Legislature(2005 - 2006)BUTROVICH 205
02/22/2006 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| Overview: Medicare Prescription Drugs - Department of Health and Social Services | |
| SB250 | |
| SB299 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 299 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 250 | TELECONFERENCED | |
SB 299-NONDISCRIMINATION HEALTH CARE PROVIDERS
2:32:37 PM
CHAIR FRED DYSON announced SB 299 to be up for consideration.
SENATOR RALPH SEEKINS, Alaska State Legislature, sponsor, began
by paraphrasing the full title, which read:
An Act relating to preventing unfair discrimination
against a health care provider who is willing to meet
a health insurer's terms and conditions for
participation in the insurer's plan, policy, or
contract for health care services; amending the
definition of 'provider' as it relates to authorized
collective negotiations by physicians affecting the
rights of providers under health benefit plans; and
providing for an effective date.
He said AS 21.36.090(d) pertains to unfair discrimination
against a person who provides services covered under a group
health insurance plan. It comes into play as a function of the
relationship between health care providers and group health care
systems. Recently, the U.S. Supreme Court upheld Kentucky's
"any willing provider" (AWP) law, which offers a more robust
alternative to Alaska's current law. Thus SB 299 would replace
AS 21.36.090(d) with case-tested AWP language, Senator Seekins
told members.
He noted that the move towards AWP language also required a
change to the definition of "health care provider."
Consequently, the original definition as used in Title 23 had to
be restored. This is found in Section 2 of the bill. Senator
Seekins said the AWP concept promotes the individual's ability
to choose a health care provider. The AWP law says a health
insurer cannot discriminate against any provider that is willing
to meet the terms and conditions for participation established
by the health insurer, assuming the provider is located within
the geographic coverage area of the health benefit plan.
He explained that this is especially pertinent when, for
example, a woman in the second trimester of pregnancy changes
jobs and may be forced to change health care providers if her
current provider isn't recognized by her new health insurance
plan. If the patient's non-network physician is willing to
accept the network fee schedule - and meets the insurance
company's licensing and credentialing standards - the patient
should be able to continue to see the known and trusted doctor.
He concluded by saying SB 299 adopts into Alaska law the "any
willing provider" concept, thereby promoting and preserving
Alaskans' ability to choose their own health care providers.
Senator Seekins informed the committee that a number of experts
were present to testify and offer examples.
2:36:13 PM
SENATOR SEEKINS, in response to Senator Wilken, said there was
no fiscal note that he knew of.
SENATOR OLSON asked how the "638" contractors in rural Alaska
would be affected. He explained that this relates to Public Law
638, which applies to health corporations in Bush Alaska that
receive federal funds.
SENATOR SEEKINS deferred to one of the experts.
2:38:09 PM
GEORGE RHYNEER, MD, Alaska Physicians and Surgeons, informed
members that he is a cardiologist from Eagle River, in practice
in Alaska for 35 years. He noted that Alaska Physicians and
Surgeons is a Southcentral physician group that, in this case,
is representing its patients.
He suggested all patients would support this because it provides
freedom of choice. He gave examples. For instance, he prefers
to refer patients to a certain endocrinologist, but finds some
cannot see that doctor because they'd be severely penalized
economically by the insurance company. Furthermore, people with
life-threatening illnesses aren't benefited by switching
physicians. Not having the ability to choose one's own
physician is counter-therapeutic. For best outcomes in illness,
Dr. Rhyneer said, it's imperative that the patient trust the
physician and have choice.
He also talked about the economic effect on physicians when an
insurance company can select or deselect doctors to be on the
panel. He said it makes it especially difficult to recruit
physicians to come to Alaska if, after they set up business and
establish patients, an insurance company can threaten
deselection unless the doctor kowtows to an onerous economic
relationship. Dr. Rhyneer concluded by saying there are
innumerable good reasons for having this legislation.
2:42:51 PM
CHAIR DYSON asked about the relationship between Alaska
Physicians and Surgeons Group and the Alaska Medical
Association.
