Legislature(1997 - 1998)
04/29/1998 03:13 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CSSB 197(RLS)am - REGULATING HEALTH MAINTENANCE ORGS. Number 0732 CHAIRMAN BUNDE announced the next order of business would be CSSB 197(RLS)am, "An Act relating to health care services provided by, and practices of, a health maintenance organization; providing that an enrollee in a health maintenance organization has the right to select a treating chiropractor; specifying certain chiropractic health care reports, examinations, and limits on treatment; and prohibiting health maintenance organizations from limiting free speech of health care providers," sponsored by Senator Dave Donley. SENATOR DAVE DONLEY informed the committee that CSSB 197(RLS)am limits certain practices of health maintenance organizations (HMO). First, it prohibits HMOs from initiating the infamous gag rules on doctors. Additionally, it provides that customers shall be informed if there are services that are not covered under a maintenance organization plan to eliminate the element of surprise. He said the bill also sets out specific provisions for direct access to chiropractic care rather than requiring all patients to go through a gatekeeper, as is the practice that has been developed by HMOs in other parts of the country. CSSB 197(RLS)am also provides for a point of service option for enrollees in HMOs that allows an option to choose a different deductible or a higher cost, if the enrollee wishes to go to the health care provider of their choice. SENATOR DONLEY advised the members he has suggested an amendment, which would add language to an existing statute prohibiting unfair discrimination against persons who provide a service. He said it would add HMOs into the existing health insurance so the same prohibition that exists in statute for all other kinds of medical insurance would also apply to HMOs. He said Chairman Bunde had proposed an amendment which he agrees with, which provides that if an HMO or insurance company decides to deny, reduce, or terminate a health care benefit to deny payment for a health care service, it must be based on the recommendation of a licensed health care provider within that specialty or subspecialty, and also a provider who is licensed to practice in Alaska. Number 0868 REPRESENTATIVE GREEN made a motion to move Amendment 1, 0- LS0905\KA.1, Ford, dated 3/18/98. Amendment 1 reads: Page 1, following line 7: Insert a new bill section to read: "* Section 1. AS 21.36.090(d) is amended to read: (d) Except to the extent necessary to comply with AS 21.42.365 and AS 21.56, a person may not practice or permit unfair discrimination against a person who provides a service covered under a group health insurance policy that extends coverage on an expense incurred basis, or under a group service or indemnity type contract issued by a health maintenance organization or a nonprofit corporation, if the service is within the scope of the provider's occupational license. In this subsection, "provider" means a state licensed physician, dentist, osteopath, optometrist, chiropractor, nurse midwife, advanced nurse practitioner, naturopath, physical therapist, occupational therapist, psychologist, psychological associate, or licensed clinical social worker, or certified direct-entry midwife." Page 1, line 8: Delete "Section 1." Insert "Sec. 2." Renumber the following bill sections accordingly. REPRESENTATIVE BRICE objected for purposes of discussion. CHAIRMAN BUNDE noted that Senator Donley had explained Amendment 1 would include HMOs and the list of other physicians and medical care providers. REPRESENTATIVE BRICE said, "They cannot discriminate." SENATOR DONLEY explained it is already an existing law. Amendment 1 adds HMOs to the existing law. Number 0935 CHAIRMAN BUNDE called an at-ease at 3:28 p.m. He reconvened the meeting at 3:30 p.m. He noted the arrival of Representative Porter at 3:29 p.m. REPRESENTATIVE FRED DYSON expressed confusion as to the intent of Senator Donley's amendment. CHAIRMAN BUNDE explained that Senator Donley's amendment is merely adding HMOs to the current statute. SENATOR DONLEY said the language in Section 1 is all in existing law and applies to all other types of health insurance policies. The amendment just adds HMOs to the existing law so the same prohibition against unfair discrimination would also apply to contracts issued by HMOs. Number 1010 CHAIRMAN BUNDE asked if Representative Brice maintained his objection. Hearing no objection, Amendment 1 was adopted. Number 1020 REPRESENTATIVE GREEN made a motion to move Amendment 2 offered by Representative Bunde which reads: Page 4, after line 6 Add a new section. A utilization review decision to deny, reduce, or terminate a health care benefit to deny payment for a health care service because that service is not medically necessary may only be made by a health care provider trained in that specialty or subspecialty and licensed to practice in the state after consultation with the covered persons's health care provider. CHAIRMAN BUNDE asked if there is an objection. There being none, Amendment 2 was adopted. Number 1032 QUINN MCKENNA, Providence Health System, testified via teleconference from Anchorage. He said he will not argue that managed care companies should not be regulated; obviously they should be. He will not argue against a legislator aggressively reviewing organizations, especially if there is any fear of infringing upon the rights of their constituents. Nor will he argue against the appropriateness of chiropractic services. Those items he just mentioned are not in question in his testimony. However, he would like to add testimony on where the line should be drawn that balances our personal desire to have free and unfettered access to any care that a person wants to receive and the cost related to that care. The only issue he was raising with this legislation is with regard to the mandating of chiropractic coverage by a managed care company. He recalled back in the early 90s across the country, our society was screaming about the dramatic increases in health care cost; health care costs were increasing three times the rate of inflation. He stated "Subsequent to that, managed care had grown quite dramatically, and actually health care inflation has come in check during this period of time. In fact, in 1996, health care inflation was just, I believe, 1.6 or 1.9 percent above the inflation rate, quite dramatically down from the double digit inflation of just a few years prior. A lot of that because of the ability of managed care companies to come