-trust law                                                                      
from coming together to negotiate over contracting                                                                              
provisions. She suggested the representatives could be                                                                          
referring to the ability of independently practicing                                                                            
physicians to come together. She remarked that this                                                                             
provision was ineffective because it asks physicians to                                                                         
give up "their practice autonomy" for the purpose of coming                                                                     
together to discuss these matters. She said that the cost                                                                       
of forming these units was over $1 million.                                                                                     
                                                                                                                                
Ms. Cerney asserted that physicians needed to be allowed                                                                        
another way to negotiate for provisions that are most                                                                           
affective for their patients. She stated that this bill                                                                         
would enable physicians to deliver the care that is most                                                                        
proper to their patients.                                                                                                       
                                                                                                                                
Ms. Cerney spoke to the strong trend in the nation with to                                                                      
adopt statewide regulations to address this matter. She                                                                         
added that six additional states were "watching and                                                                             
waiting" and that this was a good opportunity for Alaska to                                                                     
help its patients.                                                                                                              
                                                                                                                                
Senator Green asked if any practices currently in place in                                                                      
Alaska were based on the Medicare model with restrictions                                                                       
on provided services, unauthorized prescriptions, etc.                                                                          
                                                                                                                                
Ms. Cerney would have to defer to someone in Alaska's                                                                           
medical industry.                                                                                                               
                                                                                                                                
Senator Green commented that a major concern of many                                                                            
physicians related to Medicare restrictions and she wanted                                                                      
to know if the insurance companies' restrictions were                                                                           
nearly as egregious as those were.                                                                                              
                                                                                                                                
Ms. Cerney spoke to her experience with Medicare provisions                                                                     
and stated that said some are much more favorable than                                                                          
those imposed by some private sector insurance providers.                                                                       
                                                                                                                                
Co-Chair Parnell noted the primary criticism of this bill                                                                       
is that the health care costs would rise and asked the                                                                          
witness to address the matter.                                                                                                  
                                                                                                                                
Ms. Cerney asserted that argument is raised for every                                                                           
legislation pertaining to managed care regulation. She                                                                          
admitted there is a provision in this bill that would                                                                           
submit the oversight entity, the attorney general, to                                                                           
impose a fee to cover the administrative review. If this                                                                        
bill were to result in premium increases, she said she                                                                          
would be "astounded" and that other threats of increased                                                                        
costs have proven untrue.                                                                                                       
                                                                                                                                
Co-Chair Parnell asked which states or studies should the                                                                       
Committee refer to with regard to increase costs.                                                                               
                                                                                                                                
Ms. Cerney answered there are a number of studies that came                                                                     
out of the managed care liability legislation that can be                                                                       
applied to other types of legislation. She cited a study                                                                        
for the Kaiser Family Foundation that projected cost                                                                            
increases associated with liability legislation would be                                                                        
between three to 13 cents per member per month. She said                                                                        
the actual outcome of the liability legislation were even                                                                       
less because there has been less litigation than expected.                                                                      
                                                                                                                                
Senator P. Kelly asked what would be the affect on cost of                                                                      
a state action doctrine that did not include fees He had                                                                        
heard that a similar doctrine had been attempted elsewhere.                                                                     
                                                                                                                                
Ms. Cerney replied that it was impossible to separate the                                                                       
two issues from any bill. She explained that whenever                                                                           
contractual items were negotiated, it would be necessary to                                                                     
look at the contract in its entirety. She stated there are                                                                      
a number of instances of the Federal Trade Commission (FTC)                                                                     
pursues physicians for negotiating over an individual                                                                           
provision because it is assumed that any negotiations would                                                                     
affect the physicians' reimbursement.                                                                                           
                                                                                                                                
Co-Chair Torgerson noted those on teleconference.                                                                               
                                                                                                                                
Co-Chair Torgerson asked Senator P. Kelly to prepare a                                                                          
committee substitute that incorporates all five submitted                                                                       
amendments rather than having the Committee act upon each                                                                       
one. [Copy of amendments on file.]                                                                                              
                                                                                                                                
Co-Chair Torgerson ordered the bill HELD in Committee.