Legislature(1997 - 1998)

04/29/1998 03:13 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         HOUSE HEALTH, EDUCATION AND SOCIAL                                    
            SERVICES STANDING COMMITTEE                                        
                   April 29, 1998                                              
                     3:13 p.m.                                                 
                                                                               
                                                                               
MEMBERS PRESENT                                                                
                                                                               
Representative Con Bunde, Chairman                                             
Representative Joe Green, Vice Chairman                                        
Representative Brian Porter                                                    
Representative Fred Dyson                                                      
Representative Tom Brice                                                       
                                                                               
MEMBERS ABSENT                                                                 
                                                                               
Representative Al Vezey                                                        
Representative J. Allen Kemplen                                                
                                                                               
COMMITTEE CALENDAR                                                             
                                                                               
HOUSE BILL NO. 44                                                              
"An Act relating to admission to an Alaska Pioneers' Home."                    
                                                                               
     - PASSED HB 44 OUT OF COMMITTEE                                           
                                                                               
CS FOR SENATE BILL NO. 197(RLS) am                                             
"An Act relating to health care services provided by, and practices            
of, a health maintenance organization; providing that an enrollee              
in a health maintenance organization has the right to select a                 
treating chiropractor; specifying certain chiropractic health care             
reports, examinations, and limits on treatment; and prohibiting                
health maintenance organizations from limiting free speech of                  
health care providers."                                                        
                                                                               
     - PASSED HCS CSSB 197(HES) OUT OF COMMITTEE                               
                                                                               
HOUSE JOINT RESOLUTION NO. 58                                                  
Proposing amendments to the Constitution of the State of Alaska                
relating to the education fund.                                                
                                                                               
     - HEARD AND HELD                                                          
                                                                               
(* First public hearing)                                                       
                                                                               
PREVIOUS ACTION                                                                
                                                                               
BILL: HB  44                                                                   
SHORT TITLE: ADMISSION TO PIONEERS' HOMES                                      
SPONSOR(S): REPRESENTATIVES(S) BRICE                                           
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 1/13/97        39     (H)  PREFILE RELEASED 1/3/97                            
 1/13/97        39     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 1/13/97        39     (H)  STA, HES, FINANCE                                  
 3/31/98               (H)  STA AT  8:00 AM CAPITOL 102                        
 3/31/98               (H)  MINUTE(STA)                                        
 4/02/98               (H)  STA AT  8:00 AM CAPITOL 102                        
 4/02/98               (H)  MINUTE(STA)                                        
 4/02/98      2851     (H)  STA RPT  CS(STA) 6DP                               
 4/02/98      2851     (H)  DP: JAMES, ELTON, BERKOWITZ, IVAN,                 
 4/02/98      2851     (H)  RYAN, HODGINS                                      
 4/02/98      2851     (H)  ZERO FISCAL NOTE (ADM)                             
 4/02/98      2851     (H)  REFERRED TO HES                                    
 4/29/98               (H)  HES AT  3:00 PM CAPITOL 106                        
                                                                               
BILL: SB 197                                                                   
SHORT TITLE: REGULATING HEALTH MAINTENANCE ORGS.                               
SPONSOR(S): SENATOR(S) DONLEY, Taylor, Ellis, Duncan                           
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 5/07/97      1783     (S)  READ THE FIRST TIME - REFERRAL(S)                  
 5/07/97      1783     (S)  HES                                                
 1/14/98               (S)  HES AT  9:00 AM BUTROVICH ROOM 205                 
 1/14/98               (S)  MINUTE(HES)                                        
 1/16/98               (S)  HES AT  9:00 AM BUTROVICH ROOM 205                 
 1/16/98               (S)  MINUTE(HES)                                        
 1/16/98      2224     (S)  COSPONSOR(S): ELLIS                                
 1/21/98               (S)  HES AT  9:00 AM BUTROVICH ROOM 205                 
 1/21/98               (S)  MINUTE(HES)                                        
 1/21/98      2250     (S)  HES RPT  2DP 1NR 2AM                               
 1/21/98      2250     (S)  DP:  WILKEN, WARD  NR: LEMAN                       
 1/21/98      2250     (S)  AM: GREEN, ELLIS                                   
 1/21/98      2250     (S)  ZERO FISCAL NOTE (DCED)                            
 2/06/98      2428     (S)  COSPONSOR: DUNCAN                                  
 2/17/98               (S)  RLS AT 11:20 AM FAHRENKAMP RM 203                  
 2/17/98               (S)  MINUTE(RLS)                                        
 2/23/98      2612     (S)  RLS CS, NEW TITLE AND CALENDAR                     
                            2/23/98                                            
 2/23/98      2613     (S)  PREVIOUS ZERO FN (DCED)                            
 2/23/98      2613     (S)  READ THE SECOND TIME                               
 2/23/98      2613     (S)  RLS  CS ADOPTED UNAN CONSENT                       
 2/23/98      2614     (S)  AM NO  1     ADOPTED UNAN CONSENT                  
 2/23/98      2614     (S)  AM NO  2     ADOPTED Y10 N8 E2                     
 2/23/98      2615     (S)  ADVANCED TO THIRD READING UNAN                     
                            CONSENT                                            
 2/23/98      2615     (S)  READ THE THIRD TIME  CSSB 197(RLS) AM              
 2/23/98      2615     (S)  RETURN TO SECOND FOR AM 3  UNAN                    
                            CONSENT                                            
 2/23/98      2615     (S)  AM NO  3     ADOPTED UNAN CONSENT                  
 2/23/98      2615     (S)  AUTOMATICALLY IN THIRD READING                     
 2/23/98      2616     (S)  PASSED Y17 N1 E2                                   
 2/23/98      2616     (S)  WILKEN  NOTICE OF RECONSIDERATION                  
 2/24/98      2635     (S)  RECON TAKEN UP - IN THIRD READING                  
 2/24/98      2635     (S)  PASSED ON RECONSIDERATION Y19 N- A1                
 2/24/98      2636     (S)  TRANSMITTED TO (H)                                 
 2/25/98      2417     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 2/25/98      2418     (H)  HES                                                
 4/29/98               (H)  HES AT  3:00 PM CAPITOL 106                        
                                                                               