in, do utilization management, promised volume for discounts, and leveraged the providers into providing lower costs because they could provide that volume discounts." MR. MCKENNA continued his testimony. "Health care is such a strange service and industry. In most other industries -- like if I were to go buy a car, I would go negotiate with the car salesman and I would write a check, or I would go to the bank and pick up money, but be obligated to pay that. In health care we buy insurance, which the insurance company then pays for the health care that I receive. And maybe during the year I pay $4,000 for my health care insurance, maybe I only need $1,000 of coverage, or maybe I need $100,000. I am, all of a sudden, taken away from my obligation of paying for that service if someone else is paying for it. And we need to be careful when our initial desire as people and society is to get as much as we can and demand as much as we can and you, as the legislature, need to be careful that we also balance the cost of that care because as we saw just less than a decade ago, it can easily spiral out of control." MR. MCKENNA urged the committee not to pass this amendment, not necessarily because it's so broad, but because it could set a precedent on limiting the ability of managed care organizations to help control health care costs for their community. He asked, "Out of all the services that are available - health care services, open heart surgery, treatment for diabetic patients, et cetera - how is it that this amendment protects chiropractic services and mandates that all chiropractors have to be (indisc.) and have to be paid for their services? How is it that out of all of the services available this is the very first one to come to be protected?" He indicated he has not heard testimony that out of all of the services available that chiropractic care is the best one that would provide (indisc.) services the health of all of the communities is going to be increased. He said he would encourage the legislature to go back and say as they start to draw the line, is this the best place to draw the line. Number 1271 DR. R. H. BANKS, President, Alaska Chiropractic Society, testified via teleconference from Anchorage. He said he would like to speak to the issues just brought up by Mr. McKenna. He believes Mr. McKenna may be a little confused with the legislation. He said first of all it's not managed care legislation, it is HMO legislation. Secondly, the bill does not mandate chiropractic care. He said in a separate clause the first amendment to mandate all services, it prohibits discrimination and so the first clause in the bill would mandate chiropractic care. The separate chiropractic clause in the bill is to ensure access to chiropractic care. He reiterated that it does not mandate chiropractic care, it assures that there would be access to chiropractic care. He said, "On par with subsistence, health care is the issue on voter's minds. Voters are concerned with access to quality care. Voters are concerned with the ability to choose a doctor who is concerned about them; a professional they can trust. Patients are demanding that their doctors be able to discuss all treatment options available to alleviate their health problems. .... We may not see HMOs in Alaska for several years and now is the time to act on behalf of thousands of Alaskans who signed a petition and sent public opinion messages in support of SB 197." He urged the committee members to move this bill out of committee today. Number 1400 GORDON EVANS, Representative, Health Insurance Association of America (HIAA), came before the committee to testify. He told the committee that HIAA opposes the bill in general because it is unneeded legislation since there are no HMOs in Alaska and no prospects for any in the unforeseeable future. He said HIAA is also concerned about certain managed care initiatives being proposed in this and other legislation and contrary to the testimony of Dr. Banks, this is not only a managed care legislation, it is also a mandate for chiropractors. MR. EVANS referred to Section 2 of CSSB 197 and read into the record, "SB 197 proposes to amend current law to require a carrier to include in his evidence of coverage guidelines explaining when treatment may be denied. Managed care plans already offer coverage guidelines in their schedule of benefits. The schedule of benefits is a legal document filed with the state Division of Insurance that describes in detail what the plan covers, what it does not cover, and the rules and procedures governing eligibility, and a copy of that schedule of benefits is provided to ensure (indisc.) enrollment. The schedule of benefits does not provide detailed utilization review or quality insurance criteria, which are very detailed and, therefore, can be voluminous." He continued, "Also, utilization review and quality insurance criteria are subject to change in order to keep up with advancing medical technology. Health insurers are not opposed to providing, upon request of a patient or the health care provider, a written explanation of an adverse determination, that is a copy of the contract basis or relevant medical rationale used to make that determination." He said he is prepared to offer a proposed amendment to replace the current Section 2 with a new Section 2 entitled, "Adverse Determination" together with a new Section 5 which would then add a definition of the term "adverse determination." Number 1500 MR. EVANS said he has a few comments to elaborate on HIAA's opposition to Section 3 of the bill. He said that section, among other things, would allow an insured direct access to the services of a licensed chiropractor of his or her choice without prior approval of the enrollee's health maintenance organization, a gatekeeper, or a primary care physician. He said this provision is a mandated benefit that will directly benefit a specific group of providers - chiropractors - and he predicts that it won't stop with them. He said, "Such legislative benefits, as we have noted on many occasions before this committee, will simply drive up costs and ultimately limiting the affordability of quality care for consumers." He said for that reason, HIAA has always opposed mandating of benefits. MR. EVANS referred to Section 4, stating that CSSB 197(RLS) am proposes to add a new subsection (i) that would prohibit HMOs from imposing limits regarding criticism by a provider of health care services provided by an HMO; written or oral communications between a health care provider and an enrollee regarding health care