Legislature(1997 - 1998)
02/19/1998 03:50 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 300 - HEALTH CARE INSURANCE Number 0008 CHAIRMAN BUNDE announced the first item on the agenda was HB 300, "An Act relating to health insurance; and providing for an effective date." Number 0073 CHAIRMAN BUNDE read the following sponsor statement into the record: "Often, insurers use health care consumers as trading chips in order to obtain services for a lower price. The problem is that the patients involved don't know always know they've been traded away until they come to use the service, and then many times, become aware that they are not able to go to the provider of their choice. House Bill 300 protects the rights of health care consumers to choose appropriate medical care. This legislation prohibits insurers from reimbursing a covered person at a different rate because of the person's choice of health care provider." CHAIRMAN BUNDE directed the committee's attention to the proposed committee substitute. Number 0147 REPRESENTATIVE BRIAN PORTER made a motion to adopt proposed committee substitute 0-LS1248\K, Ford, 2/19/98, as a work draft. There being no objection, that version was before the committee. CHAIRMAN BUNDE asked Patti Swenson to come forward to present her testimony. Number 0168 PATTI SWENSON, Legislative Assistant to Representative Con Bunde, Alaska State Legislature, testified, "The legislation before you today is HB 300; it concerns the rights of patients to choose who will provide their medical care. This legislation also supports health care providers by giving some recourse to physicians if their patient's treatment is denied. "House Bill 300 holds implications for all health care consumers. Managed care organizations as well as preferred provider organizations (PPOs) have traditionally limited their enrollees' choice of provider by imposing a closed panel or closed network of providers. By enabling consumers to choose their provider the closed panel will expand to meet the consumers needs. Choice is important to consumers. It is an arbiter of quality and lets them get the care they need, which may otherwise be limited by managed care organizations. These limits are due to the built-in incentive to reduce medically inappropriate and unnecessary care, as well as care that is actually needed. "Many people think that managed care, PPOs and other similar plans contain costs without sacrificing medical benefits or attracting intrusive governmental regulations. However, it is the health care consumers that are making the sacrifice. "Insurers promise preferred providers a high volume of patients in exchange for charging lower rates for their services. The idea is that, as medical costs rise, they have to contain costs to maintain affordability and access to health care. The reality is, insurers are using health care consumers as bargaining chips, without their knowledge or consent. Because of the insurers bargaining, health care consumers now face restrictions on the type of care they receive and where they can get it. "The optimism about cost containment is misplaced. Managed care and PPO contracts are subject to the same upward pressure on costs, resulting from new technology and rising wages, that other providers face. Unable to control these forces, managed care providers have instead kept costs below those of fee-for-service providers. They accomplish this by using fewer hospital days, denying newer and perhaps more expensive treatment for patients, and by reducing access by limiting the number of care providers in a PPO. This strategy delays treatment to the point that it may not be done or it forces the patient outside the plan where remuneration for the treatment is lower than that paid under the PPO. As more patients go outside the PPO, the cost savings for the managed care or PPO appears to be greater than it would for a fee-for-service p "Consumers have to ask if their medical care has improved or become more efficient since the beginning of managed care. Many consumers say they can't see the physician they wish to see; they spend less time with the physician they go to see; and they feel rushed out of the hospital when they are ill. "Physicians on the other hand say they can't afford to spend as much time with patients as they used to; many tests that they would like to use for diagnosing medical conditions are denied by insurance companies; their patients are not approved for time in the hospital and physicians have very little recourse; and the insurance companies are not paying for care in a timely manner. "Is this the efficient low cost system we were told to expect when insurers were touting managed care? Consumers are putting more money out of their pockets at each doctor's visit than ever before. When insurers wish to contain costs, they simply use less medical services or force consumers outside of the program. House Bill 300 will go a long way to help health care consumers and physicians. I urge the committee's positive consideration of this legislation." Number 0458 MS. SWENSON directed the committee's attention to the committee substitute and noted the following changes: First, the title is changed to reflect the emphasis of the legislation, which is patients' rights; a short title has been added in Section 1; and Section 2(b) is changed to require physician to physician contact in cases where patients are denied care, reduced care or terminated health care benefits. The remainder of the committee substitute is the same as the original bill. Number 0523 DAN PITTS, Dentist, testified that he is currently in private practice and as a care provider he supports HB 300. He explained the first