BILL: HJR 58                                                                   
SHORT TITLE: CONST AM: EDUCATION FUND                                          
SPONSOR(S): REPRESENTATIVES(S) COWDERY                                         
                                                                               
Jrn-Date    Jrn-Page           Action                                          
 2/12/98      2306     (H)  READ THE FIRST TIME - REFERRAL(S)                  
 2/12/98      2306     (H)  HES, JUDICIARY                                     
 3/31/98               (H)  HES AT  3:00 PM CAPITOL 106                        
 3/31/98               (H)  MINUTE(HES)                                        
 4/07/98               (H)  HES AT  3:00 PM CAPITOL 106                        
 4/07/98               (H)  MINUTE(HES)                                        
 4/29/98               (H)  HES AT  3:00 PM CAPITOL 106                        
                                                                               
WITNESS REGISTER                                                               
                                                                               
SENATOR DAVE DONLEY                                                            
Alaska State Legislature                                                       
Capitol Building, Room 508                                                     
Juneau, Alaska  99801-1182                                                     
Telephone:  (907) 465-3892                                                     
POSITION STATEMENT:  Testified as sponsor of CSSB 197(RLS)am.                  
                                                                               
QUINN MCKENNA                                                                  
Providence Health System                                                       
3200 Providence Drive                                                          
Anchorage, Alaska  99519                                                       
Telephone:  (907) 261-3055                                                     
POSITION STATEMENT:  Testified on CSSB 197(RLS)am.                             
                                                                               
GORDON EVANS, Representative                                                   
Health Insurance Association of America                                        
211 Fourth Street, Suite 305                                                   
Juneau, Alaska  99801                                                          
                                                                               
Telephone:  (907) 586-3210                                                     
POSITION STATEMENT:  Testified on CSSB 197(RLS)am.                             
                                                                               
ANNETTE DEAL, Researcher                                                       
  to Representative John Cowdery                                               
Alaska State Legislature                                                       
Capitol Building, Room 416                                                     
Juneau, Alaska  99801-1182                                                     
Telephone:  (907) 465-3879                                                     
POSITION STATEMENT:  Testified on HJR 58.                                      
                                                                               
MARCO PIGNALBERI, Legislative Assistant                                        
   to Representative John Cowdery                                              
Alaska State Legislature                                                       
Capitol Building, Room 416                                                     
Juneau, Alaska  99801-1182                                                     
Telephone:  (907) 465-3879                                                     
POSITION STATEMENT:  Testified on HJR 58.                                      
                                                                               
ACTION NARRATIVE                                                               
                                                                               
TAPE 98-50, SIDE A                                                             
Number 0001                                                                    
                                                                               
CHAIRMAN CON BUNDE called the House Health, Education and Social               
Services Standing Committee meeting to order at 3:13 p.m.  Members             
present at the call to order were Representatives Bunde, Green,                
Dyson and Brice.  Representative Porter arrived at 3:29 p.m.                   
Representatives Vezey and Kemplen were absent.                                 
                                                                               
HB  44 - ADMISSION TO PIONEERS' HOMES                                          
                                                                               
Number 0062                                                                    
                                                                               
REPRESENTATIVE TOM BRICE, Sponsor of HB 44, said the concept of                
this legislation was brought to his attention during the last                  
campaign by one of his constituents who, while on the waiting list             
for the Alaska Pioneers' Home, inquired if he would be denied                  
admission if the monthly rent increased to a point where he                    
couldn't afford it.  While it is current policy that the Pioneers'             
Home will not disqualify a person based on failure to make an                  
initial payment or provide security for monthly payments, his                  
concern is that policy could change during the annual policy                   
update.  House Bill 44 would place that policy in statute, thus                
protecting the state's senior population from being denied                     
admission into the Pioneers' Home.                                             
                                                                               
