Legislature(1997 - 1998)

03/20/1998 03:45 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 300 - ALASKA PATIENTS' BILL OF RIGHTS                                       
Number 0051                                                                    
CHAIRMAN ROKEBERG announced the committee's first order of business            
would be HB 300, "An Act relating to health insurance; and                     
providing for an effective date."  He noted a quorum was not                   
present at the beginning of the bill hearing but said the committee            
would begin taking testimony.                                                  
Number 0104                                                                    
PATTI SWENSON, Legislative Assistant to Representative Con Bunde,              
sponsor of HB 300, came forward to present the bill.  She stated               
the bill version before the committee is the House Health,                     
Education and Social Services Standing Committee substitute, CSHB
300(HES), labeled 0-LS1248\L.  Ms. Swenson stated, "This House bill            
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 patients' treatments            
are 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's 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 what is actually needed.  Many people             
think that managed care, PPOs and other similar plans contain costs            
without sacrificing medical benefits or attracting intrusive                   
governmental regulation.  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 the medical costs              
rise, they have to contain costs to maintain affordability and                 
access to health care."                                                        
Number 0235                                                                    
MS. SWENSON continued, "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 also face.  Unable to control these                 
forces, managed care providers have used the few means they have               
available to keep costs below those of fee-for-service providers.              
They accomplish this by using fewer hospital days, denying newer               
and perhaps more expensive treatments for patients, and by reducing            
access by limiting the number of providers in a PPO.  The strategy             
delays treatment to the point that it may not be done or it forces             
the patient outside of the plan where remuneration for treatment is            
lower ... than that paid under the PPO.  As more patients go                   
outside the preferred provider organization, the cost savings                  
through the managed care or PPO appears to be greater than would be            
[for] fee-for-service.  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're very ill.                
Physicians, on the other hand, say they can't afford to spend much             
time with patients.  Many tests that they would like to do for                 
diagnosis of medical conditions are denied by insurance companies,             
their patients are not approved of for time in the hospital and the            
physicians have very little recourse, and the insurance companies              
are not paying for the care in a timely manner."                               
Number 0375                                                                    
MS. SWENSON said, "In our state, I think and I hope, an unintended             
effect of PPO is the ruination of some small businesses that are               
involved in providing health care in rural areas of Alaska as well             
as in urban areas of Alaska.  There are dentists, chiropractors,               
nurse practitioners, pharmacists and medical supply businesses that            
are being forced out of business because they cannot compete, and              
are not able to become of a PPO.  The ramifications of the loss of             
health care providers such as these is enormous in a state with                
such vast geography.  ... Is this the efficient, low-cost system we            
are 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, only to find that their claim is              
denied after months of waiting, ... or they are finally reimbursed             
for some of their expenses.  When insurers wish to contain costs               
they simply use less medical service or force consumers outside of             
the program, and this bill, House Bill 300, will go a long way to              
help consumers and physicians.  I urge the committee's positive                
consideration of this legislation."                                            
Number 0463                                                                    
MS. SWENSON noted she had passed copies of some articles and                   
letters to the committee members, noting she included two letters              
from states that had very broad patient rights or "any willing                 
provider" bills.  She stated HB 300 was not an "any willing                    
provider" bill.  She indicated the committee members had a list of             
those states in their bill packets and she had contacted a few of              
those states with demographics similar to Alaska.  She said she had            
received letters back saying there had been had no adverse effects             
on consumers or insurance companies when this same type of bill was            
passed.  Ms. Swenson noted an article had also been included about             
how technology would eventually force the cost of health care                  
Number 0519                                                                    
CHAIRMAN ROKEBERG said he noted Ms. Swenson equated the PPO-type               
contractual relationships with managed care and asked her if that              
was correct.                                                                   
MS. SWENSON replied that they were both the same.                              
Number 0540                                                                    
CHAIRMAN ROKEBERG noted she said HB 300 was not an "any willing                
provider" and asked how she would make the distinction.                        
MS. SWENSON said she believes there was a dentist present to                   
testify on that and explain further.  She stated HB 300 was a                  
patients' rights bill; it stood up for patients and it says what               
the insurance companies can not do.                                            
Number 0573                                                                    
CHAIRMAN ROKEBERG indicated he had glanced at the description of               
Idaho's legislation from that state's health insurance coordinator,            
noting there seemed to be a difference between what Idaho has and              
what HB 300 provides for.  Chairman Rokeberg indicated this was in             
the sense a health care provider in Idaho who met the requirements             
could be brought into an organization; it was not a straight fee               
for service.                                                                   
MS. SWENSON stated the chairman was right; she said Idaho has an               
"any willing provider" law and HB 300 is different from that.  She             
indicated the reason she included information on Idaho was because             
many people in Alaska thinks HB 300 is "any willing provider"                  
legislation.  Ms. Swenson indicated she had been told repeatedly               
"any willing provider" legislation would increase the cost of                  
insurance in Alaska, and she noted it did not in Idaho.                        
Number 0637                                                                    
CHAIRMAN ROKEBERG asked if she wished the committee to wait for                
further description of the distinction from the witnesses                      
MS. SWENSON answered in the affirmative.                                       
CHAIRMAN ROKEBERG said he would assume, then, that this was "any               
willing provider plus."                                                        
MS. SWENSON answered in the negative.                                          
Number 0655                                                                    
CHAIRMAN ROKEBERG indicated the committee would take witness                   
testimony for as long as possible at this meeting.  He stated it               
was not his intention to take formal action on HB 300 at this time,            
indicating a further hearing on HB 300 is scheduled for March 23,              
1998.  Chairman Rokeberg noted there were many witnesses signed up             
to testify, asking witnesses to also submit their testimony in                 
writing to the committee.                                                      
Number 0799                                                                    
TIM WOLLER, DDS, President, Alaska Dental Society ["association"               
stated on tape], came forward to testify.  He stated he wished to              
address the difference between this bill and an "any willing                   
provider" bill.  Dr. Woller stated, "In an 'any willing provider'              
bill, any provider who goes and meets the criteria that have been              
negotiated by the insurance company has to be accepted as a                    
provider, and then that remuneration for the patient is accepted               
just the same as it would be in the PPO ....  This bill does not do            
that.  [In] this bill, people outside the plan have their own fee              
schedule for private individuals.  If a person who is under a PPO              
elects to go outside the plan, they then have to go ahead and                  
receive money from the managed care provider and then pay the                  
difference to the outside person.  In the case of Delta Dental and             
also in the case of United Concordia [ United Concordia Companies,             
Incorporated] which operate in Fairbanks, when a person goes in and            
has theirs done by a preferred provider, they're remunerated at one            
level.  When they step outside the plan they only get about 60                 
percent of that amount of money."  Dr. Woller stated the winner                
there is the insurance company because the company had contracted              
to receive and pay out that amount of money for each patient.  He              
indicated the company was economically rewarded when a patient                 
steps outside the plan.  The Alaska Dental Society believes each               
patient should have the same dollar amount of remuneration no                  
matter who performed the work.  He said the patients would still               
have economic incentive to stay in the PPO because that would                  
provide 100 percent coverage, or a coverage at a negotiated lower              
rate.  Even with the same dollar amount of remuneration, once the              
patients step outside of the PPO they would have to pay some money             
out-of-pocket.  Dr. Woller indicated the Alaska Dental Society did             
not think the managed care company should be economically rewarded             
because the plan failed to meet that individual's expectation or               
treatment needs.  He noted that was the difference between "any                
willing provider" and HB 300.                                                  
Number 0933                                                                    
CHAIRMAN ROKEBERG asked it if was Dr. Woller's testimony that if a             
member of a PPO-type plan used a health care provider outside the              
plan's provider list, that consumer would be reimbursed at a lesser            
DR. WOLLER confirmed that was correct.                                         
Number 0955                                                                    
CHAIRMAN ROKEBERG asked if that was peculiar to dental                         
practitioners or other healing arts practitioners.                             
DR. WOLLER said he knows it happens in other parts of the country              
in dental, but did not know if it was specific to dental.                      
Number 0975                                                                    
CHAIRMAN ROKEBERG mentioned a previous amendment to the bill and               
said he was not sure where the language was located in the bill                
which did what Dr. Woller was talking about.                                   
Number 0992                                                                    
DR. WOLLER indicated he was referring to Section 2, subsection                 
(c)(1) of the bill.  Dr. Woller noted Section 1, subsection (a)(1)             
read, "(a) A health care insurer may not include in the health care            
insurance plan or contract a provision that (1) prohibits a person             
from obtaining health care services from a health care provider of             
the person's choice, including a specialist;"  He stated that would            
allow the person the freedom to go outside the plan.  He then                  
quoted Section 2, subsection (c)(1), which read, "(1) directly or              
indirectly reimburse a covered person at a different rate because              
of the person's choice of provider;".                                          
Number 1030                                                                    
CHAIRMAN ROKEBERG said he appreciated that, but asked, "Is it also             
your testimony that ... a fee-for-service provider outside a plan              
would not be allowed to be mandated to be paid whatever his                    
requested fee is."                                                             
Number 1048                                                                    
DR. WOLLER replied, "No, he would not be allowed to mandate his                
requested fee.  The patient would only receive that same dollar                
amount to pay toward that.  In other words, they would receive the             
same dollar amount whether they are under the plan or if they ...              
went outside."                                                                 
Number 1066                                                                    
CHAIRMAN ROKEBERG said he wanted to make sure these points were                
well-understood by the committee and that was the reason for his               
Number 1083                                                                    
DR. WOLLER indicated the other portion of the legislation has to do            
with a person's ability to receive full disclosure of any                      
treatment.  He stated, "Under some of the provisions of very                   
restricted HMOs [health maintenance organizations] people have                 
actually had 'gag' clauses where they were not allowed to be able              
to be told about more expensive procedures.  We think that a                   
patient ... has the right to have full disclosure of all - all                 
given procedures, all procedures that are pertinent to their                   
treatment whether that's a covered expense or not.  They still need            
to know that it's available."  Dr. Woller asked the committee to               
consider limiting Section 2, subsection (b) to "Alaska-licensed                
physician, dentist or consultant."  Section 2, subsection (b) read,            
"(b) A health care insurer may not deny, reduce, or terminate                  
health care benefits for a covered person unless the denial,                   
reduction, or termination is approved by a physician who is                    
licensed to practice in the United States."  He commented, "The                
reason is not because we believe our hands are anointed, it's                  
because this gives legal recourse for the patient through the                  
attorney general's office, through the state after review, back to             
that individual.  If you have an individual at an insurance company            
who is acting in bad faith and doing these things this does give               
some legal recourse to the patient toward that individual, and                 
that's why we'd ... ask that that provision be put in there.  Other            
provisions are allowing them to challenge the insurance companies              
under this - this Act and not be disciplined for it."                          
Number 1172                                                                    
REPRESENTATIVE JOHN COWDERY asked if Dr. Woller believed a consumer            
group should be allowed to negotiate for the best possible price               
and service.                                                                   
DR. WOLLER answered in the affirmative.                                        
Number 1189                                                                    
REPRESENTATIVE COWDERY noted, "Price is the bottom of everything of            
cost."  He commented he is on the public employees insurance plan              
and indicated he did not think he was limited as far as his choice             
of providers.                                                                  
DR. WOLLER said Representative Cowdery has a traditional indemnity             
REPRESENTATIVE COWDERY asked Dr. Woller if he thought the cost of              
insurance coverage to the consumers, who utilize the same plan as              
Representative Cowdery, would be affected.                                     