DR. RHYNEER explained that the latter is a professional
organization, partnered with the American Medical Association.
The first organization was started six or seven years ago as
more of a business and legislative group. They are separate
organizations, although many members of one belong to the other.
CHAIR DYSON referred to unspecified documentation he'd been
given that says passage of this law will drive up costs. He
offered his understanding that the bill says whoever the
provider is must agree to the fee schedule offered by the third-
party payer. He asked whether that is Dr. Rhyneer's
understanding of what is being done.
DR. RHYNEER affirmed that.
CHAIR DYSON asked Dr. Rhyneer to clarify his statement that
doctors would have to agree to an onerous remuneration schedule.
DR. RHYNEER explained that when an insurance company has a large
share of the business in a community and can direct its patients
from one group of physicians to another - by having or not
having them on its panel - then it's hard for a physician to
refuse the offered pay scale, even if it's less than overhead
costs, because all those patients could be sent elsewhere.
CHAIR DYSON related his understanding that in this bill a doctor
would give a group discount for having all those referrals. If
one patient decided to stick to another doctor, however, then
the other doctor would have to agree to this discount schedule
in order to be paid by the third-party payer.
DR. RHYNEER affirmed that. He suggested in larger communities
such as New York City or Chicago, with thousands of physician
groups and perhaps hundreds of hospitals, it's easier to defend
that kind of predatory activity by insurance companies.
2:46:40 PM
SENATOR ELTON said it seems if an employer cannot negotiate a
price break on health care, then either the employer's health
care costs could rise or changes could be made to employees'
benefits.
DR. RHYNEER responded that in other jurisdictions there has been
no apparent change in the cost to companies or providers of
insurance, through their premiums, when AWP laws have been
established; it appears, from "observations and measurements,"
that AWP has no deleterious effect on that relationship.
SENATOR ELTON expressed interest in the observations cited by
Dr. Rhyneer. He noted that others have cited observations
pointing to the opposite conclusion.
DR. RHYNEER said in Alaska almost all money spent on health care
remains in Alaska. It goes towards improving care, machinery,
modernization and the availability of nurses; very little goes
elsewhere to shareholders and so forth. He pointed out that so-
called managed care has had a serious effect on the
availability, and probably the quality, of health care delivered
outside of Alaska.
SENATOR ELTON reiterated that data would be helpful.
SENATOR OLSON remarked that he thought money from Providence
Alaska Medical Center went back to the main offices outside the
state, which helped to ensure that other health care ventures
were put in place.
DR. RHYNEER replied that he has heard that rumor, both in the
past and recently. However, he is on the board for that
institution, and every month they get a rundown of the finances.
He said he has never seen evidence that money is transferred to
the Seattle office, which is an owner. He added that the
corporation does require remuneration for the services it
provides to the local hospitals - the outsourcing, the billing,
and so forth, which are done in Seattle. However, the majority
of the "margin" money is used for capital improvements.
SENATOR OLSON expressed concern for owners of small businesses,
who often have trouble affording health insurance for employees.
DR. RHYNEER said he believes there is a far more elaborate
answer than he could provide. "I think this, from observations,
plays a very small part in that issue," he added.
SENATOR OLSON asked whether the concept in this bill works
against that, however.
DR. RHYNEER replied that there is no evidence it does.
SENATOR SEEKINS returned to earlier discussion, saying, "I think
the answer to your question about whether or not your physician
has to accept that fee is correct, but you get to go and say,
'Will you do this for me?' It's not that you have to accept the
entire panel of people that you send to that physician."
2:53:12 PM
SENATOR WILKEN asked whether this legislation will help attract
physicians to Alaska or will deter them.
SENATOR SEEKINS opined that it will help, expanding the universe
of available physicians.