Number 0140                                                                    
                                                                               
REPRESENTATIVE BRICE made a motion to adopt Amendment 1 which                  
reads:                                                                         
                                                                               
     Page 1, line 10:                                                          
                                                                               
          Following "on"                                                       
          Insert "financial"                                                   
                                                                               
CHAIRMAN BUNDE objected for the purpose of discussion.                         
                                                                               
REPRESENTATIVE BRICE withdrew Amendment 1 because his concern was              
addressed on line 13.                                                          
                                                                               
Number 0260                                                                    
                                                                               
CHAIRMAN BUNDE pointed out the Department of Administration had                
submitted a zero fiscal note, yet there would be people at the                 
Pioneers' Home at state expense.  He inquired at what point is it              
determined that a person cannot pay.                                           
                                                                               
REPRESENTATIVE BRICE said a person would be required to pay as much            
as possible based on the current determination process.  This                  
legislation basically states a person unable to provide security or            
make an initial payment will not be denied admission.                          
                                                                               
CHAIRMAN BUNDE remarked the zero fiscal note is misleading in that             
it does cost money, just not additional money.                                 
                                                                               
Number 0335                                                                    
                                                                               
REPRESENTATIVE JOE GREEN asked if that's the case, is HB 44                    
necessary?                                                                     
                                                                               
REPRESENTATIVE BRICE responded it is necessary because policy is               
just that - policy, and given that policies can change without                 
legislative approval, he wants that policy codified to statute.                
                                                                               
REPRESENTATIVE GREEN said, "Last summer, I visited the Pioneers'               
Home in Anchorage and there were several people in there who were              
not Alzheimer or dementia people and because they were up to some              
80 percent of the people that lived there suffering from some form             
of dementia, the costs were escalating extremely rapidly.  Now if              
that's the case - and these people were saying they were in danger             
of being thrown out - if the policy is that if they can't pay, they            
get to either come in or get to stay in, there's a confusion factor            
here because the people were already there and fearful that they               
were going to be thrown out because they could not longer afford               
these elevated prices."                                                        
                                                                               
REPRESENTATIVE BRICE agreed that was a good point and added the                
purpose of HB 44 is to alleviate some of that concern and fear.                
                                                                               
REPRESENTATIVE GREEN said, "If that's the case and people will make            
application, the costs are going up because you're treating                    
dementia patients, is that going to exacerbate the problem at the              
Pioneers' Home because costs are going up to cover the cost of                 
operation, but these people are coming in not paying the costs,                
which makes them go up even higher."                                           
                                                                               
REPRESENTATIVE BRICE responded this will ensure that individuals               
will not be denied admission to the Pioneers' Home because of their            
inability to pay.  Individuals living at the Pioneers' Home have               
never paid the full cost of care, yet it is true that individuals              
are helping to pay the increased costs of having to care for                   
individuals with dementia.  He added, "What this might help us with            
is possibly ensuring that those - as the prices increase and the               
costs are shifted, that folks still have access because frankly, I             
don't know too many people who come from the era of the folks who              
are involved in the Pioneers' Home, who could afford to pay the                
full cost on the fixed level of retirement they're getting out of              
jobs they had in the 70s ...."                                                 
                                                                               
REPRESENTATIVE GREEN said, "If that's happening - if we're treating            
more and more dementia related illnesses, mental illnesses if you              
will, in Pioneers' Home, have we lost the idea of the Pioneers'                
Home originally, should we go back to having a Pioneers' Home and              
if we have that many mental illness faces, then I think Mental                 
Health ought to come in and take care of those people and not                  
confuse the issue with the Pioneers' Home."                                    
                                                                               
REPRESENTATIVE BRICE shared Representative Green's point of view               
and has drafted legislation that would codify the role of the                  
Pioneers' Home as a communal living environment, breaking off the              
dementia related illnesses to a separate facility so as to become              
Medicaid eligible, and refinance their care by 50 percent of                   
federal funds.                                                                 
                                                                               
Number 0660                                                                    
                                                                               
CHAIRMAN BUNDE observed there have been a number of policy                     
decisions made relating to the Pioneers' Homes.  He asked if there             
was further discussion on HB 44.  Hearing none, he closed public               
testimony and asked the wish of the committee.                                 
                                                                               
Number 0697                                                                    
                                                                               
REPRESENTATIVE BRICE made a motion to pass HB 44 out of committee              
with individual recommendations and attached zero fiscal notes.                
                                                                               