Number 1232                                                                    
DR. WOLLER indicated people would stay with a plan designed by the             
health maintenance organization or by the actual insurance company             
that met their needs and would have an economic incentive to do so.            
He indicated that if a plan was not providing quality service, a               
few people would be going outside the plan whether the plan paid               
that dollar amount to a preferred provider or to another provider.             
It's still the same dollar amount, there should be no change.  Dr.             
Woller noted "the rub" would come in if large numbers of people                
started leaving the plan for one reason or another.  The plan's                
operators would then lose their bargaining power with their                    
preferred providers and that could make a difference.  However, Dr.            
Woller said he would submit that if large numbers of people were               
leaving their plan then something was wrong with the plan and it               
would need to be examined.  He commented holding people as economic            
hostages in a plan that was not providing good service was not to              
the benefit of patients.                                                       
Number 1311                                                                    
REPRESENTATIVE COWDERY indicated he believed rates for employees               
and employers were set through studies and actuaries, using every              
DR. WOLLER said he would assume so.                                            
REPRESENTATIVE COWDERY questioned whether there was a problem out              
there he hadn't seen, asking for details and noting the world was              
not perfect.                                                                   
Number 1352                                                                    
DR. WOLLER replied the problem in Alaska is fairly low, noting                 
there were currently not a lot of dentistry PPOs in the state.  He             
said he thought that having guidelines in place would make these               
things easier to tolerate as they proliferated.  Dr. Woller                    
indicated the members of the Alaska Dental Society are aware of the            
kinds of problems that could come up because their colleagues in               
other states are having them.  He said it was currently happening              
on a smaller scale, noting, for example, many of the military                  
dependents in the Fairbanks area are under a PPO.                              
Number 1399                                                                    
REPRESENTATIVE COWDERY asked if that was state or federal.                     
DR. WOLLER replied it was federal, mentioning United Concordia                 
Companies again.                                                               
Number 1415                                                                    
REPRESENTATIVE JOE RYAN asked if that was TRICARE [TRICARE-Active              
Duty Family Member Dental Plan] or if it was the old CHAMPUS with              
the military.                                                                  
DR. WOLLER confirmed it was United Concordia, indicating the                   
company had contracted nationally with the military.                           
Number 1440                                                                    
TOM HIPSHER, DDS, Alaska Dental Society, came forward to testify               
next.  He noted that besides being a dentist, he is also a                     
registered civil engineer in Alaska and the owner of software                  
development company which marketed software for health care benefit            
plans throughout the 50 states.  Dr. Hipsher indicated he would                
say, as a dentist, what HB 300 was, and then what it was not.  He              
noted there are people present who would probably try to make this             
an issue about cost which it is really not.  He stated they are not            
attempting to set fees or premiums for insurance policies, but he              
commented they would be led to believe this would probably cause               
insurance rates to increase.  Dr. Hipsher reiterated that HB 300 is            
not "any willing provider" legislation.  He stated they are not                
attempting to eliminate closed panels, eliminate or undermine                  
managed care, eliminate utilization reviews or outcomes                        
assessments.  He indicated he thought all of those things played a             
very important role in overall patient health.  Dr. Hipsher                    
indicated HB 300 is not necessarily about hospitals and the cost or            
services provided by hospitals.  He stated it is not about tort                
reform as had been suggested by some legislators in prior                      
committees.  It is not about doctors, doctors' fees, pharmaceutical            
companies, pharmaceutical products or the cost of pharmaceutical               
Number 1527                                                                    
DR. HIPSHER stated, "This bill is about patient rights; it's about             
you and I as health care consumers wanting nothing more than to be             
able to make choices about the health care that we receive and not             
be penalized for making those choices."  He said HB 300 is strictly            
about patients; it is about eliminating discrimination with regards            
to the care patients receive, eliminating discrimination in the                
treatment that is recommended, and eliminating discrepancies in                
payment for the reimbursement to the patients for the treatment                
received.  He continued, "This bill is about you and I as patients             
having the freedom to seek medical and dental care from whatever               
doctor we choose.  It's about patients having the right to receive             
all of the treatment options available to them for their particular            
situation and having the right to choose the treatment that is most            
appropriate to their needs without being penalized for doing that."            
Number 1573                                                                    
DR. HIPSHER continued, "As a practitioner, I believe in the concept            
of free enterprise and competition.  In my business the only way               
that I can attract patients is ... by providing the highest quality            
oral health care that I can at ... a reasonable cost.  The fees                
that I charge for my care are based on what it costs me to run a               
practice in ... Anchorage, Alaska.  There are no guarantees for me             
in my business.  I have to rely on my expertise as a dentist, I                
have to rely on the fact that my patients will trust me as a                   
dentist, so all of this tends to make me a better dentist.  If they            
aren't satisfied with what I charge or if they aren't satisfied                
with the type of work I do or my bedside manner or any of that,                
they have the freedom to go anywhere they want.  The decisions that            
are made about their care are ultimately made by themselves.  ...              
I have to provide them with all of the options available to them,              
and the cost of those options vary greatly, so ... it's their                  
choice as to what the treatment they want that is most appropriate             
for their needs.  And ... most importantly, is the treatment that              
I render for my patients is I accept full responsibility for ...               
that care.  ... The insurance industry is in the business to make              
money and I realize that that is a valid point, and I respect their            
efforts to ... help keep costs low.  However, in the process of the            
day-to-day business, I feel that things get so bottom-line oriented            
that they forget about the human elements involved.  It's my job,              
as a health care provider, to make sure that the human element is              
cared for by providing treatment that is appropriate, that is                  
unbiased, and that is at ... a cost that is as reasonable as I can             
provide it."                                                                   
Number 1671                                                                    
REPRESENTATIVE COWDERY asked, "What percentage ... do you feel of              
our society is under insurance?"                                               
DR. HIPSHER said he would say that probably 90 percent of the                  
people he saw were under an insured plan, noting he could only                 
speak from his practice.                                                       
REPRESENTATIVE COWDERY asked if the uninsured 10 percent of Dr.                
Hipsher's patients came to his practice because of his ability or              
good looks.                                                                    
Number 1695                                                                    
DR. HIPSHER said all of his patients came to him strictly through              
word-of-mouth, noting he did not advertise and indicating his fees             
were not lower than standard.                                                  
Number 1708                                                                    
CHAIRMAN ROKEBERG said, "Doctor, your testimony was that what this             
bill is, it's not a duck, even though it may look like one."  He               
asked if it would be Dr. Hipsher's contention that this would not              
raise costs.                                                                   
DR. HIPSHER said he did not feel it would raise costs.                         
CHAIRMAN ROKEBERG asked if he thought it would lower costs or keep             
costs the same.                                                                
Number 1719                                                                    
DR. HIPSHER said he would assume costs would remain the same unless            
they saw patients that were unhappy with their current situation.              
He indicated HB 300 was about allowing patients under managed care             
or PPO plans who were not being treated correctly by their provider            
to be able to go to another provider and be reimbursed at the same             
rate they would have been reimbursed for under their plan.                     
Number 1755                                                                    
LYNN HARTZ, Family Nurse Practitioner, Alaska Nurse Practitioner               
Association, testified next via teleconference from Anchorage.  She            
spoke from a prepared statement:                                               
     The Alaska Nurse Practitioner Association is pleased to                   
     support HB 300.  This bill provides important consumer                    
     protections including the right to full disclosure                        
     regarding treatment options and assuring Alaskans                         
     continued access to their clinician of choice.                            
     This bill also protects health care providers from                        
     discrimination.  I refer to that part which states, "A                    
     health care insurer may not (1) directly or indirectly                    
     reimburse a covered person at a different rate because of                 
     the person's choice of provider."  Now, this section has                  
     particular resonance for us because it's the Blue Cross                   
     Federal Employee Program's discrimination against their                   
     own nurse practitioner preferred providers since the                      
     beginning of this year.  Currently, nurse practitioners                   
     with a preferred provider agreement with Blue Cross are                   
     not reimbursed for their services until the patient has                   
     met a $200 calendar year deductible.  Physicians with a                   
     preferred provider agreement with Blue Cross are paid in                  
     full after a $10 copayment for each office visit.  This                   
     policy has led to ridiculous situations in practitioner-                  
physician practices in which patients are forced to decide whether             
to see the nurse practitioner whom they may have seen for years and            
pay $200 before their insurance kicks in, or see the physician in              
the same office and pay $10.                                                   
     In response to questions, so far Blue Cross has not                       
     explained the rationale behind this policy and to date                    
     has just forwarded complaints to their Washington, D.C.,                  
     This is not about cost.  The Blue Cross Federal Employee                  
     Program in this case is actually providing financial                      
     incentives for their subscribers to see more expensive                    
     providers and directing them away from less expensive                     
     providers who are all preferred providers.  They are also                 
     practicing discrimination against a subgroup of their own                 
     preferred providers without warning or explanation.                       
     There are about 18 small solo nurse practitioner                          
     practices and 4 nurse practitioner-owned health clinics                   
     in Anchorage and Eagle River.  Insurance company policies                 
     similar to that of Blue Cross will seriously affect their                 
     business, if not put them out of business.                                
     The Alaska Nurse Practitioner Association believes that                   
     this example provides ample evidence that HB 300 is                       
     needed.  We need your help.  Providing high quality,                      
     cost-effective health care is apparently not enough to                    
     save us from insurance company policies like that of the                  
     Blue Cross Federal Employee Program, a policy that is not                 
     based on cost savings, nor does it have anything to do                    
     with appropriate use of health care.                                      
     We strongly support HB 300 and hope that the Labor and                    
     Commerce Committee will support it also and move it                       
MS. HARTZ asked if there was enough time to read two paragraphs                
from a pediatric nurse practitioner who had not been able to be                
Number 1889                                                                    
CHAIRMAN ROKEBERG said in the interests of time it would probably              
be best if she faxed the statement to the committee, and he                    
provided the number, or if she gave it to the teleconference                   
monitor.  He said it might be most appropriate for anyone on                   
teleconference who has any testimony to fax their written comments             
to the committee, then summarize those comments in their verbal                
The statement Ms. Hartz spoke of was conveyed to the committee.  It            
was from Catherine A. Stange, MS ANP, and read:                                
     I am a nurse practitioner working in a large group                        
     pediatric practice in Anchorage.  I am directly affected                  
     in my practice by the inconsistency of benefits provided                  
     to me as a nurse practitioner and that of the                             
     pediatrician.  Many of my patients I have cared for since                 
     birth and therefore have a relationship with them and                     
     their families.  Presently, they are required to pay a                    
     $200.00 annual deductible to see me but for the SAME                      
     service could see the pediatrician in my office with only                 
     a $10.00 co-pay.  This encourages very poor continuity of                 
     care as well as inappropriate use of the physician in a                   
     collaborative practice, when both of the providers are                    
     Preferred Providers.  Incidentally, I have been a                         
     preferred provider with Federal Blue Cross for several                    
     years, in private practice, prior to joining this group                   
     practice.  Financially, the discrimination against nurse                  
     practitioners does not make sense.  By the inappropriate                  
     use of physicians in the practice, patients will see them                 
     instead of the nurse practitioners, and therefore,                        
     Federal Blue Cross will be paying out much more in funds                  
     for medical coverage to their clients.  I also see that                   
     by this discrimination, nurse practitioners' practice is                  
     being restricted which is unconstitutional.  I am                         
     convinced that this discrimination has been an oversight                  
     after many changes in the last 2 years of Benefit plans                   
     with Federal Blue Cross and hope that this issue will be                  
     addressed as soon as possible.  Thank you for your                        
     consideration in this matter.                                             
Number 1911                                                                    
KAREN DECKER-BROWN testified next via teleconference from                      
Anchorage.  She stated she was testifying from a consumer point of             
view and spoke from a prepared statement:                                      
     The consumer should have the right to choose any health                   
     care provider, and that means not just physicians but                     
     (indisc.) example use a nurse practitioner or a dentist                   
     or whoever that they need for health care coverage.  It                   
     goes against all the principles ... our forefathers                       
     fought for to make America free to have insurance                         
     companies dictate who we can see for health care, what                    
     services we are allowed, and limiting coverage for                        
     individuals with certain problems.                                        
     In the book Animal Farm [by George Orwell] there is a                     
     phrase that goes something like this, "All animals are                    
     equal, it's just some are more equal than others."  This                  
     is what we will have with managed care and health                         
     maintenance organizations here in Alaska.                                 
