Legislature(2011 - 2012)HOUSE FINANCE 519

03/08/2011 09:00 AM House FINANCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ HB 13 WORKERS' COMPENSATION: MEDICAL FEES TELECONFERENCED
Moved Out of Committee
+ HB 80 SELF DEFENSE TELECONFERENCED
Heard & Held
+ HB 126 OMNIBUS BOARD EXTENSIONS TELECONFERENCED
Moved CSHB 126(FIN) Out of Committee
+ Bills Previously Heard/Scheduled 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                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB13 Sectional Analysis.pdf HFIN 3/8/2011 9:00:00 AM
HB 13
HB13 Sponsor Statement.pdf HFIN 3/8/2011 9:00:00 AM
HB 13
HB13 Supporting Documents 2010 NCCI AK Med.pdf HFIN 3/8/2011 9:00:00 AM
HB 13
HB13 Supporting Documets - MSRC Nov 2009 Report pages 11-12.pdf HFIN 3/8/2011 9:00:00 AM
HB 13
HB126-NEWFNCCED-RCA-02-17-11.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126-NEWFNCCED-CBPL-02-16-11.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB13 Supporting Documents OR Rate Study Comparison.pdf HFIN 3/8/2011 9:00:00 AM
HB 13
HB126 Supporting Documents-RCA Sunset Review.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-RCA Audit Summary.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-Nursing Sunset Review.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-Nursing Audit Summary.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-LB&A Subcommittee Recommendation ABC Board.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-Dental Examiners Audit Summary.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-Dental Ex Sunset Review.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-Barbers and Hairdressers Sunset Review.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-Barbers and Hairdressers Audit Summary.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Sponsor Statement LB&A letterheada.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-ABC Audit Summary 2009.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB126 Supporting Documents-ABC Sunset Review.pdf HFIN 3/8/2011 9:00:00 AM
HB 126
HB80 HJUD Letter to HFIN 02-14-11.pdf HFIN 3/8/2011 9:00:00 AM
HB 80
HB 80 Sponsor Statement for HFIN.docx HFIN 3/8/2011 9:00:00 AM
HB 80
HB126 CS Work Draft 27LSO321-I.pdf HFIN 3/8/2011 9:00:00 AM
HB 126