CHAIRMAN BUNDE asked if there was objection.  There being none,                
HB 44 moved from the House Health, Education and Social Services               
Standing Committee.                                                            
                                                                               
CSSB 197(RLS)am - REGULATING HEALTH MAINTENANCE ORGS.                          
                                                                               
Number 0732                                                                    
                                                                               
CHAIRMAN BUNDE announced the next order of business would be CSSB
197(RLS)am, "An Act relating to health care services provided by,              
and practices of, a health maintenance organization; providing that            
an enrollee in a health maintenance organization has the right to              
select a treating chiropractor; specifying certain chiropractic                
health care reports, examinations, and limits on treatment; and                
prohibiting health maintenance organizations from limiting free                
speech of health care providers," sponsored by Senator Dave Donley.            
                                                                               
SENATOR DAVE DONLEY informed the committee that CSSB 197(RLS)am                
limits certain practices of health maintenance organizations (HMO).            
First, it prohibits HMOs from initiating the infamous gag rules on             
doctors.  Additionally, it provides that customers shall be                    
informed if there are services that are not covered under a                    
maintenance organization plan to eliminate the element of surprise.            
He said the bill also sets out specific provisions for direct                  
access to chiropractic care rather than requiring all patients to              
go through a gatekeeper, as is the practice that has been developed            
by HMOs in other parts of the country.  CSSB 197(RLS)am also                   
provides for a point of service option for enrollees in HMOs that              
allows an option to choose a different deductible or a higher cost,            
if the enrollee wishes to go to the health care provider of their              
choice.                                                                        
                                                                               
SENATOR DONLEY advised the members he has suggested an amendment,              
which would add language to an existing statute prohibiting unfair             
discrimination against persons who provide a service.  He said it              
would add HMOs into the existing health insurance so the same                  
prohibition that exists in statute for all other kinds of medical              
insurance would also apply to HMOs.  He said Chairman Bunde had                
proposed an amendment which he agrees with, which provides that if             
an HMO or insurance company decides to deny, reduce, or terminate              
a health care benefit to deny payment for a health care service, it            
must be based on the recommendation of a licensed health care                  
provider within that specialty or subspecialty, and also a provider            
who is licensed to practice in Alaska.                                         
                                                                               
Number 0868                                                                    
                                                                               
REPRESENTATIVE GREEN made a motion to move Amendment 1, 0-                     
LS0905\KA.1, Ford, dated 3/18/98.  Amendment 1 reads:                          
                                                                               
     Page 1, following line 7:                                                 
                                                                               
          Insert a new bill section to read:                                   
                                                                               
          "* Section 1.  AS 21.36.090(d) is amended to read:                   
               (d) Except to the extent necessary to comply with               
          AS 21.42.365 and AS 21.56, a person may not practice or              
          permit unfair discrimination against a person who                    
          provides a service covered under a group health insurance            
          policy that extends coverage on an expense incurred                  
          basis, or under a group service or indemnity type                    
          contract issued by a health maintenance organization or              
          a nonprofit corporation, if the service is within the                
          scope of the provider's occupational license.  In this               
          subsection, "provider" means a state licensed physician,             
          dentist, osteopath, optometrist, chiropractor, nurse                 
          midwife, advanced nurse practitioner, naturopath,                    
          physical therapist, occupational therapist, psychologist,            
          psychological associate, or licensed clinical social                 
          worker, or certified direct-entry midwife."                          
                                                                               
     Page 1, line 8:                                                           
          Delete "Section 1."                                                  
          Insert "Sec. 2."                                                     
                                                                               
     Renumber the following bill sections accordingly.                         
                                                                               
REPRESENTATIVE BRICE objected for purposes of discussion.                      
                                                                               
CHAIRMAN BUNDE noted that Senator Donley had explained Amendment 1             
would include HMOs and the list of other physicians and medical                
care providers.                                                                
                                                                               
REPRESENTATIVE BRICE said, "They cannot discriminate."                         
                                                                               
SENATOR DONLEY explained it is already an existing law.  Amendment             
1 adds HMOs to the existing law.                                               
                                                                               
Number 0935                                                                    
                                                                               
CHAIRMAN BUNDE called an at-ease at 3:28 p.m.  He reconvened the               
meeting at 3:30 p.m.  He noted the arrival of Representative Porter            
at 3:29 p.m.                                                                   
                                                                               
REPRESENTATIVE FRED DYSON expressed confusion as to the intent of              
Senator Donley's amendment.                                                    
                                                                               
CHAIRMAN BUNDE explained that Senator Donley's amendment is merely             
adding HMOs to the current statute.                                            
                                                                               
SENATOR DONLEY said the language in Section 1 is all in existing               
law and applies to all other types of health insurance policies.               
The amendment just adds HMOs to the existing law so the same                   
prohibition against unfair discrimination would also apply to                  
contracts issued by HMOs.                                                      
                                                                               