     Of great concern to me is that the insurance industry is                  
     no longer wholly owned by American companies.  Some of                    
     the wealthiest and largest businesses in the United                       
     States are in the insurance industry.  They are great                     
     companies to invest in, and personally I have stock in                    
     insurance companies, but not at the expense of the                        
     American and Alaskan people.  It is my understanding that                 
     companies such as New York Life and Equitable are owned                   
     by the Japanese, if not wholly, then in part.  We                         
     defeated the Japanese from taking over our land and it is                 
     of great concern that they are now buying America and                     
     dictating the quality of life and health care of the                      
     American people.  It is by small bits over time great                     
     changes take effect.  It is almost imperceptible at the                   
     time, but our choices and coverage will be greatly eroded                 
     for financial gain of an overseas conglomerate.  What has                 
     that got to do with the here and now?  It is looking at                   
     the larger picture of which we are a small bit.                           
     It is for this reason I support action relating to                        
     patients' right under the health insurance and to                         
     prohibit insurance companies' restrictive treatment                       
     practices.  Thank you.                                                    
Number 2004                                                                    
KATHY ODEGARD, Senior Operations Director, NYLCare Health Plans                
Northwest, Incorporated (NYLCare), testified next via                          
teleconference off-network from Seattle.  She stated NYLCare is the            
administrator of the state of Alaska's employee benefit plan.  Ms.             
Odegard testified that as the administrator of the state plan                  
NYLCare is well aware of budget pressures, et cetera.  She said HB
300 will remove the current tools NYLCare has to assist the state              
in managing the rapidly escalating cost of health care.  She noted             
the bill does not take into account a lot of the care that has                 
historically gone outside Alaska to the Lower 48.  She said that in            
NYLCare's reading, the current discounts applying to state of                  
Alaska employees would be eliminated, increasing cost to the state,            
and could ultimately end up increasing costs to the consumer.  She             
noted the bill also did not appear to distinguish between the                  
geographical differences within or outside the state.  She asked,              
"Does this imply one rate for everyone, no matter where the                    
services are provided?  Who actually benefits from this bill?  Is              
it the Alaska employers, the employees of the state of Alaska,                 
state of Alaska taxpayers?  As we see it, the bill protects the                
income of health care professionals against the economic pressures             
(indisc.--coughing) the state today.  In no other service industry             
are employers or employees prohibited from shopping for the best               
price or value.  We don't see where health care ... shouldn't be               
the same.  ... It is our opinion that if this bill passes, it will             
rapidly escalate the cost of health care.  It also limits plan                 
design and provides a competitive disadvantage in a market.  I                 
heard talk about Blue Cross and Blue Shield, as we read the current            
bill we're not convinced it applied to the Blue Cross Blue Shield              
Associations at all."                                                          
Number 2087                                                                    
CHAIRMAN ROKEBERG noted NYLCare is the third-party administrator of            
the state's plan and said it is his understanding the state's plan             
was exempt under ERISA (Employment Retirement and Income Security              
Act) from any state statute because it is a self-insured plan.  He             
asked her if that was her understanding as well.                               
Number 2100                                                                    
MS. ODEGARD agreed but said it has been the state plan's practice              
to adopt whatever regulations were passed for the state of Alaska.             
Number 2114                                                                    
REPRESENTATIVE RYAN commented this seemed like an obvious question,            
but he asked, "Are not the benefit package that the employees                  
receive a negotiated portion of their compensation for the service             
they perform in their job?"                                                    
Number 2131                                                                    
MS. ODEGARD said she would say yes but thought he should direct the            
question to the state, noting, "Usually a benefit plan is                      
definitely a part of their whole compensation package.                         
REPRESENTATIVE RYAN confirmed the employees receive the benefit                
plan in lieu of financial compensation, noting that was all he                 
wanted to establish.                                                           
Number 2143                                                                    
CHAIRMAN ROKEBERG indicated there is a provision in the bill                   
requiring a health care professional, qualified for the particular             
service, to provide whatever utilization review is appropriate.  He            
asked how that would affect the contract and practice of NYLCare in            
providing services and what impacts there would be on costs.                   
Number 2158                                                                    
MS. ODEGARD said, "If you're referring to the piece that indicates             
the services done by someone licensed within the state of Alaska,              
and we already have a medical director that is associated in the               
state ... lives there and practices there, ... we don't believe it             
would have an impact."                                                         
Number 2171                                                                    
CHAIRMAN ROKEBERG asked if NYLCare did not have a provision for                
some utilization review procedures and preauthorizations as part of            
its contractual obligation with the state.                                     
MS. ODEGAARD replied, "Yes, but ... we believe the bill states that            
... we would still do that, we would just -- the actual utilization            
review and services would -- we have people in Alaska today that do            
that as well .... It won't impact the cost as we understand it."               
Number 2203                                                                    
KATHY VOLZ, President, Alaska Physical Therapy Association,                    
testified next via teleconference from Anchorage.  Ms. Volz stated,            
"I'm here on behalf of my organization, which is 180 licensed                  
health care practitioners, just to say, in summary, that we are in             
support of the current version of this bill recognizing rights to              
the consumers and providers as well."                                          
Number 2228                                                                    
ROSS BLAKER, AETNA U.S. Health Care (AETNA), testified next via                
teleconference from Anchorage.  Mr. Blaker commented he wanted to              
keep it brief but indicated they feel health care costs are high               
and are continuing to increase.  He stated, "Insurers and employers            
and consumers are all seeking some cost control in one of the                  
greatest human resource expenses.  This bill really seems to limit             
a health plan and an employer can define a health benefit package              
to control one of his fastest rising costs.  It also seems to apply            
to insured plans only, not to the large self-insured plans, and                
therefore, the small employers typically insured is gonna be the               
target of ... this legislation.  This (indisc.) group is typically             
subject to the most mandated legislation as far coverage and level             
of benefits is concerned.  PPOs have been in Alaska for a number of            
years now and - and they seem to be a viable financial alternative             
to straight indemnity plans.  PPOs are very popular in the                     
marketplace and many, if not most, of the plans being purchased now            
are structured in the PPO model.  They're popular because they're              
the most effective towards controlling costs.  In the PPOs that                
AETNA U.S. Health Care offers, there's a meaningful benefit for                
nonuse of a PPO provider.  There's a better benefit for the use of             
the PPO provider, assuming the member has coverage for that                    
particular service in question and they do have meaningful benefit             
if they're outside the network.  By eliminating the PPO                        
differential I offered a credentialling providers is undermined.               
There will be no benefit differential and, therefore, no network.              
Credentialling providers to quality cost to service is basic to                
building a cost-effective PPO network.  I really don't have a                  
problem with Section 390(b) [see Number 1083, Dr. Woller's                     
testimony].  We think that 390(e) could probably be reworded a                 
little bit, and I think in summary it seems to -- It seems hard for            
us to see how this bill would benefits consumers of medical care               
and we think it would be detrimental to insured plans."                        
Number 2307                                                                    
CHAIRMAN ROKEBERG noted AETNA did approximately $160 million in                
health insurance in Alaska in 1996 and had 43 percent of the                   
state's market, but AETNA had the state of Alaska's contract at                
that time.  He asked Mr. Blaker what the premium amount was and                
what percentage AETNA had of the health care underwriting in Alaska            
for calendar year 1997.                                                        
MR. BLAKER replied he could not currently tell the chairman that.              
He said it shrank very, very substantially when the state of Alaska            
went to NYLCare and became self-insured.                                       
CHAIRMAN ROKEBERG asked for a guess.                                           
MR. BLAKER indicated he couldn't even provide that.                            
CHAIRMAN ROKEBERG asked if it was from something like $160 million             
down to $10 or $20 million.  Chairman Rokeberg stated, "It's all               
public record, you have to do it for CHIPRA [Comprehensive Health              
Insurance and Payment Reform Act], so we'll get it eventually."                
Number 2350                                                                    
MR. BLAKER replied, "(Indisc.) comprehensive health insurance                  
association, but I really don't know because ... that premium is               
based on AETNA having ... the state of Alaska insured for half of              
the year.  So, I presume what you're looking for is - is our                   
premium income as of ... December 31st, and I'm sorry, I just don't            
know that."                                                                    
Number 2364                                                                    
CHAIRMAN ROKEBERG asked him to try to obtain that or provide the               
information to the committee whenever the quarterly or annual                  
report comes out.  He said the committee would very much like to               
know because of the position AETNA previously had in the state.  He            
added he hopes AETNA would be remaining in the state as a provider             
of health insurance.  He asked Mr. Blaker if his firm currently                
writes any individual policies in Alaska.                                      
MR. BLAKER answered in the negative, stating it was strictly group             
Number 2385                                                                    
REPRESENTATIVE RYAN asked for confirmation AETNA would be buying               
NYLCare so they could get back in the state's market.                          
MR. BLAKER said he understood that the boards of directors of both             
companies had approved it and it is now up to the regulators.                  
