Legislature(1997 - 1998)
03/05/1998 08:02 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 359 - HEALTH INSURANCE REGULATION Number 0225 CHAIR JAMES announced the next order of business to be HB 359, "An Act relating to regulation of health insurance plans; and providing for an effective date." Number 0225 REPRESENTATIVE RYAN read the sponsor statement into the record: "This bill is offered to impose requirements on managed care providers to enhance patient care, including advocacy of patient care and prohibiting financial incentives to withhold care. "Requires insurer to disclose terms and conditions of the health insurance plan upon enrollment, annually and upon request. This information shall provide for but not be limited to a current provider directory and referral information. "Provides for a designated medical director and imposes his/her duties and responsibilities and provides for the establishment of a notice and hearing procedure for the termination for a health care provider. "Requires the option to allow covered persons to receive health care form any nonparticipating heath care provider with a caveat that they pay a higher premium if they chose to do that. "Establishes an appeals board to review decisions by an insurer to reduce, deny or terminate benefits and requires written decisions." Number 0254 REPRESENTATIVE RYAN gave his reasoning for bringing this froward. His wife is a registered nurse and he has seen the options for plans and premiums. It is a dartboard, someone is supposed to pick someone he has never heard of, there are no qualifications listed or what their experience levels are. Representative Ryan stated that he has a congenital problem called hammertoe that causes him to see a podiatrist on a regular basis. He stated that he has been insured by the state plan and he still does not understand the options. He stated that after going to the podiatrist he received a letter stating that he had not been given a referral and therefore, they would not pay. He explained that under some plans there is a discount offered for services but conversely the insurance agencies have offered them a volume of patients to make up for the discount. He stated that under this he was supposed to go to the primary care physician and pay him $70 to tell him what he already knew; that he had to go to a podiatrist. He asserted that he did not understand how this was supposed to save money. He was informed that he has to abide by the regulations of the plan or else the insurance company will not pay. Number 0321 REPRESENTATIVE RYAN stated that these people pay a premium, for a wage benefit, therefore there is an obligation for insurance. Yet, the insurance companies structure the system so it is difficult to get care. He referred to the authorization process and he referred to a Tennessee company and phone diagnoses, that are receiving $62.50 per phone call. He stated that there is a process called utilization review which is basically after authorization is given and there is a diagnosis, the insurance companies look at the record and look at how it was utilized and can decide that it is not appropriate after the fact and therefore refuse to pay. REPRESENTATIVE RYAN stated that this bill addresses these problems. It sets up an appeals board for people that feel they have been unjustly denied. He stated that the providers are holding health care down and saying that participants are saving a lot of money. He stated that this health care system is requiring participants to go to the lowest bidder. Managed care is inadequate to provide quality service for the patient. Number 0369 CHAIR JAMES stated that she understood the problem. She stated that she has had several conversations with New York Life Care about managed care versus deferred provider. She asked Representative Ryan if he could explain the difference. REPRESENTATIVE RYAN stated that he has a business which provides psychiatric services and in order to be a Preferred Provider Organization (PPO) they have to give a discount, which means that they lower fees to the Medicare rate and that fee structure is acceptable so they will send them patients under that scenario. If they were to charge the normal fee for the service they would not get the contract. CHAIR JAMES asked from the position of the insured it is then managed care. REPRESENTATIVE RYAN replied yes it is. He stated that the big point is that no choice is given, you must chose a physician from the list of providers in order to be reimbursed. He stated that the bill allows the option to go to any specialist in the group or to go to whoever you choose. Number 0415 CHAIR JAMES asked if he has heard from any health insurance companies on the bill. REPRESENTATIVE RYAN stated that there is letter from Providence Insurers in the packet, stating that they do not like the bill. He stated that he received a call from Blue Cross asking if they had done something to make him angry. He stated that he is not trying to single out any insurance company. He is just trying to mitigate what he thinks is an approach by people to better take care of their bottom line at the expense of the average individual in Alaska. Number 0425 CHAIR JAMES asked that the part of the compensation in Alaska was the insurance policy but now in order to have that same policy they have to pay because it is under a different system now. She stated that she has a problem as an employer and as an employee saying that insurance is part of your wages. She explained that to her it is a benefit and she has mixed feelings about what the employer is required to do. She asked if he thought it is something that citizens are entitled to or is it a benefit that is provided by the employer. REPRESENTATIVE RYAN replied that it is a benefit but it is part of the total compensation package. He stated that the market place has determined that if this additional compensation is not offered then the company will have difficulty finding qualified employees. He stated that some CEO's negotiate health care plans as part of their compensation package. Therefore, it would be fair to say that a health care service is part of one's compensation. Number 0470 CHAIR JAMES asked if the bill requires health insurance plans to have the option to choose to go to whatever doctor you want although the participant would then have to pay more for that option. REPRESENTATIVE RYAN replied yes. CHAIR JAMES asked if it was true that not everyone is going to be forced into this box. REPRESENTATIVE RYAN replied that is correct. Number 0487 REPRESENTATIVE ELTON stated that what makes sense is that if there is someone who is outside the state who is reviewing decisions made by a medical provider in the state and has the ability to deny or to change the treatment, that they be licensed here in the state. However, he stated that there may be a glitch. REPRESENTATIVE RYAN stated possible but it would be resolved in the local appeals court. He stated the problem with out of state reviews is that at his community mental health center 45 percent of the kids are Natives and the people in Tennessee do not understand the situation at all. He stated that they are just following a model of institutionalized care. Alaska does not have those facilities, therefore, that model does not work here. He stated that he is trying to ensure that there is a quality of care and people will have some assurance of who they are seeing. Number 0548 CHAIR JAMES asked if when he referred to the providers did he mean the doctors and the clinics or the insurance companies. REPRESENTATIVE RYAN replied that he is talking about both. He reiterated that the incentive that the clinics have to offer is a discounted rate in exchange for a large pool of people to do business with. He stated that the bill has a cost containment provision in it, meaning that a financial incentive could not be given. Number 0550 REPRESENTATIVE ELTON asked if either scenarios mentioned before; the Tennessee situation and the New York Life situation, are they managed care entities and would they fall under this provision where the medical officer would have to be licensed in Alaska or are they outside of this umbrella. REPRESENTATIVE RYAN stated that New York Life Care has hired a company to administrate their health program and they are enforcing what the Commissioner of Administration has asked them to do. He stated that in regard to the Tennessee scenario, there is a lot of grey area. There is a statute that says that the Department of Health and Social Services cannot delegate their "prerogative of overseeing and making these decisions". He stated that this is converse to what they have done by contracting it away to the organization in Tennessee that is definitely managed care. He stated that with cost containment and utilization review the providers are trying to ensure that the treatment is necessary. Number 0588 REPRESENTATIVE ELTON stated that it was his understanding that New York Life Care is not managed care but the Tennessee contractor is managed care. REPRESENTATIVE RYAN stated that yes the Tennessee contractor could be very easily classified as managed care. Number 0591 CHAIR JAMES stated that part of New York Life Care's agreement is to reduce cost by trying to get as many providers as they can to reduce the expense. She stated that Representative Dyson had a children's caucus on this issue and received a lot of testimony. She asked if that testimony is available. REPRESENTATIVE DYSON replied that he did not know, it was done at the Anchorage LIO and was recorded. CHAIR JAMES stated that she would like the tapes. There is no one here to testify today and in order to make a decision to move the bill out that testimony needs to be heard. She stated that HB 359 would be held over because she would like to have that testimony on the record.