Number 1010                                                                    
                                                                               
CHAIRMAN BUNDE asked if Representative Brice maintained his                    
objection.  Hearing no objection, Amendment 1 was adopted.                     
                                                                               
Number 1020                                                                    
                                                                               
REPRESENTATIVE GREEN made a motion to move Amendment 2 offered by              
Representative Bunde which reads:                                              
                                                                               
     Page 4, after line 6                                                      
          Add a new section.                                                   
               A utilization review decision to deny, reduce, or               
          terminate a health care benefit to deny payment for a                
          health care service because that service is not medically            
          necessary may only be made by a health care provider                 
          trained in that specialty or subspecialty and licensed to            
          practice in the state after consultation with the covered            
          persons's health care provider.                                      
                                                                               
CHAIRMAN BUNDE asked if there is an objection.  There being none,              
Amendment 2 was adopted.                                                       
                                                                               
Number 1032                                                                    
                                                                               
QUINN MCKENNA, Providence Health System, testified via                         
teleconference from Anchorage.  He said he will not argue that                 
managed care companies should not be regulated; obviously they                 
should be.  He will not argue against a legislator aggressively                
reviewing organizations, especially if there is any fear of                    
infringing upon the rights of their constituents.  Nor will he                 
argue against the appropriateness of chiropractic services.  Those             
items he just mentioned are not in question in his testimony.                  
However, he would like to add testimony on where the line should be            
drawn that balances our personal desire to have free and unfettered            
access to any care that a person wants to receive and the cost                 
related to that care.  The only issue he was raising with this                 
legislation is with regard to the mandating of chiropractic                    
coverage by a managed care company.  He recalled back in the early             
90s across the country, our society was screaming about the                    
dramatic increases in health care cost; health care costs were                 
increasing three times the rate of inflation.  He stated                       
"Subsequent to that, managed care had grown quite dramatically, and            
actually health care inflation has come in check during this period            
of time.  In fact, in 1996, health care inflation was just, I                  
believe, 1.6 or 1.9 percent above the inflation rate, quite                    
dramatically down from the double digit inflation of just a few                
years prior.  A lot of that because of the ability of managed care             
companies to come in, do utilization management, promised volume               
for discounts, and leveraged the providers into providing lower                
costs because they could provide that volume discounts."                       
                                                                               
MR. MCKENNA continued his testimony.  "Health care is such a                   
strange service and industry.  In most other industries -- like if             
I were to go buy a car, I would go negotiate with the car salesman             
and I would write a check, or I would go to the bank and pick up               
money, but be obligated to pay that.  In health care we buy                    
insurance, which the insurance company then pays for the health                
care that I receive.  And maybe during the year I pay $4,000 for my            
health care insurance, maybe I only need $1,000 of coverage, or                
maybe I need $100,000.  I am, all of a sudden, taken away from my              
obligation of paying for that service if someone else is paying for            
it.  And we need to be careful when our initial desire as people               
and society is to get as much as we can and demand as much as we               
can and you, as the legislature, need to be careful that we also               
balance the cost of that care because as we saw just less than a               
decade ago, it can easily spiral out of control."                              
                                                                               
MR. MCKENNA urged the committee not to pass this amendment, not                
necessarily because it's so broad, but because it could set a                  
precedent on limiting the ability of managed care organizations to             
help control health care costs for their community.  He asked, "Out            
of all the services that are available - health care services, open            
heart surgery, treatment for diabetic patients, et cetera - how is             
it that this amendment protects chiropractic services and mandates             
that all chiropractors have to be (indisc.) and have to be paid for            
their services?  How is it that out of all of the services                     
available this is the very first one to come to be protected?"  He             
indicated he has not heard testimony that out of all of the                    
services available that chiropractic care is the best one that                 
would provide (indisc.) services the health of all of the                      
communities is going to be increased.  He said he would encourage              
the legislature to go back and say as they start to draw the line,             
is this the best place to draw the line.                                       
                                                                               
Number 1271                                                                    
                                                                               
DR. R. H. BANKS, President, Alaska Chiropractic Society, testified             
via teleconference from Anchorage.  He said he would like to speak             
to the issues just brought up by Mr. McKenna.  He believes Mr.                 
McKenna may be a little confused with the legislation.  He said                
first of all it's not managed care legislation, it is HMO                      
legislation.  Secondly, the bill does not mandate chiropractic                 
care.  He said in a separate clause the first amendment to mandate             
all services, it prohibits discrimination and so the first clause              
in the bill would mandate chiropractic care.  The separate                     
chiropractic clause in the bill is to ensure access to chiropractic            
care.  He reiterated that it does not mandate chiropractic care, it            
assures that there would be access to chiropractic care.  He said,             
"On par with subsistence, health care is the issue on voter's                  
minds.  Voters are concerned with access to quality care.  Voters              
are concerned with the ability to choose a doctor who is concerned             
about them; a professional they can trust.  Patients are demanding             
that their doctors be able to discuss all treatment options                    
available to alleviate their health problems.  .... We may not see             
HMOs in Alaska for several years and now is the time to act on                 
behalf of thousands of Alaskans who signed a petition and sent                 
public opinion messages in support of SB 197."  He urged the                   
committee members to move this bill out of committee today.                    
                                                                               