Number 2396                                                                    
CHAIRMAN ROKEBERG asked why AETNA did not choose to write                      
individual policies in Alaska.                                                 
MR. BLAKER said AETNA had individual policies up until                         
approximately eight or ten years ago.  He said he thought AETNA                
decided it wanted to target the employee benefit field rather than             
the individual field, and sold its "book of business" to Mutual of             
Omaha Insurance Company.                                                       
Number 2425                                                                    
TERRY ALLARD, Chairperson, Health Committee, Southern Alaska Life              
Underwriters Association, was next to testify.  Ms. Allard spoke               
mainly from her prepared statement, noting they were concerned, as             
agents representing employer groups purchasing benefit plans for               
their employees, about the impact of HB 300 on their employer                  
clients.  She said carriers would lose the ability to negotiate                
favorable pricing on behalf of consumers and purchases by being                
required to pay all providers the same fee, and that this would                
increase the premiums by eliminating the carriers' ability to                  
control or at least help mitigate cost increases through use of                
their networks.  Ms. Allard stated, "Employers currently providing             
preferred provider health plans can expect to see costs increases              
of 10 to 15 percent due to the carriers' inability to steer                    
patients to preferred facilities where they have discounts                     
negotiated, and this would be in addition to the increases that                
we're seeing of in the neighborhood of 6 to 10 percent that are due            
just simply to inflation.  ..." [TESTIMONY INTERRUPTED BY TAPE                 
SUBMITTED TO THE COMMITTEE:                                                    
"It is estimated that approximately 80 percent of more of the                  
employers in the Anchorage area are currently providing PPO plans              
for their employees.  2) Deny purchasers the choice of products                
TAPE 98-33, SIDE B                                                             
Number 0001                                                                    
MS. ALLARD continued, "... choice of products that contain                     
incentives to use these provider networks.  The price increases are            
going to continue to escalate.  There are options in the market for            
employers today.  They do have a choice of buying a PPO plan or a              
traditional indemnity-type plan, and this has been stated by people            
testifying prior to me.  Employers are making the choice to buy PPO            
plans because of the economy of purchasing that plan, and those                
plans do provide a mechanism for somebody who chooses not to use a             
preferred provider, to go outside of that network, and they still              
have a benefit, they're choosing consciously to make - to utilize              
services from another provider and they're paying the difference               
out of their pocket.  By passing this bill you would be taking away            
the ability for an employer to make a choice to buy that plan                  
because if the carrier can't continue to negotiate the pricing, the            
... discounted plan that they're purchasing is going to away and               
that's where those 10, 15 percent rate increases are going to come             
Number 0048                                                                    
MS. ALLARD stated, "We also fear that this is gonna increase                   
carrier administrative costs because of the provisions requiring               
Alaska licensure for all medical professionals conducting                      
utilization review in Alaska and create an unfavorable environment             
here for doing business by placing these restraints on carriers and            
exposing them to increased liability.  It's also my understanding,             
as it's been expressed by someone prior to me, ... that the way                
this legislation is worded, it's only going to affect plans that               
are fully insured.  The people that are out there are currently on             
plans that are self-insured are not gonna be impacted by this                  
legislation.  So, plans like the Blue Cross Federal Employee                   
program are not going to be impacted by this."                                 
Number 0086                                                                    
MARY VEALE, Legislative Liaison, Alaska Chapter, American Physical             
Therapy Association, came forward to testify.  She stated the                  
association strongly supports this bill, indicating the association            
felt it was an important protection of Alaskan patients' rights for            
patients to be able to choose their physical therapist.  She also              
recommended a change to Section 2, subsection (b)of CSHB 300(HES),             
which currently read:                                                          
     (b) A health care insurer may not deny, reduce, or                        
     terminate health care benefits for a covered person                       
     unless the denial, reduction, or termination is approved                  
     by a physician who is licensed to practice in the United                  
MS. VEALE requested more specific language stating the review be               
made by a health care provider who is licensed and competent to                
perform the service under review instead of physician denial.  Ms.             
Veale commented on Alaska's types of patient populations, like                 
commercial loggers, that physicians in the continental United                  
States might not be as familiar with, giving the example of a                  
physician without a specialty in rehabilitation medicine denying               
benefits.  She said she also thinks it would be cheaper for                    
insurance companies in the long run if the individual health care              
provider was doing a review, noting a physical therapist reviewer              
would cost the company less than a physician reviewer.  Ms. Veale              
additionally commented she had been unhappy with some of the things            
she had seen relating to HMOs and PPOS when she worked in Seattle,             
Washington.  She said there were quite a few of those types of                 
organizations there and she noted many of her coworkers were                   
quitting and not working for these organizations because they felt             
they could not offer the same quality of care as in an autonomous              
practice.  She said they felt limited by the amount of time they               
could see the patient.                                                         
Number 0162                                                                    
REPRESENTATIVE RYAN commented, "For a person to maintain a practice            
... when it's a reduced pay, they have to push people through like             
animals in a box car or else ..."                                              
MS. VEALE agreed, and she said she felt the patients are the losers            
in a situation like that.                                                      
REPRESENTATIVE RYAN asked if that affected her profession.                     
MS. VEALE replied very much so, noting there were places in Seattle            
before she left that she would not work because of the association             
mostly with HMOs.  She indicated physical therapists were limited              
to very short time intervals with patients and she felt the amount             
of time allowed was inadequate to do thorough evaluations and                  
treatments.  She indicated she did not find this situation so much             
in Alaska.                                                                     
Number 0186                                                                    
CHAIRMAN ROKEBERG asked Ms. Veale if she moved to Alaska to get                
away from an HMO environment.                                                  
MS. VEALE indicated she moved mostly to get away from traffic.                 
Number 0199                                                                    
REPRESENTATIVE RYAN noted he had a rhetorical question for Chairman            
Rokeberg.  He said, "You've heard all this testimony, this money               
hasn't gone away, it's still in somebody's pocket.  Who's got the              
CHAIRMAN ROKEBERG replied that was the issue here, "Whose pocket               
does the money go in?"                                                         
Number 0216                                                                    
LINDA FINK, Assistant Director, Alaska Hospital and Nursing Home               
Association, came forward to testify.  She said the association                
represents all of the community hospitals in the state and strongly            
opposes HB 300, specifically Section 21.42.390(a)(1) and (c)(1), in            
Section 2 of CSHB 300(HES).  She stated the bill will take away one            
of the few options Alaska businesses have, contracting with                    
hospitals for volume discounts, to manage the cost of offering                 
health insurance benefits to their employees.  She stated the bill             
interferes with the right of a business to fully define the benefit            
package it would offer and also interferes in the contracting                  
relationship between purchasers and providers.  Instead of                     
providing choice, they believe it will reduce the variety of health            
plan options on the market; the net results would be higher health             
costs for everyone in Alaska, and more people losing health                    
Number 0254                                                                    
REPRESENTATIVE JERRY SANDERS asked if patients currently have a                
choice to go anywhere they wish.                                               
MS. FINK replied she believes they do.                                         
REPRESENTATIVE SANDERS said then the only difference is in who pay             
for it; if the patients exercised their choice, they pay for it.               
MS. FINK replied she thought it depended on what kind of insurance             
they had.                                                                      
REPRESENTATIVE SANDERS indicated if HB 300 was passed, that when               
the patients exercised their choice, he would pay for it.  He noted            
that was his understanding.                                                    
MS. FINK answered, "Yes"  She said she thinks it depends on what               
kind of insurance they have.                                                   
Number 0295                                                                    
REPRESENTATIVE RYAN commented there was a point he was trying to               
get clear.  He asked Ms. Fink if it was her understanding the                  
benefit package offered to the employees of the association's                  
hospitals, along with actual monies for services performed, was                
part of the employees' compensation package.  He indicated the                 
association's members were in a competitive job marketplace.                   
MS. FINK indicated it was her understanding insurance coverage was             
part of an employee's compensation package in most cases.                      
REPRESENTATIVE RYAN noted that and said, "Then, if utilization                 
review comes along and denies them, has not whoever did this                   
utilization review and denied them, stolen something of value from             
them - taken something without compensating them some other way in             
cash money?"                                                                   
Number 0321                                                                    
MS. FINK replied she thought most plans had specific things they               
compensate for and it was not blanket or carte blanche.                        
REPRESENTATIVE RYAN indicated he had received a bill for a couple              
of hundred dollars because his wife had surgery from a provider who            
was covered under her plan but the surgery was done at a facility              
other than Providence Alaska Medical Center.                                   
MS. FINK indicated some of the other witnesses might be able to                
address that better than she could.                                            
REPRESENTATIVE RYAN indicated his comments were not directed                   
specifically at her.                                                           
Number 0357                                                                    
CHAIRMAN ROKEBERG asked if Ms. Fink knew if Bartlett Regional                  
Hospital in Juneau has any PPO arrangements.                                   
MS. FINK said she did not know.                                                
Number 0385                                                                    
MARIANNE BURKE, Director, Division of Insurance, Department of                 
Commerce and Economic Development, came forward to testify next.               
Ms. Burke indicated she had received a letter dated March 13, 1998,            
from the committee requesting certain information.  She said the               
specific questions raised by Chairman Rokeberg addressed points                
touched on that day.  Ms. Burke noted one question was the number              
of health insurers licensed to do business in Alaska.  She stated              
her information was based on calendar year 1996, noting the 1997               
information was not due in to the state until March 1.  She said               
there are literally thousands of reports being processed and that              
data is being compiled.  Ms. Burke stated there were 142 insurance             
companies who held a certificate of insurance and had the authority            
to write group health coverage in Alaska.  There were also other               
insurers who had what was known as specialized authority to write              
other nontraditional health care or managed care policies; she gave            
the examples of cancer or disability coverages.  She noted 226                 
insurers in total held certificates of authority in Alaska and                 
Alaska additionally had two medical service corporations, nonprofit            
entities, Blue Cross Blue Shield Alaska and "Alaska Vision."                   
Number 0490                                                                    
MS. BURKE added that although the question was not asked she would             
like say that there are no HMOs in the state of Alaska.  Although              
the state does have enabling legislation, no HMO has applied for a             
license in Alaska.  The premium volume by carrier is available in              
the division's annual report, and she noted she has provided                   
selected pages to the committee.  The premium volume is on calendar            
year 1996.  The total dollars of premium written in Alaska was                 
$269,271,000.  She stressed that is insured plans and does not                 
include plans that are ERISA self-insured.  She indicated the                  
division does not have the authority to gather that data and the               
data is not available, it is proprietary to the entities and the               
division is precluded by federal law from requesting that data.                
She said the committee's letter also asks for information about the            
types of policies underwritten particularly as it relates to                   
individuals.  Currently, Blue Cross [Blue Cross Blue Shield Alaska]            
writes approximately 90 percent of the individual policies written             
in the state of Alaska.  Since 1995 Blue Cross has experienced a               
steadily declining number of policy holders.  Fewer people are                 
seeking individual health insurance.  This is for a number of                  
different reasons, not the least of which is that the premiums for             
individual health insurance have been steadily rising.  There are              
some fixed costs that remain as the number of individuals                      
decreases, so there are fewer people to spread that cost over.  In             
addition, there has been significant increase in the cost of health            
care and delivery in Alaska as in a number of other states.                    
Number 0614                                                                    
MS. BURKE said the remaining 10 percent of insurers writing                    
individual policies were scattered over 10 to 12 different                     
companies, none of which had a significant amount.  She added in               
many cases that health insurance was more or less written as an                
accommodation to the insurance company's client who might have a               
very large portfolio of other insurance.  Ms. Burke indicated the              
March 13 letter also requested her to specifically address a                   
December 3, 1997, memorandum written by legislative counsel Michael            
Ford which said it was the author's opinion state mandates could               
apply to ERISA self-insured plans.  Ms. Burke indicated Signe                  
Anderson, an assistant attorney general assigned to the Division of            
Insurance, had responded and the committee has been provided with              
a copy.  Ms. Burke said there is 24 years of case law, all over the            
country, which clearly says states are preempted from mandating any            
coverage to an ERISA self-insured plan.  She commented that has                
been challenged all over the country and it has never been                     
overridden.  According to the information the division was                     
voluntarily provided, Alaska's larger employers such as ARCO                   
Alaska, Incorporated; BP Exploration (Alaska) Incorporated; Carr-              
Gottstein and Fred Meyer were all self-insured.  Ms. Burke                     
indicated HB 300 would not apply to these employers or to the Blue             
Cross Federal Employees plan mentioned previously.  She said that              
was a federal plan and they have no authority over it.                         
