Legislature(1997 - 1998)
01/21/1998 09:00 AM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 197 - REGULATING HEALTH MAINTENANCE ORGS. CHAIRMAN WILKEN called the Senate Health, Education and Social Services (HESS) Committee to order at 9:05 a.m. Present were Senators Green, Leman, and Ellis. Senator Ward arrived at 9:07 a.m. The Chairman announced the committee would first continue taking public testimony on SB 197, and then take up SB 146. QUINN MCKENNA, Operations Manager for Managed Health Physician Integration and Business Development for Providence Health System in Alaska, testified via teleconference. Mr. McKenna raised two concerns with SB 197. The first was the provision mandating coverage for chiropractic services, because any change to the way HMOs function may inhibit their ability to control costs. Last year health care inflation nationwide was 1.9 percent, a dramatic decrease from the spiraling double-digit inflation of prior years. That decrease is attributable to the tools used by managed care plans: the ability to define benefit packages; to control and offer networks volume in exchange for price discounts; and the ability to control who is in and out of the network with regard to quality. Consumers currently have the choice of getting services from a managed care plan or a traditional indemnity insurance plan with a free choice of providers. If HMOs are mandated to look more like traditional indemnity plans, the price differential will change. MR. MCKENNA'S second concern was a lack of clarifying language in Section 3 which specifically prohibits HMOs from reimbursing physicians for denying or delaying coverage. Federal regulations, known as STARK 2 (ph), address this issue and agree with the language in Section 3, but make it clear that a physician can be reimbursed for developing clinical pathways for a group of patients. This provision allows HMO providers to treat all patients in the same manner, but disallows singling out one patient for a different level of care. This is a second tool used by HMOs to control health care costs nationwide. There being no questions of the witness, and no further testimony, SENATOR GREEN moved SB 197 out of committee with individual recommendations and accompanying fiscal notes. SENATOR LEMAN objected for the purpose of making a brief statement. Number 134 SENATOR LEMAN stated that other providers have expressed interest in having protections similar to those offered to chiropractors in Section 2 and asked Senator Donley why no other providers are included in the bill. Senator Leman said he would like to see that issue addressed before the bill reaches the Senate floor and then removed his objection to the motion. SENATOR ELLIS stated although he is a co-sponsor of SB 197 and supports it in its current form, he believes this is the appropriate committee to address the concerns raised by Providence Hospital staff. SENATOR DONLEY responded that he worked on this legislation with various interest groups over a four-month period last year, and introduced it last session so that everyone would have notice of it and could provide feedback during the interim. During that time he worked with the Alaska Medical Association and developed a formula that addresses some of Mr. McKenna's concerns and he added SB 197 contains provisions for cost containment of chiropractic services. He empathized with other groups who want similar protections, but said the Legislature is in the second year of this session, and addressing those concerns at this time could prevent action on this bill, achieving nothing. He stated he is willing to work with those groups but felt it is not the right policy call to use this piece of legislation as the vehicle to address those groups' concerns at this time. Number 207 SENATOR ELLIS asked about the new issue raised by Providence staff regarding physician compensation and the ability of groups of physicians in various specialties to establish clinical protocols. He and Senator Duncan talked to many physicians who generally wanted no reform. However, the national trend has been to develop protocols to determine what kind of practices and care within a certain scope would be compensated by third party payers and HMOs. The national trend was prompted by genuine concern about patient care and because the establishment of protocols could limit those practitioners from liability. Senator Ellis said Mr. McKenna is concerned that the language in SB 197 could be misconstrued to preclude innovation by other specialities. SENATOR DONLEY said that the language in SB 197 was taken from other states that used the initiative process to deal with abuses by HMOs in those states. The situation had become serious enough that people forced the issue via the ballot. SENATOR DONLEY thought the picture painted by the previous witness was not entirely accurate. He did not believe the language contained in SB 197 prohibits appropriate clinical protocols; the language could be interpreted that way but the chance of it prohibiting legitimate cost containment procedures is very, very slim. SENATOR ELLIS asked who will decide appropriate protocols. SENATOR DONLEY answered the Division of Insurance regulates those matters, and will have to resolve questions as they come up over time. To write a bill that specifies those concerns would require 40 pages and it would be obsolete within six months. SENATOR ELLIS did not think the bill should include specific clinical protocols, but should specify who would arbitrate and what protocols are appropriate. SENATOR DONLEY thought the Division of Insurance would be able to address the problems through its hearing process, and noted any action on the division's part would be initiated by consumer complaints. Number 289 SENATOR ELLIS thought most people would agree that a peer review panel of chiropractors can decide reasonable clinical protocols for that scope of practice, and that other specialties could do the same for their own practices. He noted the Division of Insurance would be conducting passive enforcement, rather than active enforcement, if it only takes action when consumers complain. SENATOR DONLEY commented it would be important that peer reviews occur independently of HMOs. SENATOR ELLIS suggested getting model language from other states to clarify the intent of the bill. He expressed concern that the Division of Insurance may not be adequately staffed and have the appropriate level of expertise to determine whether clinical protocols and the related cost aspect are in the public's best interest. SENATOR DONLEY said the highest complaint response activity within the Division of Insurance is with health insurance, therefore they do have staff specifically trained in that field. SENATOR ELLIS asked if that is the one area they are currently prohibited by state law from knowing what the insurance companies are doing. SENATOR DONLEY answered the only thing they are prohibited from knowing is rate review, but they do regulate the administration of the insurance process to ensure that the companies are treating people fairly. SENATOR ELLIS said in a very important aspect they are blind. SENATOR DONLEY agreed that a gap exists in that area. There being no further objection, CHAIRMAN WILKEN announced the motion to pass SB 197 to the next committee of referral with individual recommendations passed.