provision of this legislation is patients' freedom of choice. As a provider, this legislation tells him that he is in competition with other providers and his quality of care should be second to none. If his quality of care is less than what other providers give, the marketplace will affect his business. He believes that competition breeds quality of care. Without competition, quality slips. He said there is a grassroots surge throughout the nation as a result of managed care, health maintenance organizations (HMO), preferred provider organizations (PPO) provisions and in his opinion, their concern is the bottom line, and the quality and service received by the patients is beginning to slip. Number 0674 DR. PITTS said the second provision of HB 300 deals with review. As a provider, he has had treatment denied to his patients and upon inquiry, the individual making the decision and denying the treatment is an administrative individual without any experience or degree in the health care field. He supports the provision requiring a health care professional to review the request for treatment. Number 0734 DR. PITTS spoke in support of the third provision which holds insurance companies accountable for their decisions. This is in the patients' best interest and with an open marketplace, the costs will not go up and quality will remain the same. Number 0773 CHAIRMAN BUNDE thanked Dr. Pitts for his testimony and said that one of the concerns expressed about HB 300, is that prices will go up if providers do not have a guaranteed market. Competition will cause the price of medical care to explode. He gave several examples of prices going down as competition increased. Based on Dr. Pitts' testimony, it appeared that he did not believe a guaranteed market was necessary to keep cost containment on dental care. DR. PITTS said the marketplace will control the cost of the health care. If there is a need for more health care providers in an area, more health care providers will move in, whether it be in dentistry or medicine. As a point of interest, in Alaska a dental license can be obtained by applying for it as long as the individual has a license in another state and five years experience. He views the position of insurance companies as wanting a locked-up market, or a monopoly on the providing of services. Number 0888 REPRESENTATIVE PORTER said in general terms, health care across the United States has gone up at a higher rate than inflation. He asked Dr. Pitts if he knew what was causing that. DR. PITTS responded there are a lot of high technology things happening in medicine now. A lot of the health care dollars are going to a number of disease processes like HIV, transplants, hepatitis and other areas where care is extremely expensive. In his opinion, prevention is the key and as health care providers get better with the technologies, prices will come back down. Number 0972 REPRESENTATIVE JOE GREEN referred to Dr. Pitts' statement that if HB 300 passes, costs will not go up; yet the committee has gotten conflicting information from HMOs and other organizations. He asked if the information from HMOs was false or was Dr. Pitts saying that because of competition, the costs will stay low. DR. PITTS remarked that he could not debate statistics with insurance companies. He noted that Texas had adopted an extremely strict patients' rights bill and the results of a study indicated that costs rise at about the same rate as inflation; less than 3 percent. He added that in dentistry, insurance is not for a catastrophic problem, but it's more of an employee benefit. There's a certain amount of dollars an employee is allowed to spend as a result of being employed by a certain employer; the amount is limited, as well as controlled, and there is co-payment with the patient. All those things built into the fee for service system keeps costs under control. Number 1116 MS. SWENSON directed the committee's attention to the information on cost savings and said a lot of the HMOs, PPOs and managed care organizations have decreased bed time and decreased access to different medical services and that's the way they show initial cost savings. But over time as that continues, these organizations can only stop people from staying in the hospital so many days and stop so many medical procedures before running out of things to stop, so eventually the cost will become even with people who are using fee-for-service. CHAIRMAN BUNDE asked Dr. Woller to come forward to present his testimony. Number 1173 TIM WOLLER, Dentist and President, Alaska Dental Society, testified that he has practiced dentistry for 26 years. He was testifying on behalf of not only his patients, but those patients of the Alaska Dental Society. The Alaska Dental Society has 291 members and endorses HB 300. He cautioned that cost containment and cost savings should not be done on the back of the patient, and that's what this legislation is about - it's about patients' rights and the right to have remuneration on a fair scale. If a patient steps outside a plan, the remuneration is at a much lower rate in most cases, which is what he has found with United Concordia in Fairbanks who insures the military dependents. He said, "On a procedure that they are paid in one office, they are paid at a much lower rate in another office. This is payment back to the patient under that schedule." If indeed there is cost savings, the cost savings are then borne by the patient. Number 1251 DR. WOLLER said dentistry is a relationship with the patient; it's not like a medical surgeon who operates once on a patient and never sees that patient again. He has patients that have been his patients since he started his