Number 0728                                                                    
REPRESENTATIVE RYAN commented the testimony had said PPOs were                 
giving substantial discounts to get business.  He said providers               
were rushing patients through in an attempt to make enough money to            
pay the overhead, but premiums are going up.  Representative Ryan              
asked who is making the money.                                                 
Number 0753                                                                    
MS. BURKE replied the division has had no such complaints of                   
patients being rushed or about PPOs with the exception of very                 
isolated situations.  She said in those cases more often than not              
the problem had not been the reimbursement itself, but either the              
time the reimbursement took or other matters.  Ms. Burke noted the             
premium that has been determined and which employers pay in did not            
contemplate 100 percent of any service was going to be paid, that              
all individuals were going to have equal amounts of claims.  She               
said, referring to Representative Cowdery's remarks, this was                  
actuarially determined and was based on the provisions of the plan.            
For example, if there was a PPO plan, it was assumed in the                    
actuarial assumptions that the amount to be paid out would be in               
accordance with the discounted or negotiated cost.  Therefore, the             
amount of money coming in for the coverage was less than if an                 
indemnity plan had been negotiated which contemplated the rates                
could vary and be higher.  Ms. Burke noted it was a choice.                    
Number 0833                                                                    
CHAIRMAN ROKEBERG indicated he has some questions for Ms. Burke                
which he hopes can be answered and discussed at the March 23, 1998,            
hearing.  He said he wanted to follow-up on the question about                 
whether Ms. Burke believed and the statistical evidence showed that            
the availability of individual health insurance plans in Alaska was            
in jeopardy.  He noted this was a separate issue from HB 300.  He              
additionally asked, "Secondly, ... whether the - the issues that               
revolve around the status of ERISA as it relates to state mandates             
and the split case law on that. ... Thirdly, what the state's                  
relationship to CHIPRA and the entire availability of health                   
insurance in the state is because of the - the shifting companies'             
ownership and the availability of their ability to underwrite                  
individual and/or group plans in the state."                                   
Number 0900                                                                    
DIRK WHITE, Pharmacist, testified next via teleconference from                 
Sitka.  Mr. White stated he was a community practice pharmacist,               
and he and his wife, also a pharmacist, own and operate the two                
pharmacies in Sitka.  He said they had approximately 22 full-time              
employees and they pay for a health insurance program for those                
employees.  Mr. White said he supports HB 300.  He stated, "Before             
the onset of the health care issues made front-page news, you could            
go and see the doctor or dentist of your choice.  They'd provide               
care for you and they might write you a prescription which you                 
could then take to your favorite pharmacist to fill.  Well, then               
the insurance companies got involved and now you need to ask them              
who you can see and where you can go to get your prescription                  
filled -- after they designate that it's okay that you see the                 
particular health care provider that's gonna write that                        
prescription.  I want to know why we've given that right away to               
them, why they've that taken that right from us or why we've                   
allowed it to happen.  Also, my concern is that myself and other               
pharmacists like me will be forced out of business by the current              
practices of these insurance companies.  In the last five years,               
the three biggest pharmacy benefit managers, those being mail-order            
houses, have been bought by drug companies. PCS, which is                      
Prescription Card Services of Scottsdale, Arizona, is owned by Eli             
Lilly [Eli Lilly and Company].  Med-Co ... Cost Containment Company            
is owned by Merck [DuPont Merck Pharmaceutical Company].                       
Diversified Pharmaceuticals is owned by Smith Kline Beecham."  He              
noted he does not own stock in any of those companies and would not            
buy it.                                                                        
Number 0979                                                                    
MR. WHITE said those three pharmacy benefit managers (PBMs)                    
controlled, or were under contract by insurance companies to                   
provide mail-order pharmacy services to over three-fourths of the              
insured lives in America.  He expressed concern about the overall              
health of his community and his profession, stating, "Unless we                
stop these practices, your pharmacist probably will soon become                
your mailperson."  He gave a recent example of a patient who needed            
a prescription for antibiotics but was covered under a plan Mr.                
White said he wasn't even given the option to join.  He said the               
person could not afford the prescription but had to be in Ketchikan            
for work about a week later, and had the prescription filled at the            
Carrs Quality Center there.  Mr. White commented about possible                
worsening of the patient's condition because of the delay in                   
receiving medication which would have cost the insurance company               
more and kept the patient from going to work when he reached                   
Ketchikan.  He indicated the healthy community and their health                
care rights were why he was testifying in support of HB 300, urging            
the committee's support.  He stated, "Our insurance reps do not use            
the word 'negotiate.'  They tell us what they'll pay us for our                
services and we can take it or leave it and those rates have not               
gone up in ten years -- well my insurance premiums certainly have              
to cover my employees."                                                        
Number 1081                                                                    
CHAIRMAN ROKEBERG referred to his conversation with Mr. White the              
previous week.  He mentioned previous written comments Mr. White               
had provided to the committee and commented on a statistic he found            
in the bill packet indicating a number of states had the "any                  
willing provider" provisions but they only really related to                   
pharmacy.  He asked Mr. White if he was familiar with other states             
that have this particular provision that only relates to                       
pharmacies.  He asked Mr. White if he could follow up on that and              
get back to the chairman at a later date.                                      
Number 1117                                                                    
REPRESENTATIVE RYAN asked if it was correct that an insurance                  
company paid Mr. White a particular fee for filling a prescription             
over the wholesale - the generic rate of the drug.                             
MR. WHITE answered in the affirmative.                                         
REPRESENTATIVE RYAN asked how much money was that in Alaska.                   
MR. WHITE asked if he was talking about the welfare rate.                      
REPRESENTATIVE RYAN said what Mr. White could get paid over, what              
the generic cost of the drug was if Mr. White could buy it at that             
MR. WHITE replied the problem was that the insurance companies'                
reimbursement rates for pharmacy are currently well below Alaska's             
welfare rate.  He said the Alaska's welfare rate was set up in 1989            
to provide pharmacists $0.25 profit on every prescription.  He                 
noted they were paying about $18 per hour for pharmacist and the               
current rate is now $29 per hour.                                              
REPRESENTATIVE RYAN asked if Mr. White could buy those drugs at  a             
wholesale or generic rate like a large company like Carr-Gottstein             
Foods Company can.                                                             
MR. WHITE answered in the negative, commenting, "Nowhere near."                
REPRESENTATIVE RYAN asked Mr. White if he gained or lost, in                   
effect, on the rate he was paid by the insurance companies.                    
MR. WHITE replied he lost.                                                     
REPRESENTATIVE RYAN observed that all of Alaska's insurance laws               
had been given to them to pass by the insurance companies.  He                 
stated, "We don't know diddley-squat about insurance law but we                
just take it and pass it, and we wind up with this kind of stuff."             
MR. WHITE agreed.                                                              
Number 1190                                                                    
CHAIRMAN ROKEBERG asked if there was anything preventing Mr. White,            
as an independent pharmacist in Alaska, from forming a buying                  
MR. WHITE replied there are anti-trust laws, indicating there are              
both federal and state anti-trust laws.  He said he doesn't discuss            
his prices with other pharmacists at all, noting they have been                
told by insurance companies they would be taken to court if they               
CHAIRMAN ROKEBERG said the committee would look into that further,             
noting he was sure buying networks existed elsewhere.                          
MR. WHITE injected he had misunderstood.  He stated there are                  
cooperatives allowing them to pool their purchasing ability, but he            
said even then they still could not get the optimal rates nonprofit            
hospitals and government can obtain.  He indicated he would check              
into the "any willing provider" state laws regarding pharmacy                  
Chairman Rokeberg had mentioned.                                               
Number 1248                                                                    
CHAIRMAN ROKEBERG confirmed there was no one who wished to testify             
via teleconference from Fairbanks at that time.                                
Number 1278                                                                    
DEBRA DUMMANN, Member, International Brotherhood of Teamsters Local            
959, testified next via teleconference from Anchorage.  She stated             
she is a member of the International Brotherhood of Teamsters Local            
959, a consumer and a mother.  Ms. Dummann spoke from a prepared               
     I am concerned after reading House Bill 300 that the Act                  
     which says the Preferred Provider Arrangement may be                      
     legislated away.  I'm a 24-year union member of Teamsters                 
     Local 959.  I've participated in our union/employer                       
     negotiations, have been on the Teamsters Health and                       
     Welfare Task Force Committee for 3 years, along with some                 
     other 15 members from around our state.  I was recently                   
     asked to participate in a parent advisory board at one of                 
     our local hospitals.  My husband and I were recently                      
     elected to share one board position for the National                      
     Mucopolysaccharide Society [MPS Society] which is the                     
     group of disorders of which our youngest son suffers                      
     from.  However, put all that aside, I feel that my                        
     greatest knowledge in the health care field comes from                    
     being a mom.  I am an informed, aware consumer and must                   
     oppose your HB 300.  I also feel that our 5,000 plus                      
     statewide Teamster Union members are informed consumers                   
     and they all have a voice to express their questions or                   
     concerns when it comes to using PPOs.                                     
     Our task force members, as well as shop stewards work in                  
     the trenches with their fellow members on a daily basis                   
     statewide.  If their questions, concerns or opinions by                   
     which the task force member or shop steward is                            
     unfamiliar, these members can phone their business                        
     agents, the local trust offices or continue up the                        
     ladder.  The members' comments are listened to and acted                  
     upon accordingly.  As an example, our Trust discontinued                  
     using an insurance provider in 1996 because of poor                       
     service, but more importantly because of the concerns                     
     that were raised by our members.  The task force was                      
     formed to look into these important health issues and we                  
     mailed some 5,000 questionnaires, statewide, to our                       
     members.  We were shocked and amazed to receive over                      
     3,500 informative questionnaires back.  These respondents                 
     didn't hold back, and yes, they participated in obtaining                 
     a new insurance provider.  Because of this, I know that                   
     our statewide membership has a voice which is a valuable                  
     tool when it comes to our union negotiating with our                      
     employers to save 'me the consumer' money.                                
     The negotiated PPO arrangements, which I am familiar                      
     with, are negotiated to obtain a higher level of care for                 
     less money.  Makes sense.  However, if this negotiated                    
     arrangement is legislated away, that will result in                       
     higher costs to our Welfare Trust, our employers,                         
     employees and passed down to our families.  An even worse                 
     scenario would be higher costs, with reduced coverage.                    
     Instead our union has been on track to keep the rising                    
     costs of health care down and to provide the utmost in                    
     quality care that our members deserve.                                    
     However, as I'm writing this - reading this, I guess - I                  
     can see the issue goes even beyond being a Teamster.                      
     What about retirees in general that have other insurance                  
     and their own negotiated PPOs?  These are people who                      
     lived on fixed incomes.  How can you legislate away their                 
     PPOs?  How can you contain their costs?  Who is going to                  
     look out for them?  The PPO arrangements at least have a                  
     negotiated cost fixed for a specific period of time to                    
     edge out the continuous rise in health care costs.  Last                  
     but not least, I'm disappointed at the notion that I am                   
     trading chip in the insurance world and I continue to                     
     oppose HB 300.  I do have a choice.   We all have a                       
CHAIRMAN ROKEBERG said he would recess the hearing on HB 300 for a             
moment to take up another order of business.                                   
