Legislature(1995 - 1996)

03/16/1995 01:40 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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         SB 100 DISCRIMINATION UNDER GROUP HEALTH INS.                        
  SENATOR KELLY announced SB 100 to be up for consideration and noted         
 there was a proposed committee substitute.  He said there were                
 three sections to this bill and started with the physician's                  
 assistants.                                                                   
                                                                               
 JACK HEESCH, Alaska Academy of Physician's Assistants, said he                
 thought this bill would prevent discrimination by group health                
 insurers among physician's assistants (PA).  This means if a person           
 is licensed by the State of Alaska as a state licensed practitioner           
 and is covered under group policy, then all people with similar               
 licenses must be paid for services.  He believed the bill did not             
 mandate or require coverage of physician's assistant services; it             
 merely says that if an insurer covers PA service, then they must              
 cover all PA's without discriminating among them.                             
                                                                               
 MR. HEESCH said the fiscal affects of this bill are $0.  He also              
 pointed out that this bill did not have adverse comment when it was           
 introduced last year, nor has it this year.  This specific statute            
 was amended in 1992 to provide for psychologists and psychological            
 associates and again, in 1994, to include certified direct entry              
 midwifes - both without adverse comment.                                      
                                                                               
 NICK COTI, East Care Acupuncture Clinic, supported SB 100.  He said           
 his wife is an acupuncturist and a medical doctor and received her            
 training in China.  He said he has recently completed one and half            
 years of graduate study in China and he found that macro economic             
 information supports how effective acupuncture is, not only as a              
 mode of treatment, but as a means of containing costs.  Life                  
 expectancy, health care, and some other things are better in China            
 than in  Washington, D.C., one study concluded.                               
                                                                               
 The World Bank has conducted studies on the nature of the Chinese             
 currency and its value in the economy, in general.  It was found              
 that there was a very reliable correlation between life expectancy            
 and per capita income.  At that time, China had a per capita income           
 of $250 and a life expectancy of 70 years.  One would predict, with           
 a per capita income of $250, a life expectancy of something like 50           
 years.  A life expectancy of 70 years is more consistent with an              
 advanced industrialized economy.  One of the reasons for this is              
 that they have a fully integrated western and Chinese medical                 
 system.  The use of both is encouraged interchangeably.                       
                                                                               
 Current insurance laws make it difficult for people to get                    
 acupuncture, because they have to pay fully out of their pocket to            
 do so.                                                                        
                                                                               
 TAPE 95-12, SIDE B                                                            
                                                                               
 MR. COTI asked the committee to consider very seriously the                   
 importance of taking discrimination against acupuncturists.  He               
 also pointed out that many acupuncturists are receiving either                
 directly or indirectly support from insurance companies through               
 other people who bill for them which is not a very good practice.             
                                                                               
 SENATOR KELLY said they would go on to the third section of the               
 proposed committee substitute.                                                
                                                                               
 DON KOCH, Division of Insurance, commented that there has been a              
 litany of providers added to this section of law over the years.              
 He explained that his department's position on section 1 is that if           
 the provider is performing a service that is covered under a group            
 insurance health policy, and that service is within the scope of              
 his occupational license and practice, then the insurance company             
 should not be able to discriminate against that person.  This does            
 not mandate to the insurer that they provide a specific kind of               
 coverage that is particular to one practitioner.  It does say that            
 if whatever you do provide coverage for can be provided by multiple           
 kinds of practitioners, then you have to treat them equally.                  
                                                                               
 MR. REINWAND, Blue Cross, asked if this means you can't have                  
 preferred provider arrangement with different fee schedules within            
 a group like doctors and hospitals.                                           
                                                                               
 MR. KOCH replied that at this time, he believed there does not                
 exist authorization for preferred provider arrangements in statute            
 - with the exception that, in the case of hospital medical service            
 corporations (for example Blue Cross and Blue Shield), they are               
 directly the provider who through contracts with practitioners                
 provide a service.  So you can have, in effect, a different level             
 of coverage for the entity with whom the Blue Cross, Blue Shield,             
 Hospital Service Corporation, is in contract with versus the piece            
 in their policy that provides for indemnification for other kinds             
 of services that they're not under contract with a provider for.              
                                                                               