Number 1400                                                                    
                                                                               
GORDON EVANS, Representative, Health Insurance Association of                  
America (HIAA), came before the committee to testify.  He told the             
committee that HIAA opposes the bill in general because it is                  
unneeded legislation since there are no HMOs in Alaska and no                  
prospects for any in the unforeseeable future.  He said HIAA is                
also concerned about certain managed care initiatives being                    
proposed in this and other legislation and contrary to the                     
testimony of Dr. Banks, this is not only a managed care                        
legislation, it is also a mandate for chiropractors.                           
                                                                               
MR. EVANS referred to Section 2 of CSSB 197 and read into the                  
record, "SB 197 proposes to amend current law to require a carrier             
to include in his evidence of coverage guidelines explaining when              
treatment may be denied.  Managed care plans already offer coverage            
guidelines in their schedule of benefits.  The schedule of benefits            
is a legal document filed with the state Division of Insurance that            
describes in detail what the plan covers, what it does not cover,              
and the rules and procedures governing eligibility, and a copy of              
that schedule of benefits is provided to ensure (indisc.)                      
enrollment.  The schedule of benefits does not provide detailed                
utilization review or quality insurance criteria, which are very               
detailed and, therefore, can be voluminous."  He continued, "Also,             
utilization review and quality insurance criteria are subject to               
change in order to keep up with advancing medical technology.                  
Health insurers are not opposed to providing, upon request of a                
patient or the health care provider, a written explanation of an               
adverse determination, that is a copy of the contract basis or                 
relevant medical rationale used to make that determination."  He               
said he is prepared to offer a proposed amendment to replace the               
current Section 2 with a new Section 2 entitled, "Adverse                      
Determination" together with a new Section 5 which would then add              
a definition of the term "adverse determination."                              
                                                                               
Number 1500                                                                    
                                                                               
MR. EVANS said he has a few comments to elaborate on HIAA's                    
opposition to Section 3 of the bill.  He said that section, among              
other things, would allow an insured direct access to the services             
of a licensed chiropractor of his or her choice without prior                  
approval of the enrollee's health maintenance organization, a                  
gatekeeper, or a primary care physician.  He said this provision is            
a mandated benefit that will directly benefit a specific group of              
providers - chiropractors - and he predicts that it won't stop with            
them.  He said, "Such legislative benefits, as we have noted on                
many occasions before this committee, will simply drive up costs               
and ultimately limiting the affordability of quality care for                  
consumers."  He said for that reason, HIAA has always opposed                  
mandating of benefits.                                                         
                                                                               
MR. EVANS referred to Section 4, stating that CSSB 197(RLS) am                 
proposes to add a new subsection (i) that would prohibit HMOs from             
imposing limits regarding criticism by a provider of health care               
services provided by an HMO; written or oral communications between            
a health care provider and an enrollee regarding health care                   
services; and employment of a health care provider to be terminated            
unless the provider receives written notice of the cause for the               
termination before being terminated.  He indicated HIAA doesn't                
object to all of that subsection, but objects to part of it.  He               
said, "Most managed care firms carefully guard their current                   
customers and information about their plan that they consider to be            
confidential.  Consequently, plans will include contractual                    
provisions asking the health care provider to agree not to                     
disparage the health plan to enrollees or to attempt to induce                 
enrollees to leave a plan or join another plan.  These types of                
contractual provisions are not unique to HMOs, but are imposed by              
many other employers through contracts or employment manuals.  No              
business can tolerate its employees driving customers away.  In                
addition, there are many legitimate business precautions a managed             
care plan must consider when contracting with an independent                   
professional or organization."                                                 
                                                                               
MR. EVANS continued, "These include first, as a general contractor             
employing the provider, health plans could be held jointly liable              
for libelous statements by a provider or spurious claims, which                
impact on other providers' or institutions' business.  Secondly,               
providers who might have mobile contractual arrangements with                  
health plans and facilities could attempt to steer patients to                 
facilities in which the provider has a personal financial stake.               
Lastly, the medical community has very jealously protected itself              
against any disclosure data which compares physicians or facilities            
based upon their clinical outcome.  The same level of analytical               
objectivity should be required in any qualitative statements made              
by contracting physicians."  He noted that HIAA does not believe               
HMOs should limit or manage clinical discussions between physicians            
and their patients regarding treatment options.  In fact, most                 
managed care plans already require language to that effect in their            
agreements.  He said Section 4 would also prohibit carriers from               
denying health care coverage for enrollee unless enrollee has been             
examined by at least two physicians.  It would also prohibit a                 
carrier from imposing financial incentives to be given or offered              
to a provider for denying or delaying health care services.  He                
said denial of health care coverage can occur for a number of                  
reasons:  for instance, a particular benefit may not be covered by             
an insured's policy.  Many procedures are subjected to utilization             
review and quality assurance criteria.  For instance, the most                 
expensive treatment is not always the best and sometimes surgery is            
not the only available intervention.  The insurer is not prohibited            
from seeking a second medical opinion, however, the insurer should             
not be required to subject every denial of health care coverage to             
a second provider's opinion and the law as stated now would require            
that.                                                                          
                                                                               