HB 300 - ALASKA PATIENTS' BILL OF RIGHTS                                       
Number 1519                                                                    
CHAIRMAN ROKEBERG announced the committee would return to the                  
public hearing on HB 300.                                                      
Number 1529                                                                    
SHELBY STASTNY, Chief Financial Officer, NANA Regional Corporation             
(NANA), testified next via teleconference from Anchorage.  He spoke            
from a prepared statement:                                                     
     In a recent study it was determined that NANA accounts                    
     for 2,000 jobs and $80 million in annual payroll - all                    
     within the state of Alaska.  Now, NANA is a self-insured                  
     organization and so the provisions of this bill won't                     
     necessarily affect directly NANA, but we believe that it                  
     will affect ... significantly the ability of others in                    
     the economy, and indirectly us through the lessened                       
     competition.  In order to stay competitive and continue                   
     to be a strong positive economic force in the community,                  
     it's imperative that we and our other businesses seek                     
     ways to control costs.  NANA is also an employer that                     
     cares about its employees.  Many of our employees are in                  
     positions that do not require high levels of education or                 
     experience, thus are not at the top of the economic pay                   
     scale.  We continually seek ways to provide benefits for                  
     our employees to improve their quality of life, while                     
     still remaining competitive in our low margin businesses.                 
     As health care costs have risen in the last few years,                    
     it's been tougher and tougher to meet our desire to                       
     provide reasonably priced health coverage for our                         
     A group of our managers, along with our insurance                         
     consultants, have worked for the last several months to                   
     provide health coverage to the families of more of our                    
     less highly compensated employees while remaining                         
     competitive to our customers.  Effective April 1, in less                 
     than two weeks, we begin our new program.  A larger                       
     number of our employees' families will have coverage                      
     because it will be more affordable.  An integral part of                  
     our ability to provide this coverage has been our ability                 
     to hold down hospitalization costs through the use of a                   
     preferred provider network of hospitals.  As a purchaser                  
     of medical services, our cost will be reduced                             
     significantly by a volume purchase agreement arranged                     
     through our insurance administrator.  Virtually all                       
     hospital service providers in Alaska were given the                       
     opportunity ... to participate, however, not all                          
     responded.  Our employees are not required to receive                     
     services from the preferred providers.  They are free to                  
     choose the provider of their choice.  If, however, they                   
     choose another provider, it's gonna cost NANA more money,                 
     since we do not have the discount arrangement.  As an                     
     incentive for the employee to utilize the service that                    
     will cost NANA the least amount of money, the employee                    
     pays a higher share of the cost in a non-preferred                        
     hospital.  There is no credible evidence that the                         
     preferred hospitals provide a lower quality of service.                   
     We object to the passage of HB 300 since it interferes                    
     with ours and other businesses' right to appropriately                    
     manage health care costs and provide the highest level of                 
     health care service possible for our employees at a                       
     reasonable cost.                                                          
Number 1691                                                                    
REPRESENTATIVE COWDERY asked if Mr. Stastny knew of anyone who had             
been hurt by the present system.                                               
MR. STASTNY replied not to his knowledge, but said he was not an               
expert in the area.                                                            
Number 1704                                                                    
CHAIRMAN ROKEBERG commented, "But Shelby, as ... one of my former              
accountants, you'd say that the cost containment benefits of a - a             
contractual relationship you've entered into is - is beneficial, is            
that correct?"                                                                 
MR. STASTNY replied it would save them hundreds of thousands of                
dollars a year and these savings have allowed them to cover more of            
their employee families.  He noted NANA has always covered the                 
employees themselves.                                                          
Number 1736                                                                    
REPRESENTATIVE RYAN commented "what seems to be the hook in this               
thing" is there is no determination of the value of the benefit                
package.  He stated, "It's given as compensation to compete in the             
job marketplace, to hire people, but nobody puts value on it for               
the employee."  Representative Ryan mentioned three possible                   
different benefit levels - "first class," "ordinary-type," "in the             
back door" - and said he thought perhaps they needed look at                   
tightening that up in statute that these benefit packages were part            
of compensation and people had a right of legal recourse receive               
the value of that compensation.                                                
MR. STASTNY said he guessed that was one way of looking at it,                 
noting NANA provided its employees with the knowledge of what it               
cost NANA to provide the employees' benefits.                                  
REPRESENTATIVE RYAN said he understood, noting the employees just              
have to be able to receive that value when they went use that                  
Number 1800                                                                    
CHAIRMAN ROKEBERG checked again to see if anyone was on                        
teleconference in Fairbanks.  There being no reply, he confirmed               
there were no other teleconference sites with witnesses waiting                
beside Anchorage.                                                              
Number 1815                                                                    
TOM TIERNEY, Director, Employee Relations, Municipality of                     
Anchorage, testified next via teleconference from Anchorage.  He               
commented the municipality has approximately 2,900 employees                   
covered; there are approximately 8,000 total lives including                   
spouses and children.  In 1997, the city's claims were in excess of            
$16 million of which inpatient hospitalization was $5.7 million,               
out-patient medical services were $7.5 million, prescription drugs             
were $0.5 million, dental care was $2.3 million and vision care was            
$0.4 million.  Mr. Tierney said the municipality has had rapidly               
escalating cost increases over the past many years, like most other            
businesses in Anchorage, in Alaska and throughout the country.  In             
the face of this problem the municipality had, before he got there,            
taken many actions in attempts to mitigate those increases.  In                
1987 the municipality began utilization review.  In 1990,                      
utilization review began for mental health care.  In 1991, the                 
municipality instituted the joint cost containment committees with             
its bargaining groups.  In 1993, the municipality approved AETNA's             
use of a PPO as a cost containment tool.  He said equally important            
during this period was that the municipality had a continuing and              
intensive review of plan design, including level of copayments and             
deductibles.  In short, he said, the municipality had left no stone            
unturned in its attempts to control its medical costs.  He said                
that, unfortunately, costs have risen, and as costs rise they have             
to be borne by someone, either the municipality's employees or its             
taxpayers.  He stated, "Make one thing clear, on our system they're            
not paid by the insurer carriers.  I think the insurance carriers              
-- I'm not gonna defend them here today, but the cost of increased             
medical care are not borne by the insurance carriers, they're borne            
by taxpayers and by employees.  The responsibility for the health              
care of our employees is one we take seriously and it's a very                 
personal matter for each of us, but it's also a business and that              
brings us to the present legislation."                                         
Number 1970                                                                    
MR. TIERNEY stated the municipality feels it is essential to                   
continue to have the ability to negotiate with providers of health             
care on behalf of its employees in order to achieve the maximum                
value for the employee and the taxpayer's health care dollar.  Mr.             
Tierney said the legislation would severely restrict the                       
municipality's ability to do this and, therefore, the municipality             
opposes HB 300.  He commented on the well-known benefits of using              
purchasing power to negotiate better deals and said restricting                
municipality's ability to do this shifts the balance of power in               
favor of the health care providers and against individual users of             
their services for those employees of the municipality.  He stated             
HB 300 is called a patients' bill of rights.  If it results in                 
increased costs to consumers, and they think it will, then it will             
be an empty bill of rights.  He said there could be no question                
that certain of the rights of the municipality's employees had been            
restricted but medical costs would bankrupt every employer and                 
government entity in the state if left unchecked.  Mr. Tierney                 
stated the municipality's employees understood this and complaints             
about the municipality's PPO had been almost nonexistent.  He noted            
they did not think this was an area which needed to be fixed.                  
Number 2045                                                                    
CHAIRMAN ROKEBERG noted the committee had Mr. Tierney's March 6,               
1998, letter but asked him to provide that additional report.                  
MR. TIERNEY replied he would.                                                  
CHAIRMAN ROKEBERG confirmed the municipality uses an insured PPO               
but is not self-insured.                                                       
Number 2066                                                                    
MR. TIERNEY agreed, noting the municipality was not totally self-              
insured; there was an insurance component of its plan.  He said the            
employee has a choice on some of the municipality's plans, noting              
they could go with a non-PPO option which cost the employee more               
and he said it is not a very popular option.                                   
CHAIRMAN ROKEBERG asked whether there is a list of physicians or if            
an employee was assigned to specific providers.                                
MR. TIERNEY replied that the PPO is with respect to hospital care              
and he confirmed the employees could select their own physicians.              
Number 2126                                                                    
REPRESENTATIVE COWDERY asked if a municipal employee covered by                
another plan could waive the municipality's coverage and receive               
additional financial compensation.                                             
MR. TIERNEY replied that the question did not come up because the              
municipality's coverage covered so much.                                       
REPRESENTATIVE COWDERY said he is covered under the municipality's             
plan and has waived coverage available to him in Juneau with the               
Number 2204                                                                    
CHAIRMAN ROKEBERG asked if the municipality's PPO was with                     
"Providence" or "Alaska Regional HCA Columbia" [Columbia/HCA is the            
parent company of Alaska Regional Hospital, recently renamed from              
Columbia Alaska Regional Hospital].                                            
MR. TIERNEY answered with "Providence."                                        
CHAIRMAN ROKEBERG asked if that meant the municipality employees               
could not go to "Alaska Regional HCA Columbia."                                
MR. TIERNEY answered in the negative, indicating he knew of some               
employees who choose to go to Alaska Regional Hospital.  Speaking              
from personal experience, he said the municipality has made special            
fee arrangements neutralizing the adverse effect of going through              
the PPO.  He said he has been told this was no longer being done,              
but knew it had been done in the fairly recent past.                           
Number 2266                                                                    
CHAIRMAN ROKEBERG asked if he had ever considered that the                     
municipality was exempted by ERISA from any state mandates                     
generated by the legislature because it is a large group.                      
MR. TIERNEY replied, "We're not, sir, at least we don't think so.              
The municipality did not believe it was exempt.  The mandates,                 
interestingly enough, always seem to cost us more money ... which              
is interesting in the sense that many of our collective bargaining             
agreements are, like, four-year agreements so the costs have to be             
-- you normally have caps with a sharing above that for collective             
bargaining groups."                                                            
Number 2333                                                                    
REPRESENTATIVE RYAN observed that with 250,000 people in Anchorage             
and 2,900 municipal employees, there is 1 employee for every 86                
people.  He asked Mr. Tierney if that makes him comfortable and                
gives him some security.                                                       
MR. TIERNEY stated, "Their health care needs are well-cared for,               
TAPE 98-34, SIDE A                                                             
Number 0014                                                                    
QUINN McKENNA, Operations Administrator, Providence Health Systems             
in Alaska, testified via teleconference from Anchorage.  He stated             
Providence Health Systems in Alaska opposes HB 300 and he                      
encouraged the committee not to pass it.  They believe it would                
increase health care costs for the community, limit choice of the              
number of insurance plans available to the community and decrease              
competition.  He said he agrees with other testimony provided,                 
indicating other states have addressed the issue of "any willing               
provider" legislation and that he does view HB 300 as "any willing             
provider" legislation.  He noted "any willing provider" means any              
patient can go to any provider and that is exactly what HB 300                 
provides for.  Mr. McKenna indicated Montana passed an "any willing            
provider" bill in 1991 and then let it sunset in two years.  He                
said Montana asked the United States of America Federal Trade                  
Commission (FTC) to give the state an opinion on its legislation               
which Mr. McKenna noted was very similar to HB 300.  He quoted from            
the February 4, 1993, letter to the attorney general of the state              
of Montana from the FTC, "By preventing PPOs from limiting the                 
panel of providers the law discourages contracts with providers in             
which lower prices are offered in exchange for the assurance of                
higher volume.  Although the law may be intended to assure                     
consumers greater freedom to choose where they obtain services, it             
appears likely to have the unintended effect of denying consumers              
the advantage of cost-reducing arrangements and limiting their                 
choice in the provision of health care services.  The commission               
has observed that competition among third party payers and health              
care providers can enhance the choice and availability of services             
for consumers and can reduce health care costs.  In summary, we                
believe that 'any willing provider' requirement may discourage                 
competition among providers, in turn raising prices to consumers               
and unnecessarily restricting consumer choice in prepaid health                
care programs without [Mr. McKenna commented he emphasized the next            
point] providing any substantial public benefit."  He stated FTC's             
primary purpose is to prevent unfair methods of competition and it             
is the FTC's opinion that legislation like this would increase                 
costs, decrease competition and limit choice.                                  