 SENATOR SALO asked when he talked about "not discriminating" did he           
 mean between providers within the same category or between a                  
 variety of providers like acupuncturist, medical doctors, etc.  MR.           
 KOCH replied that it was between all the different providers.  He             
 explained that typically a hospital medical service corporation               
 will enter into contracts with hospitals and, generally, with                 
 medical doctors.  They may have arrangements in some cases where              
 they go to other practices as well.  In that case, you're going to            
 have a level of care that can be stated in the policy that may be             
 greater than the level of care you would provide on an                        
 indemnification basis.  He said they may limit coverage to the care           
 provider who was "first in line" to give treatment.                           
                                                                               
 Number 501                                                                    
                                                                               
 SENATOR DUNCAN asked if Mr. Heesch agreed with Mr. Koch's                     
 testimony.  MR. HEESCH answered that he didn't.  SENATOR DUNCAN               
 restated that Mr. Heesch's understanding of adding physician's                
 assistants meant you have to treat all physician's assistants the             
 same.  What Mr. Koch's understanding of the unfair discrimination             
 is that if you have a headache, you should be able to go to anyone            
 who is licensed to practice in the state who could cure that                  
 headache.   MR. KOCH replied that was correct.                                
                                                                               
 SENATOR DUNCAN asked if the list of providers is necessary to be              
 included in the bill.  MR. KOCH replied that he would take out the            
 list of providers and put in some generic language that says, "if             
 the practitioner is operating within the scope of his license, and            
 the event that is triggering his care is within the scope of his              
 practice."                                                                    
                                                                               
 SENATOR DUNCAN asked if that had been suggested in the past,                  
 because there is the problem of continuously adding to the list and           
 then there are providers who aren't being recognized by the                   
 insurance industry, although they are certified and licensed.  MR.            
 KOCH answered no, their deputy director, Thelma Walker, recently              
 asked the same thing.                                                         
                                                                               
 SENATOR DUNCAN said just adding "physician assistant" wasn't                  
 solving the problem the physician assistants were concerned with.             
 MR. KOCH agreed and said there was one more issue which is, in some           
 cases, some of the items have been added to the list, but the scope           
 of practice is not particularly clear.                                        
                                                                               
 SENATOR KELLY announced an at ease at 2:35 - 2:43.                            
                                                                               
 RACHEL YATES, Alaska Association of Marriage and Family Therapists,           
 said they are licensed clinical professionals and provide a                   
 comparable service to psychological associates and clinical social            
 workers.  She asked to be added to the list in the bill.                      
                                                                               
 CHARLIE MILLER, Alaska Regional Hospital, supported SB 100.  Alaska           
 Regional Hospital has a very well defined scope of service.  They             
 are well established, highly regulated, certified, and licensed               
 facilities.  They are primary providers of health care in the state           
 and requested to be added to the list of providers.                           
                                                                               
 MR. MILLER noted there was a question about them being an                     
 institution rather than an individual, but he did not think this              
 was significant.                                                              
                                                                               
 SENATOR SALO said it looked like listing hospitals would start a              
 whole other list, because there are nursing homes, clinics, etc.              
 MR. MILLER said that usually a clinic is included with a                      
 physician's billing.  SENATOR SALO said that wasn't necessarily the           
 case, because many clinics offer surgical services where they do              
 bill separately.                                                              
                                                                               
 SENATOR SALO said some insurance companies prefer using Providence            
 in Anchorage and asked if that would be prohibited.  MR. MILLER               
 said a lot of programs are regulated by federal law.  There are no            
 provisions for preferred provider agreements in the indemnity                 
 insurance, as Mr. Koch said, in AS 21.36.090.  The ones that are              
 allowed are in  AS 21.87.                                                     
                                                                               
 MR. KOCH added that AS 21.36.090 does apply to both an insurance              
 company and a medical service corporation.  The reason is because             
 there is a reference in 21.87 back to 21.36. saying it picks it up.           
 In addition, there is language that talks about "group disability             
 policy" and "group service for an indemnity type contract."  "Group           
 service" is the language that should be used to pick up the                   
 contract that a hospital medical service corporation uses; and the            
 term "policy" used for the contract and insurance companies issues.           
 Both are covered by the language in AS 21.36.090.                             
                                                                               
 SENATOR DUNCAN asked if he was saying that nowhere in statute is              
 there a provision for preferred provider networks in this state for           
 insurers, for example, Aetna.  MR. KOCH agreed, but said Blue Cross           
 and Blue Shield could, because they are a medical service                     
 corporation.  The way they could be viewed as a preferred provider            
 is that those that they enter into a contract with to provide                 
 services may be recompensed under their contract at a different               
 level than those they don't have a contract with, but have the                
 ability to be picked up as an indemnifier.                                    
                                                                               