2:54:15 PM
MIKE HOGAN, Executive Director, Alaska Physicians and Surgeons,
noted that his organization is a 170-member physician group in
Anchorage. He spoke in strong support of SB 299. In answer to
Senator Wilken's question, he said his group has been working
with other entities to create the most favorable health care
environment in Alaska to attract new physicians - this is one of
their chief goals, and this bill is one piece among several
pieces of legislation over the years. He said the likely
relationship with insurance carriers is one criterion that new
doctors will look at. Now that the Supreme Court has cleared
the AWP idea, he surmised there will be an increase in
legislation in other states. He offered his belief that this
will attract new physicians and be good for patients.
SENATOR ELTON pointed out an element not being discussed: the
ability of employers of large numbers of people to negotiate
health care costs, which also would benefit patients. He said
it seems the AWP system will give less incentive for any health
care provider to negotiate a fairly significant break for the
employer - and thus for the employee.
MR. HOGAN referred to the group-discount model, called
"steerage," saying it works much better in states with an
overabundance of physicians. The state medical association has
calculated Alaska to be 400 physicians short, out of a private
physician population of about 1,200. Some plans other than Blue
Cross have had trouble establishing significant panels in this
state. He asked Senator Elton to elaborate on his concern.
SENATOR ELTON explained that he understands the benefit of
patients' ability to choose their doctors. However, this also
reduces employers' ability to negotiate lower rates, and that
ability would benefit patients through either lower costs or a
broader menu of health care options.
MR. HOGAN reported that Kentucky has looked at this issue and
costs for the last ten years; he indicated he could provide that
information, and said the state contends that it hasn't
significantly affected costs. Acknowledging that legislators
will have to weigh the argument posed by Senator Elton when
deliberating, he nonetheless emphasized focusing on patients'
ability to choose their health care providers.
SENATOR ELTON requested that Mr. Hogan provide the information
from Kentucky.
CHAIR DYSON pointed out that when there is are negotiated lower
prices for one group of employees, it works against people who
don't have insurance and thus pay their own way.
3:00:12 PM
SENATOR OLSON asked how this bill would affect the "638"
contractors.
MR. HOGAN said he didn't know, but could provide an answer.
CHAIR DYSON asked to hear from any testifiers who had time
constraints or wouldn't be available the following Wednesday.
3:01:12 PM
GREG LOUDON, Health Care Consultant, Willis of Alaska, spoke in
opposition to SB 299. He began by discussing cost containment,
a broad term for a toolbox of methods to reduce costs for health
plans. He said contracting with a select group of providers is
one of the best methods his organization has for limiting costs.
They can't expect discounts from providers without offering them
directed health care dollars in exchange. He related examples.
He explained that contracting is key to offering and using cost-
containment methods; he mentioned the quality of the provider
and ongoing care. Mr. Loudon said it isn't just a matter of
price. When choosing health care providers, they check the
background and experience as well as any complaints. Health
plan members know there has been a basic level of quality
assurance, and can choose providers outside of the contract -
but at a lower reimbursement level.
He said health savings accounts and health reimbursement
accounts are dependent on getting good data, including price and
quality data. The contracts provide good data. These
management programs are another way to contain costs, he
suggested, and should work with the contractor providers to try
to improve the quality of care and decrease the time people
spend in hospitals or other high-cost treatment options.
3:04:13 PM
SENATOR OLSON asked how to ensure health maintenance
organizations (HMO) don't become a predominant provider of
health care in Alaska.
MR. LOUDON replied that he doesn't see how this bill would
prevent that. He offered his understanding that the reason
Alaska doesn't have HMOs is that any provider which wants to
take risks is required to file as an insurance company. He said
there are lots of hoops to jump through besides the contracting
issue this bill addresses.
3:05:10 PM
COLLEEN SAVOIE, Willis of Alaska, noted that her organization
represents a number of insured plans and large (indisc.)
entities. She spoke in opposition to SB 299 because it would
result in increased medical costs. She pointed out that
employers are struggling with the increased cost of health care.