Number 1667                                                                    
                                                                               
MR. EVANS told the committee that managed health care plans have               
attempted to create reimbursement systems which reward providers               
for keeping their patients healthy in the most efficient way                   
possible, but do not, of course, encourage over-utilization of                 
scarce health dollars.   If a physician provides too few services,             
that could be just as costly as providing too many.                            
                                                                               
MR. EVANS expressed confusion as to where Amendment 2 would fit                
into the bill.                                                                 
                                                                               
SENATOR DONLEY was of the impression that Amendment 2 added a new              
section to the bill.                                                           
                                                                               
CHAIRMAN BUNDE confirmed that.                                                 
                                                                               
MR. EVANS said the problem with having a licensed practice in this             
state is a problem because there are some specialties that there               
may be only one person licensed in this state.  In that context he             
asked, "Is he going to consult with himself to do that?"                       
                                                                               
CHAIRMAN BUNDE replied, "They don't have to live in this state,                
they just have to be licensed to practice in this state."                      
                                                                               
MR. EVANS said, "I understand, but with the professional                       
utilization review entities that are around the country, they are -            
and they are very good whether - I know that some people don't                 
think they are, but they are."                                                 
                                                                               
CHAIRMAN BUNDE said that's not whose profit line we're looking at.             
                                                                               
MR. EVANS said, "I can't argue with you on that, if that's your                
view."  He indicated that the idea is if a person is licensed in               
the United States, why not have it that way rather than just                   
licensed in this state?  He pointed out the argument was made the              
attorney general can't get to them if they're not licensed in this             
state.  He contends the attorney general isn't going to bring a                
civil lawsuit against them anyway; the patient will file a lawsuit.            
He asked, "Where does the attorney general get involved in it?                 
Jerking their license?"                                                        
                                                                               
Number 1776                                                                    
                                                                               
CHAIRMAN BUNDE responded, "We have our own board that I think                  
Alaskans are more comfortable with having them at our standards."              
                                                                               
MR. EVANS referred to Amendment 1 stating the problem HIAA has with            
it is that particular statute is being used now for everything                 
except what it was intended to when it was originally enacted by               
this legislature.  He stated originally it was intended to be                  
comparing physician "A" with physician "B" and now it's gotten to              
the point where it compares physician "A" with chiropractor "B," or            
if they happen to do the same sort of service, you have unfair                 
discrimination.  He said the best thing the legislature could do               
with that statute is to repeal it and start over from scratch and              
make it back to what it was intended to be in the first place.  He             
pointed out he is not the only one saying that; the Division of                
Insurance has told the legislature that many times, also.                      
                                                                               
Number 1829                                                                    
                                                                               
CHAIRMAN BUNDE announced that public testimony is closed.  In                  
summary, he said health care costs are a challenge.  One way to                
limit that is through volume, the other way is to reduce services.             
He expressed that he understands the concern about limiting health             
care costs and he also understands that insurance companies exist              
to make a profit and can make profits many ways; one way is by                 
reducing services.                                                             
                                                                               
SENATOR DONLEY concluded by stating the concept of repealing the               
whole statute goes way beyond the scope of this legislation.  He               
said obviously we have this existing statute, which is being                   
enforced by the Division of Insurance who is going through the                 
process of developing the criteria to enforce it.  He indicated                
that it seems completely appropriate that it's there and applies to            
health insurance; it should also apply to HMOs.                                
                                                                               
Number 1987                                                                    
                                                                               
CHAIRMAN BUNDE made a motion to move HCS CSSB 197(HES) out of                  
committee.  There being no objection, HCS CSSB 197(HES) was moved              
from the House Health, Education and Social Services Standing                  
Committee.                                                                     
                                                                               
HJR 58 - CONST AM: EDUCATION FUND                                              
                                                                               
Number 1902                                                                    
                                                                               
CHAIRMAN BUNDE announced the next order of business was HJR 58,                
Proposing amendments to the Constitution of the State of Alaska                
relating to the educational fund.  At the previous hearing, the                
committee had asked Representative Cowdery to check into the                   
possible use of National Petroleum Reserve in Alaska (NPRA) monies.            
                                                                               