Number 0230                                                                    
CHAIRMAN ROKEBERG noted that letter was in the committee members'              
packets due to Mr. Reinwand's efforts.  He indicated the committee             
would next hear from Mano Frey.                                                
THE TELECONFERENCE MONITOR at the Anchorage Legislative Information            
Office (LIO), informed the chairman that Mr. Frey would be return              
for the Monday, March 23, hearing.                                             
Number 0280                                                                    
GREG STOKES, Administrator, Alaska Electrical Trust Fund, Health               
Care Cost Management Corporation of Alaska, testified via                      
teleconference from Anchorage.  He said his organization provides              
benefits for the International Brotherhood of Electrical Workers               
(IBEW), statewide.  He noted they are a member of the Health Care              
Cost Management Corporation of Alaska, which has approximately 19              
members.  Plans represented are mainly in the construction industry            
and they represent over 30,000 households in Alaska.  Mr. Stokes               
said they oppose HB 300 and agrees with previous speakers who                  
testified against the bill.  The legislation would greatly limit               
their ability to exercise cost containment efforts.  He thanked the            
committee for allowing him voice his concerns.                                 
CHAIRMAN ROKEBERG asked what the purpose is of his organization.               
MR. STOKES responded that they are a health care cost coalition                
that collectively negotiates PPO discounts.                                    
CHAIRMAN ROKEBERG asked if his business and the other businesses               
are just under one umbrella organization for the purpose of                    
negotiating a single contract with a single PPO provider.                      
MR. STOKES responded in the affirmative.                                       
Number 0424                                                                    
BRUCE GALE, Account Executive, Willis Corroon Corporation of                   
Anchorage, was next to testify via teleconference from Anchorage.              
He informed the committee his business is an insurance brokerage               
and health care consulting firm.  Many of their clients are                    
corporate clients who are their employers.  Their clients purchase             
health care services through the purchase of employee benefit                  
plans, some of which are insured and some of which are self-                   
insured.  Mr. Gale  said he would like to indicated their                      
displeasure with HB 300.  In their opinion, the employer comes to              
Willis Corroon Corporation of Anchorage and asks them to reduce                
health care costs.  He explained there are basically three                     
alternatives.  Mr. Gale said they can reduce benefits, pass on more            
of the employer's costs to the employee or they can use managed                
care techniques to drive down the cost of claims by virtue of                  
agreements that will include discounted costs from providers.  Mr.             
Gale stated that HB 300 will eliminate the possibility of the use              
of managed care in any way, shape or form on insured contracts.  He            
said they also believe that even though it will not affect self-               
insured clients, the elimination of the possibility of using                   
managed care in the insured market is going to hinder efforts to               
establish managed care plans in the Alaskan economy.                           
CHAIRMAN ROKEBERG asked Mr. Gale what the nature is of his                     
MR. GALE stated they are an independent brokerage and consulting               
firm.  He noted they would work with all licensed insurers in the              
state of Alaska.                                                               
CHAIRMAN ROKEBERG asked Mr. Gale how many underwriters he works                
with that writes individual health policies in the state of Alaska.            
MR. GALE responded that they work with Blue Cross and United Omaha.            
CHAIRMAN ROKEBERG asked how many other underwriters they have for              
property, casualty, et cetera.                                                 
MR. GALE said he couldn't answer that question as he works                     
exclusively on benefits.                                                       
Number 0600                                                                    
CHUCK O'CONNELL, Business Manager, Alaska State Employees                      
Association (ASEA); American Federation of State, County and                   
Municipal Employees (AFSCME), testified via teleconference from                
Anchorage.  He stated he strongly opposes HB 300 and is speaking on            
behalf of 7,500 members in the general government bargaining unit.             
He said it is the policy of the state of Alaska to engage in                   
competitive bidding in an effort to extend the state's resources in            
a way that is fiduciarily responsible.  Mr. O'Connell stated HB 300            
would remove competitive bidding from the health care industry.  He            
referred to Section 21.42.390 (b) and said it seems that it would              
preclude insurance companies from having a maximum level of                    
benefits.  The language says you cannot terminate benefits for any             
reason.  He said, "If somebody has a $1,500 maximum on a dental                
plan, you might have just quadrupled that."  Mr. O'Connell informed            
the committee members that he is also opposed to Section 21.42.390             
(c)(1), which has to do with directly or indirectly reimbursing a              
covered person at a different rate because of the person's choice              
of provider.  In the state of Alaska, they do not have preferred               
provider agreements with their medical benefits.  The NYLCare plan             
has not yet consummated any preferred provider arrangement.  He                
pointed out that the only place they are really available is in                
Anchorage.  Mr. O'Connell referred to the opening testimony on the             
bill which made reference to preventing HMO abuses and stated there            
aren't any HMOs so there aren't abuses.  If the legislation is                 
passed, it would destroy any opportunity to manage health care                 
costs in Alaska.  He respectively asked that the committee members             
all vote to kill the bill.                                                     
Number 0814                                                                    
CHAIRMAN ROKEBERG said, "Mr. O'Connell, as the executive director              
of the largest government employee union in the state, do you think            
if you were involved in negotiations with the state of Alaska - if             
they were to offer you a choice of a lower cost PPO type plan, vis-            
 -vis a self-insured NYLCare fee for service plan - what do you                
think your membership would prefer to have?"                                   
MR. O'CONNELL stated he doesn't think it makes any difference.  He             
said they have two very good hospitals in Anchorage.  If one                   
hospital were to agree to provide a level of service at one rate               
and the other hospital does not, he wouldn't have a problem                    
encouraging the members to go to where they'll receive the best                
level of benefit.  Mr. O'Connell stated they have experienced                  
significant health care claim cost increases and they are looking              
at trying to get into preferred provider arrangements.  If they do             
so, it will save about $4 million in the general government unit in            
terms of the state's premium costs.  If that is done statewide, it             
could save about double that amount.                                           
CHAIRMAN ROKEBERG said, "If NYLCare could figure out how to write              
a check in a timely fashion and/or there was another third party               
provider for the state's self-insured plan, if that particular                 
provider could arrange for a PPO style contract, you believe that              
your union members - because of the cost containment measures in               
savings - would prefer to go along with that?  Like, for example,              
take a cut in their cost of their medical benefits in order to                 
offset and increase their regular pay.  Would that be a fair                   
MR. O'CONNELL stated that health claims have a fiscal note.  If                
health claim costs are increasing at a very high rate - it is                  
currently about 7.5 percent to 8 percent, there are very few                   
options.  One option is to pay more money for insurance.  The                  
second option is to negotiate preferred provider agreements.  He               
referred to the first option and said it would increase the cost to            
the employer and/or the employee, or both.  He stated that HB 300              
would hurt the 100 largest employers in the state of Alaska.  It               
would have a disastrous effect on them.                                        
Number 0992                                                                    
REPRESENTATIVE RYAN said, "Don't you, as a strategy when you're                
negotiating for your members, and you fit an impasse as to what                
hard money you can get, isn't the next strategy to go for a better             
benefit plan to try to bring home a little something more to                   
present to the membership for ratification?"                                   
MR. O'CONNELL responded that is a strategy, yes.  There is pretax              
benefits and post-tax benefits.                                                
CHAIRMAN ROKEBERG asked if some of the bargaining groups have a                
problem with the state's contract because they failed to anticipate            
the increase of costs, and therefore, there is an issue about who              
is paying for what because of a cap that was bargained for.                    
MR. O'CONNELL responded that they are engaged in a major dispute               
with the state.  That dispute comes out of a situation where the               
state wasn't paying its full premium costs and they underpaid the              
premium over a period of time.  He said, "As far as we're                      
concerned, they owe about $3.36 million to the plan."                          
Number 1079                                                                    
JAMIE SLACK, Officer, VECO Corporation, was next to testify via                
teleconference from Anchorage.  He informed the committee members              
that he is responsible for employee benefits for the company.  As              
stated earlier, there really are only three choices in this matter             
as it relates to cost.  You either absorb the cost and go back to              
the provider to try to negotiate discounts, pass the costs on to               
the employees or reduce the benefits.  Mr. Slack stated that is the            
struggle VECO Corporation deals with every year in regards to                  
increasing costs.  Last year, they had to ask for a 25 percent                 
increase on the level that their employees are paying for their                
health insurance because VECO Corporation was in a position where              
they didn't want to have to turn back benefits.  Mr. Slack stated              
VECO Corporation is against HB 300 as they feel there isn't an                 
advantage to it.  He agreed with previous comments against the                 
CHAIRMAN ROKEBERG asked Mr. Slack if they have a dental plan.                  
MR. SLACK responded in the affirmative.                                        
CHAIRMAN ROKEBERG asked if employees can select their own dentists.            
MR. SLACK responded they can select their own dentists as they                 
don't have a PPO with dentists.  He noted the only PPO provision               
they have relates to hospitalization.                                          
CHAIRMAN ROKEBERG asked who underwrites their PPO.                             
MR. SLACK responded that they are a self-insured program, but the              
program is funded through Great West.  He noted their broker is                
Willis Corroon of Anchorage.                                                   
CHAIRMAN ROKEBERG said they're a third party administrator and VECO            
Corporation is self-insured.                                                   
MR. SLACK responded, "Yes, to a certain limit."                                
Number 1166                                                                    
CHAIRMAN ROKEBERG asked if they are exempt from ERISA requirements.            
MR. SLACK informed the committee members there is some argument                
about the real interpretation of that because there is eventually              
an insurance layer in there.  He said their feeling is that whether            
they are exempt or not, they certainly feel that competition is                
what built the United States and Alaska, and to be in a position               
where competition would not be allowed in the medical arena would              
do nothing but increase costs and eliminate the quality of care.               