They are reducing benefits, increasing the employee contribution
rate or eliminating it altogether. Using a preferred provider
network has been very successful so far in helping to control
health care costs, Ms. Savoie said. She gave an example, noting
that SB 299 would include hospitals as well as other providers.
She asserted that AWP-type legislation will affect costs. She
cited a 2001 study published in the Journal of Health Economics
as saying health expenditures are higher when AWP laws are
enacted. Ms. Savoie also noted that the National Association of
Health Underwriters in 2003 identified AWP legislation as a
threat to market stability.
She told members the Federal Trade Commission (FTC) opposes AWP
legislation. Directing attention to a report by the FTC and the
Department of Justice, published in July 2004, Ms. Savoie
encouraged members to review this report. She noted that it
says AWP laws have anti-competitive effects; make provider
discounts less likely; and restrict the ability of health
insurers and plans to structure offerings with varying levels of
choice. Thus they actually reduce the options.
3:09:58 PM
SENATOR ELTON requested copies for the committee of the 2001,
2003 and 2004 reports Ms. Savoie had referenced.
JACK McRAE, Senior Vice President, Blue Cross Blue Shield of
Alaska (Blue Cross), informed the committee that his company has
about 50 percent of Alaska's physicians on contract now, and
believes this saves the membership hundreds of thousands of
dollars. With the contracts, the company is able to negotiate
with the physicians.
He emphasized that his company does pay when people go to non-
contracted physicians, though it may pay less. Furthermore,
regarding continuity of care, Mr. McRae said Alaska's
legislature addressed the issue in 2000 by passing a so-called
patients' bill of rights, which Blue Cross supported. Under
that, a patient continues to be seen by the physician until
treatment is completed, and Mr. McRae said Blue Cross continues
to pay the bills as before; he gave an example. Mr. McRae
mentioned the FTC study and concluded by highlighting another
study by Arthur Andersen (ph), completed for 1998-2002 that
showed AWP legislation would increase costs by 12 percent.
3:12:57 PM
WILLIAM PFEIFER, D.C., Alaska Chiropractic Society, thanked
Senator Seekins and the committee for bringing up this bill,
which he believes is needed in Alaska. However, he pointed out
language concerns that he hadn't yet had time to address with
the sponsor.
He referred to page 1, line 12, through page 2, line 1, which
read, "This subsection does not affect different reimbursements
to different types of health care providers, nor does if affect
coverage for the service of a particular type of health care
provider." Saying it seems to reverse the intent of the
legislation, Dr. Pfeifer proposed exploring that further with
the sponsor in order to clarify it or have it deleted.
He referred to page 2, line 9, "(B) does not include insurance
under the Alaska Workers' Compensation Act, AS 23.30. He said
there may be some good rationale for that. However, having sat
on the medical services review committee for workers'
compensation this last year, he'd filed a minority report
because the recommendation was to allow the insurance company or
employer to choose the treating physician of an injured worker.
Dr. Pfeifer expressed concern that the aforementioned language
might have some other meanings, and requested clarification.
He also voiced concern about the redefinition of "health care
provider", which includes facilities. Dr. Pfeifer said it's not
that he thinks hospitals and such should be protected under AWP.
However, classifying them as providers removes the existing
language that says (indisc.). Dr. Pfeifer pointed out that
facilities don't have an occupation or a license, and said there
is no reference back to that. He cited the example of an
insurance company that contracts with a hospital for x-rays; he
expressed concern about excluding small facilities (indisc.) and
mentioned financial agreements and absorption by broader bases.
Dr. Pfeifer expressed hope that he'd have an opportunity to work
with the sponsor before the bill moved forward.
CHAIR DYSON requested that Dr. Pfeifer work with the sponsor
before next week, when the bill would likely move from
committee.
3:16:50 PM
ROSE KALAMARIDES, Administrator, Alaska Teamster-Employer Trust,
spoke briefly in opposition, saying Mr. Loudon and Ms. Savoie of
Willis of Alaska had summed up her organization's position.
CHAIR DYSON thanked participants. He held SB 299 in committee.
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