practice 26 years ago and have become comfortable with him doing their dentistry. When patients are negotiated into a preferred provider plan, those patients generally don't have the input; the employer decides that. But once the patient is in the preferred provider plan, it becomes a dictate as to what provider the patient can see and is severely penalized for going outside that plan. DR. WOLLER said, "I'd like them to not be as severely penalized. We're not trying to call this an any willing provider bill, whereby a dentist would go ahead and accept as 100 percent payment, thereby competing directly with the PPO person who is admittedly given a lower rate to garner more patients. We're simply saying that they should not be as heavily penalized; they should get the same amount of money for the procedure to see their dentist. They're going to have to have a co-pay; there's still going to be some financial imposition, but it will not be the penalty by the insurance company. That's the big provision." Number 1317 DR. WOLLER referred to the gag order provision and said in the Lower 48, providers are joining an HMO or a PPO, and in signing onto that, the provider is guaranteeing not to discuss certain procedures with a patient. These procedures are usually high end cost procedures and could be in the patient's best interest. These are commonly known as gag orders. At this point, this has not been imposed in Alaska, but the language was inserted in HB 300 to prevent that from happening. Dr. Woller said the Alaska Dental Society favors the recourse provision, and suggested the language be changed to read "an Alaska licensed physician or dentist." It's not restrictive on the insurance companies; it's meant to have recourse for the patient. The attorney general's office has advised that if the person auditing or reviewing the plan for the insurance company is not Alaska licensed, the attorney general's office has no recourse against that person; thus the patient doesn't have the ability to get an answer from the insurance company. Number 1400 CHAIRMAN BUNDE asked what the impact of that requirement would be on a national insurance company, whose headquarters are located in Chicago, for example. DR. WOLLER responded that Alaska licensure is very broadly available. An individual who passes the western regional examination, a consortium of about 15 western states, can simply apply and get an Alaska license. CHAIRMAN BUNDE thanked Dr. Woller for his testimony and asked Dr. Robinson to present his comments. Number 1464 ROB ROBINSON, Dentist, stated he is not currently practicing, but was testifying on behalf of individuals in the Mat-Su Valley who have expressed concerns. He testified in support of HB 300 and doesn't view it as restricting HMOs or PPOs. He felt strongly that patients have rights and that's how he views this legislation. He supports the recourse provision as well as the requirement for an Alaskan licensed physician or dentist as suggested by Dr. Woller. He felt it was important for a patient to have recourse in the state of residence through the attorney general's office or the Division of Occupational Licensing. Number 1459 DR. ROBINSON referred to Representative Porter's question about the guaranteed market and said there's still a guaranteed market, the way he views this legislation. For example, if a group of providers want to charge $50 for $100 fee, that group has their guaranteed market and insurance companies can adjust fees however they see fit. The fee is not what he wanted to address; however, if a patient wanted to go to a provider who charged $100 fee, that should be the patient's choice. CHAIRMAN BUNDE noted there were people waiting to testify via teleconference. He asked Dee Jay Johannessen to present his comments. Number 1634 DEE JAY JOHANNESSEN, Executive Director, AIDS Care Network, testified via teleconference from Anchorage. He said the AIDS Care Network is a statewide AIDS service organization based in Anchorage and one of the main focuses of the AIDS Care Network is to educate for the proper primary care for treatment of HIV and AIDS. He urged careful consideration of HB 300 which addresses three major issues: The patient's right; assessability to quality health care; and cost. He believes that Alaskans have the right to not only seek out, but to obtain the highest quality of care that is available to meet individual medical needs. While his main focus is directly related to the treatment of HIV, the premise transfers directly to any chronic illness which may be terminal in nature. Primary care for persons living with HIV and AIDS is complex and rapidly changing. Currently, there are over 100 clinical studies taking place in the United States to treat this disease more effectively. It is integral that the outcomes of these studies be instituted in treatment-type protocols in order to institute the highest level of care. He referenced two different studies that have shown that when treatment for HIV infection is provided by HIV experienced physicians, clinical outcomes are optimal. HIV experienced physicians are largely in private practice; not people who will be bidding on these managed care programs and it is important to note that in the state of Alaska there are only ten HIV experienced physicians; seven of which live in Anchorage and none work in the major hospitals. The overall cost of care when treatment is provided by an HIV specialist is reduced by 38 percent and most importantly, the long term survival rate for patients is increased by 43 percent. If a specialist is willing to accept the cost reimbursement rate which is established by the insurance company, the insurance company should