Number 1226                                                                    
JIM CASE, Pediatric Dentist, testified via teleconference from                 
Anchorage in support of HB 300.  He informed the committee members             
of several organizations that he is a member of, and noted he was              
the first pediatric dentist in Alaska in which there are now nine              
pediatric dentists.  Dr. Case said, "I have a general feeling here             
after listening to much of the testimony that what we may be facing            
here is a case where dentistry is sitting over on the side and                 
decisions are made in health case on the basis of what happens over            
in what we call 'medicine.'  And those filter over into the little             
dentistry corner and create all kinds of problems for patients and             
for the profession.  I do know of people who I think have been hurt            
by the current system.  To echo a question I heard asked, 'Who has             
been damaged?'  Well I believe that some kids have damaged who have            
stayed with dental practitioners and not been referred to                      
specialists because that's what their plan said need to happen, or             
there was an economic disincentive to their parents.  The general              
dentist wanted to refer to me (indisc.) specialist, but the parents            
were at an economic disadvantage in their plan to follow up on that            
referral.  I don't believe that the -- or (indisc.) the parent was             
damaged because they did follow up on the referral but it cost them            
more.  So their pocketbook was damaged where if -- or a certain                
procedure that an insurance company was providing 'X' amount to                
whatever willing provider there was, the patient and parent would              
have had the freedom.  I don't believe the Alaska people want to               
give up their economic and regulatory rights to choose a                       
practitioner just so that employers can do the volume negotiation              
that we've been hearing about."                                                
CHAIRMAN ROKEBERG thanked Dr. Case for his testimony.                          
MR. CASE said he had something else to say.  He stated from his                
view as a specialist, he thinks people are often not aware that as             
a specialist, many specialists can do treatment cheaper than the               
general dentist.  Dr. Case said specialists often knows how to                 
handle situations with less treatment.  They can do it faster and              
more efficiently with lower overhead because of their experiences              
of doing that.  He stated he is not a referral specialist as most              
of his clients come out of the population by word of mouth from                
Number 1415                                                                    
CHAIRMAN ROKEBERG asked Dr. Case if he has had an experience where             
he has had patients that may have wanted to come to him, but have              
not because of the way their insurance is structured.                          
DR. CASE responded in the affirmative.  He added that he has had               
patients who have delayed coming to him, but eventually came to                
him.  He said patients have told him they wished they had come a               
lot earlier.                                                                   
CHAIRMAN ROKEBERG asked Dr. Case if he is aware of other types of              
insurance policies that apply to the practice of dentistry that                
usually provide over $1,000 or $2,000 worth of case per year.                  
DR. CASE responded, "No, you're talking what covers almost all, if             
not all, plans.  That's the arena we're talking about here in                  
CHAIRMAN ROKEBERG stated he doesn't understand why there are                   
restrictive elements here when there is almost very little                     
disincentive or incentive to move one way or the other unless you              
have a PPO situation where you're given greater levels of care as              
a benefit within your contract or within you're plan.  He said he              
isn't sure how HB 300 will impact dentists.                                    
DR. CASE said, "Say the service costs $125 and if that preferred               
provider -- the company will pay $110, and in my office they'll pay            
$70.  It's not a large amount, but it's an amount that people will             
make their decisions on."                                                      
Number 1599                                                                    
DAVID LOGAN, President-elect, Alaska Dental Society, came before               
the committee members to give his testimony.  He informed the                  
committee members that he is a practitioner in Juneau.  Dr. Logan              
stated HB 300 is a patient rights bill.  Patient rights are what               
people should have regardless of what type of insurance coverage               
they have.  They should have the right to choose who they seek for             
their health care.  They should have the right to know who is                  
reviewing their health care and what their qualifications are, and             
they should have the right, if they choose, to see somebody, a                 
health care provider, to be paid at the same rate, regardless of               
who the choice is.  Dr. Logan pointed out that there has been a                
great deal of testimony regarding costs and how, if the bill                   
becomes law, costs are going to increase.  He stated he protests               
that, he does not believe that and believes it is completely                   
totally false.  He referred to the testimony that PPOs will die if             
the bill is passed and stated they will succeed very well and there            
are very good reasons why PPOs will succeed.  He said, "If you have            
a PPO, all we're asking is that no matter who you see, you get paid            
the same amount regardless of whether you're participating in the              
PPO or not.  For the patient, I think that is a very valuable                  
right.  If the patient chooses to see a provider outside of the PPO            
network, they will have increased costs.  They will have to pay the            
difference, if there is any, between what the PPO will reimburse at            
and what the provider will charge.  That isn't always the case that            
there is a difference. I can speak to a dental plan, United                    
Concordia (ph.).  For instance, their fee schedule under their PPO             
network, of which I am not a provider, is about 125 percent, for               
the most part, of what my fee schedule is.  However, if one of my              
patients is participating in the United Concordia, (indisc.) they              
get paid at 80 percent of my rate, not the rate that they would                
normally be reimbursed at if they see a provider within the United             
Concordia network.  PPOs will not go away on this, people will not             
lose their bargaining power.  If there is nothing to prevent                   
employers from negotiating rates, the only difference here is that             
when a patient goes to somebody who is participating in a PPO or               
does not go to somebody who is participating in a PPO, they will               
receive the same reimbursement from the insurance company.  The                
difference is they will pay extra possibly to see somebody outside             
the PPO network."                                                              
Number 1749                                                                    
DR. LOGAN explained the bill will not set a rate for any plans.  He            
pointed out that Blue Cross, AETNA, et cetera, does not pay at the             
same rate within all their plans.  The insurance companies will set            
the rates and reimbursement according to what they set for                     
premiums.  It is a (indisc.) that they turn, they turn it up                   
forward when they pay more on their premiums, they pay less under              
other plans.  It's a negotiated benefit depending upon the                     
particular plan you sign up for.                                               
DR. LOGAN stated HB 300 would not affect self administered plans.              
There seems to be a giant misconception out there that if the bill             
passes, it will somehow affect what is happening with ERISA plans.             
It will not.  There is pending national legislation, the Parker                
bill, that could possibly affect that but at this time there is                
nothing.  He thanked the committee for listening to his testimony.             
Number 1809                                                                    
REPRESENTATIVE COWDERY asked Dr. Logan if all the dentist rates are            
on the same level.                                                             
DR. LOGAN indicated he didn't have that knowledge.  He noted there             
was an article in the Juneau Empire last year which discussed some             
dental rates in Juneau and there was a huge spread.  He said he                
believes that he was one of the lowest.                                        
REPRESENTATIVE COWDERY asked Dr. Logan that because he was one of              
the lowest, does he think the quality of his service is any less               
than anybody else.                                                             
DR. LOGAN said he doesn't believe that.  He stated he charges what             
he feels is a fair fee for the service he provides.  It is based on            
the time it takes him, the materials he uses and the time that it              
has taken him to acquire the knowledge to deliver that care.  It is            
not based on any sort of pre-mandated profit margin.                           
REPRESENTATIVE COWDERY asked Dr. Logan if he makes a profit.                   
DR. LOGAN responded that he does.                                              
Number 1867                                                                    
CHAIRMAN ROKEBERG said it seems to him that the disparities between            
what is typically written in a dental insurance plan in the state              
of Alaska is really minor.  He asked if that is a fair assumption.             
DR. LOGAN stated he believes that there is similarity between most             
of the plans, but there is still a wide range.  There are some                 
plans that are fairly minimal plans.  They'll cover some of the                
basic preventative services, but are minimal for restorative or                
none at all.  There are some more traditional plans that will have             
a cap at $1,000 or $1,500.  Occasionally, there is a cap of $2,000,            
with a sliding rate fee depending on the services provided.                    
Number 1922                                                                    
CHAIRMAN ROKEBERG said, "If you have a heart bypass, you're going              
from $35,000 to $60,000.  There was not one doctor here today and              
there was a letter from AMA [American Medical Association].  Are               
the dentists the stocking oars here for the medical profession?  Or            
why are you not advocating for a dental only type (indisc.).:                  
DR. LOGAN stated he can only speak to the dental end of things.  He            
is not a physician, he has minimal contact with hospitals, he                  
doesn't know the inner workings of hospitals.  Dr. Logan said he               
cannot say what the physicians or hospitals are feeling.  He said              
he can only speak to the dental end of things.  Dr. Logan asked the            
committee to move the bill out of committee.  He noted that in                 
speaking for the General Executive Council of the Alaska Dental                
Society, they support the bill in its present form and urged it be             
passed.  If the committee has problems with the present form, he               
would ask that the committee members make whatever changes are                 
necessary to move the bill out of committee.                                   
CHAIRMAN ROKEBERG said it seems that there would be a better                   
opportunity for movement of the bill if it was more dental                     
specific.  He asked Dr. Logan if he discussed that with his                    
DR. LOGAN explained it has been a general topic of discussion.  It             
seems there is relatively broad-based support without the health               
care providers.  It is a global bill and perhaps some parts of it              
may not be as appropriate for medicine and hospitals as others are.            
Number 2120                                                                    
JERRY REINWAND, Lobbyist, Blue Cross of Washington and Alaska, was             
next to address the committee.  He said, "The effect of the bill is            
really any one provider.  I mean whether that was the intent or                
not, that's the effect of the bill."  Mr. Reinwand stated he can               
assure the committee members that the director of the Division of              
Insurance reviews all the rate filings.  He said Blue Cross of                 
Washington and Alaska actually is audited substantially.  Mr.                  
Reinwand said he doesn't think that there are political excess                 
profits being garnered by insurance companies, at least not under              
the current director.  He referred to rates of pay and said there              
600 pages in the insurance statute.  Mr. Reinwand said, "I frankly             
wish it were true, I wish the insurance industry had written a                 
code.  It would look a lot different than it does now.  We haven't             
-- you can see what happened on -- just some of our concerns about             
unfair discrimination that hasn't been addressed, it still                     
continues to be an issue.  So there are lots of things that can be             
regulated that were talked about that really had nothing to do with            
this bill.  It (indisc.) any willing provider bill.  Again, I'm not            
saying that's the intent of the author, but that's the effect of it            
and we have serious concerns about it.  I got lots of paperwork I              
could give you, but I won't bother you today, we can come back to              
that tomorrow.  And Mr. Chairman, I'd like to say I think you hit              
on an important point looking about what's available out on the                
market.  These kinds of controls apply to a smaller and smaller and            
smaller segment of the population of Alaska over time simply                   
because so many people are going self-insured to get away from this            
kind of stuff.  So you hit on a very good point and we'd like to               
participate in that discussion when you come back to that."                    
Number 2203                                                                    
CHAIRMAN ROKEBERG inquired whether anybody from Blue Cross of                  
Washington and Alaska would be available to testify at the next                
meeting the following Monday.                                                  
MR. REINWAND indicated there would be somebody available.                      
CHAIRMAN ROKEBERG stated that there is information in the committee            
packet which includes the rate structures of the two different                 
types of plans that Blue Cross of Washington and Alaska is                     
currently offering in Alaska.  He asked Mr. Reinwand if one of the             
plans is PPO type of a plan.                                                   
MR. REINWAND said that could be true.  He noted he hasn't seen the             
package of information that Chairman Rokeberg is talking about.                
CHAIRMAN ROKEBERG stated he is concerned because of the change of              
percentages of payments into the CHIPRA which is actually their                
only source of information that we've been able to identify.  He               
pointed out that in 1996, Blue Cross of Washington and Alaska had              
approximately 35 percent of the market.  He said he is curious as              
to what happened in 1997.  He said he would like to know the shift             
of their business between the number of individual policies written            
versus group.  Chairman Rokeberg said he would like to be made                 
aware of any name and financial changes in their prospects for                 
servicing the people of the state of Alaska.                                   
MR. REINWAND indicated there would be people available to testify              
regarding the questions Chairman Rokeberg had.                                 
[HB 300 was held over.]                                                        

Document Name Date/Time Subjects