 SENATOR DUNCAN commented, then, that under the way our statutes are           
 presently written, and with the movement towards managed care                 
 networks in the country, Alaska is really in a very weak position             
 to have managed care.  MR. KOCH said that was absolutely correct              
 and if this is what they want, he has a copy of a model bill that             
 may address that issue.                                                       
                                                                               
 SENATOR KELLY asked how this affects the arrangement that Aetna has           
 with Providence Hospital.  MR. KOCH said he contends that Aetna               
 could enter into those kinds of arrangements with self insurers,              
 because the insurance code provides no impediment to a self                   
 insurer.                                                                      
                                                                               
 SENATOR DUNCAN asked if they were sure there were no PPO's in this            
 state that are in violation of the law right now.  MR. KOCH replied           
 that no, they are not.  If there are PPO's written by insurers of             
 this state, they may well be in violation of the statutes.                    
                                                                               
 REED STOOPS, Aetna, said that Aetna does have PPO agreements, and             
 have had them for years in Alaska.  They believe the statute                  
 permits those agreements.  The Division of Insurance has approved             
 policies with those provisions and there has never been any attempt           
 to prohibit Aetna from doing it.                                              
                                                                               
 MR. STOOPS said there are other statutes in other states that have            
 litigated this question before and courts have determined that                
 unfair discrimination does not mean that one cannot have a PPO                
 agreement.                                                                    
                                                                               
 What he thought the issue really was, was an attempt by Alaska                
 Regional Hospital to clearly prohibit a PPO agreement.  He thought            
 PPO agreements were in the public interest; they are common                   
 practice in the rest of the country and provide lower cost                    
 insurance for Aetna's clients.                                                
                                                                               
 Number 334                                                                    
                                                                               
 SENATOR DUNCAN asked if the Municipality of Anchorage is self-                
 insured.  MR. STOOPS said they are not self insured.                          
                                                                               
 SENATOR DUNCAN asked who their contracts are with.  MR. STOOPS                
 replied that they have a PPO with Providence, although not for all            
 clients.  They also have a PPO agreement with some doctors and                
 dentists in Anchorage.                                                        
                                                                               
 SENATOR DUNCAN wanted to ask the Division of Insurance to respond             
 to the testimony that they have been approving contracts that they            
 think are in violation of the law.                                            
                                                                               
 Number 284                                                                    
                                                                               
 MR. KOCH responded that they have written to Aetna and told them              
 that these arrangements are not legal; some have been disapproved.            
 If any have been approved, it has happened inadvertently.  He said            
 Mr. Stoops is correct that they presented some arguments that place           
 somethings into question.  They haven't gone to court to contest              
 it, because there were discussions going on about it in the                   
 legislature.                                                                  
                                                                               
 MR. STOOPS said there was no doubt that this particular amendment             
 will strengthen the case.  He said he would like to have someone              
 from Aetna testify about which customers are included under PPO               
 arrangements now.                                                             
                                                                               
 JERRY REINWAND, Blue Cross, said he thought there were a couple of            
 issues here:  what the existing law says, what the legislature                
 thought it said, and what the division says it says.                          
                                                                               
 He thought he heard the division say that the section in existing             
 law is really a mandate.  If you are on the list, you're mandated             
 to cover that scope of practice.  He suggested getting the                    
 division's interpretation of what the existing law is.  MR.                   
 REINWAND said he would like to know what this amendment does to               
 Blue Cross and other providers and does it mean they have to void             
 their existing PPO arrangement with Providence's other providers.             
 Third, he wanted to know the public policy on this and if this is             
 the right direction to go.  The whole trend is toward managed care            
 to try to bring costs down and this appears to be going in the                
 other direction.                                                              
                                                                               
 SENATOR DUNCAN said the real question on managed care is are we               
 really reducing costs or increasing costs by adding layers of                 
 bureaucracy.                                                                  
                                                                               
 MR. REINWAND said there is a question of discrimination within a              
 group and, then, whether it applies to Blue Cross or not is another           
 public policy question.  If it's discrimination between groups,               
 does that apply to services.  If a physician provides a service,              
 and an acupuncturist provides the same service and they get a bill            
 from both, do they say no to one and pay the other.                           
                                                                               
 SENATOR SALO said she wanted to know what the affect would be of              
 going to the generic language rather than the specific list.                  

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