have no right to deny access to quality care. It is important in the treatment of HIV and AIDS that everything available be used. CHAIRMAN BUNDE thanked Mr. Johannessen for his testimony and called on Mr. McKenna to present his comments. Number 1778 QUINN McKENNA, Operations Administration, Providence Health Systems in Alaska testified via teleconference from Anchorage in opposition to HB 300. In reviewing the legislation, he said a large part comes down to choice versus community commitments to pay for health care services. He recalled that a few years ago, health care inflation was in double digits - three times higher than inflation, and employers began to realize it was no longer feasible to continue paying the increased costs, which contributed in a large part to the advent of managed care. He said that managing or coordinating health care is no different than the process the legislature is following to balance the state budget. The choice of constituents is to have all their wishes funded, but the legislature has to work hard to carefully prioritize according to the greatest need versus funds available. In the same way, purchasers of health care, usually employers, can no longer offer carte blanche health care coverage. With limited resources, those employers are attempting to use the available dollars wisely; meaning more careful decisions in purchasing and more oversight of the process when care is needed. Number 1867 MR. McKENNA referred to previous testimony regarding limiting choices and said currently in the market, everyone does have choice. A person can choose a traditional indemnity plan or a managed care plan, knowing up-front there are limitations on the panel and some differences in the benefits. The usual difference is price; the management care plan usually being a lower cost. To the extent that the legislature and HB 300 make the managed care plan and the traditional indemnity plan look more alike, the thing that will change is that the two plans will cost alike and the cost benefits of a managed care plan will be lost. As a managed care organization comes to a provider like Providence Health Systems and requests a discount, the question asked is, "What are you able to offer?" and typically the answer is volume. To the extent that managed care plans cannot offer volume, then it limits Providence Health Systems' ability to give a discounted price. Number 1914 MR. McKENNA referred to a 1993 letter from the Acting Director of the Federal Trade Commission to the Attorney General of Montana, who had implemented any willing provider legislation in Montana and said the opinion of the Federal Trade Commission is similar to his. In summary, it said that any (indisc.) provider requirement may discourage competition among providers, in turn raising prices to consumers and unnecessarily restricting consumer choice without providing any substantial public benefit. CHAIRMAN BUNDE thanked Mr. McKenna for bringing forth another side of the argument. He noted that discussion will continue on HB 300 at a later meeting. He called a brief at-ease at 4:29 p.m. CHAIRMAN BUNDE called the meeting back to order at 4:30 p.m. with another individual to testify via teleconference. Number 1986 JIM JORDAN, Executive Director, Alaska State Medical Association, testified via offnet and read the following letter into the record: "The Alaska State Medical Association (ASMA) represents nearly 500 private practice physicians and their patients. Thank you for the opportunity to provide commentary on HB 300. "ASMA's governing body, the House of Delegates, has long supported the concept of a patient's reasonable choice in the physician that provides his or her medical care. This concept is included in HB 300. "ASMA's interest in any health care plan focuses on what impact it would have on the quality of medical care and the patient/physician relationship. Generally, the physician community is interested in assuring that: 1) patients have a reasonable choice in which physician provides their health care; 2) patients have a clear understanding of all material benefits and restrictions involved with any health plan; 3) each physician desiring to participate as a contracted provider of care has a fair opportunity to do so; 4) any physician contract criteria, contracting procedures, and contract termination be on a fair and equitable basis; 5) any utilization review or medical necessity determination be accomplished on a peer review basis; and finally 6) patients aren't unreasonably denied benefits after receiving emergency care in a hospital or other emergency facility." He noted the last paragraph of the letter had been somewhat addressed by the adoption of the committee substitute, so he didn't read the last paragraph. The letter was signed by Kevin Tomera, M.D., President of the Alaska State Medical Association. He thanked Chairman Bunde for the opportunity to testify. Number 2076 CHAIRMAN BUNDE noted there had been earlier discussion from individuals who wished to see the review process completed by an Alaskan licensed physician as it related to the recourse provision. He asked Mr. Jordan if he would care to comment. MR. JORDAN said it was an interesting issue and in many other states it has been determined that such activity by a physician is determined to be the practice of medicine. If that is the case, licensure in the state of Alaska would be required. He suggested the question be posed to the Alaska State Medical Board. CHAIRMAN BUNDE thanked Mr. Jordan for his comments and closed testimony on HB 300 and reiterated that HB 300 would be held in committee for a further hearing.
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