services; and employment of a health care provider to be terminated unless the provider receives written notice of the cause for the termination before being terminated. He indicated HIAA doesn't object to all of that subsection, but objects to part of it. He said, "Most managed care firms carefully guard their current customers and information about their plan that they consider to be confidential. Consequently, plans will include contractual provisions asking the health care provider to agree not to disparage the health plan to enrollees or to attempt to induce enrollees to leave a plan or join another plan. These types of contractual provisions are not unique to HMOs, but are imposed by many other employers through contracts or employment manuals. No business can tolerate its employees driving customers away. In addition, there are many legitimate business precautions a managed care plan must consider when contracting with an independent professional or organization." MR. EVANS continued, "These include first, as a general contractor employing the provider, health plans could be held jointly liable for libelous statements by a provider or spurious claims, which impact on other providers' or institutions' business. Secondly, providers who might have mobile contractual arrangements with health plans and facilities could attempt to steer patients to facilities in which the provider has a personal financial stake. Lastly, the medical community has very jealously protected itself against any disclosure data which compares physicians or facilities based upon their clinical outcome. The same level of analytical objectivity should be required in any qualitative statements made by contracting physicians." He noted that HIAA does not believe HMOs should limit or manage clinical discussions between physicians and their patients regarding treatment options. In fact, most managed care plans already require language to that effect in their agreements. He said Section 4 would also prohibit carriers from denying health care coverage for enrollee unless enrollee has been examined by at least two physicians. It would also prohibit a carrier from imposing financial incentives to be given or offered to a provider for denying or delaying health care services. He said denial of health care coverage can occur for a number of reasons: for instance, a particular benefit may not be covered by an insured's policy. Many procedures are subjected to utilization review and quality assurance criteria. For instance, the most expensive treatment is not always the best and sometimes surgery is not the only available intervention. The insurer is not prohibited from seeking a second medical opinion, however, the insurer should not be required to subject every denial of health care coverage to a second provider's opinion and the law as stated now would require that. Number 1667 MR. EVANS told the committee that managed health care plans have attempted to create reimbursement systems which reward providers for keeping their patients healthy in the most efficient way possible, but do not, of course, encourage over-utilization of scarce health dollars. If a physician provides too few services, that could be just as costly as providing too many. MR. EVANS expressed confusion as to where Amendment 2 would fit into the bill. SENATOR DONLEY was of the impression that Amendment 2 added a new section to the bill. CHAIRMAN BUNDE confirmed that. MR. EVANS said the problem with having a licensed practice in this state is a problem because there are some specialties that there may be only one person licensed in this state. In that context he asked, "Is he going to consult with himself to do that?" CHAIRMAN BUNDE replied, "They don't have to live in this state, they just have to be licensed to practice in this state." MR. EVANS said, "I understand, but with the professional utilization review entities that are around the country, they are - and they are very good whether - I know that some people don't think they are, but they are." CHAIRMAN BUNDE said that's not whose profit line we're looking at. MR. EVANS said, "I can't argue with you on that, if that's your view." He indicated that the idea is if a person is licensed in the United States, why not have it that way rather than just licensed in this state? He pointed out the argument was made the attorney general can't get to them if they're not licensed in this state. He contends the attorney general isn't going to bring a civil lawsuit against them anyway; the patient will file a lawsuit. He asked, "Where does the attorney general get involved in it? Jerking their license?" Number 1776 CHAIRMAN BUNDE responded, "We have our own board that I think Alaskans are more comfortable with having them at our standards." MR. EVANS referred to Amendment 1 stating the problem HIAA has with it is that particular statute is being used now for everything except what it was intended to when it was originally enacted by this legislature. He stated originally it was intended to be comparing physician "A" with physician "B" and now it's gotten to the point where it compares physician "A" with chiropractor "B," or if they happen to do the same sort of service, you have unfair discrimination. He said the best thing the legislature could do with that statute is to repeal it and start over from scratch and make it back to what it was intended to be in the first place. He pointed out he is not the only one saying that; the Division of Insurance has told the legislature that many times, also. Number 1829 CHAIRMAN BUNDE announced that public testimony is closed. In summary, he said health care costs are a challenge. One way to limit that is through volume, the other way is to reduce services. He expressed that he understands the concern about limiting health care costs and he also understands that insurance companies exist to make a profit and can make profits many ways; one way is by reducing services. SENATOR DONLEY concluded by stating the concept of repealing the whole statute goes way beyond the scope of this legislation. He said obviously we have this existing statute, which is being enforced by the Division of Insurance who is going through the process of developing the criteria to enforce it. He indicated that it seems completely appropriate that it's there and applies to health insurance; it should also apply to HMOs. Number 1987 CHAIRMAN BUNDE made a motion to move HCS CSSB 197(HES) out of committee. There being no objection, HCS CSSB 197(HES) was moved from the House Health, Education and Social Services Standing Committee.