                                                                               
Number 1950                                                                    
                                                                               
ANNETTE DEAL, Researcher to Representative John Cowdery, said the              
Legislative Legal Division staff has advised those funds are                   
already spoken for, which basically leaves HJR 58 as it currently              
stands.                                                                        
                                                                               
CHAIRMAN BUNDE called an at-ease at 3:53 p.m.  Chairman Bunde                  
reconvened the meeting at 3:55 p.m.                                            
                                                                               
Number 1985                                                                    
                                                                               
REPRESENTATIVE GREEN said, "As I read the bill, this would in                  
effect add another 40 percent dedication to the already                        
constitutionally dedicated 25 percent and statutorily dedicated 25             
percent in addition.  This would then constitutionally add another             
40 percent, so that there would only be, in effect, 10 percent left            
for allocation other than the 90 percent mandated.  And my concern             
is that when we do that, are we binding ourselves to the point that            
-- as I understand the original intent of the permanent fund was               
that it would take care of government expenditures when oil revenue            
no longer was capable, such as the situation ...."                             
                                                                               
CHAIRMAN BUNDE interjected, "Earnings of the permanent fund ...."              
                                                                               
REPRESENTATIVE GREEN continued, "Yah, not the corpus.  This would              
take of that which we can now allocate, it would dedicate it to                
schools and leave only 10 percent for other allocations because 50s            
already spoken for.   Is that fiscally responsible?"                           
                                                                               
CHAIRMAN BUNDE said it becomes a policy call.                                  
                                                                               
Number 2060                                                                    
                                                                               
MARCO PIGNALBERI, Legislative Assistant to Representative John                 
Cowdery, said another way to look at it is the money going into                
this fund is an offset to other general fund monies that would                 
otherwise be going to education.  For example, if there was $100               
million in the fund, that's $100 million less that would have to be            
taken out of the general fund to fund education.                               
                                                                               
REPRESENTATIVE GREEN noted the difference is significant; in one               
case it's a constitutional amendment which means going to the                  
people for a vote if there's a problem in the future; whereas, if              
it's done by statute, the allocation is done each year by the                  
legislature and statutes can be changed each year.                             
                                                                               
Number 2100                                                                    
                                                                               
MR. PIGNALBERI said in looking at the first five years of revenue              
(indisc.) projections, for example, about $75 million would go into            
the fund - the state's current educational expenditures are running            
upwards of $700 million.  Again, the money going into this fund                
means less that would be taken out of the general fund and other               
sources to pay for education.  He added it would be quite a long               
period of time before this fund had enough money in it to be the               
primary funding source for education.  He said, "The point I'm                 
trying to make is that you're not locked in - this resolution would            
not lock in expenditures until it got to be so large that you had              
to go to this fund for all funding for educational expenditures.               
And until it gets that large, you could look at it as an offset of             
the general fund."                                                             
                                                                               
REPRESENTATIVE GREEN said if that's the case, what is to be gained             
by making it a constitutional amendment.                                       
                                                                               
MR. PIGNALBERI said it is a way of incrementally getting to a point            
where there's a stable source of education funds in the state.  It             
may take some years to reach the level of $700 million plus, and               
may never reach it in our lifetime, but it's a start and future                
legislatures may find other revenue sources to add to the fund.                
The overall goal is to establish a stable source of educational                
funding so it's not so subject to the economic situation of the                
state.                                                                         
                                                                               
Number 2185                                                                    
                                                                               
REPRESENTATIVE DYSON said he had two fundamental problems; first,              
should any government agency have reserved funds and therefore not             
have to compete with other government services for funding; and                
secondly, if any government organization should have a                         
noncompetitive standing for funding, is education the appropriate              
one?  He noted it's a philosophical question, but he would                     
appreciate Mr. Pignalberi's remarks.                                           
                                                                               
MR. PIGNALBERI said there has been a lot of thought given to the               
question and basically, when this approach is compared to the                  
approach that's been put forth by this Governor, as well as                    
previous Governors, for an educational endowment, this is a milder,            
more incremental approach which is still subject to annual                     
legislative appropriation.                                                     
                                                                               
REPRESENTATIVE GREEN inquired if funds would have to be                        
appropriated under this approach?                                              
                                                                               
MR. PIGNALBERI responded yes, this is a funding source; funds would            
still have to be appropriated to the particular educational                    
programs.                                                                      
                                                                               
REPRESENTATIVE GREEN asked if Mr. Pignalberi meant the revenue from            
this fund.                                                                     
                                                                               
MR. PIGNALBERI confirmed that.                                                 
                                                                               
REPRESENTATIVE DYSON inquired if the money would simply remain in              
the fund and couldn't be used for anything else if it didn't get               
appropriated.                                                                  
                                                                               
CHAIRMAN BUNDE stated his belief that there were two purposes in               
the legislation; one was to build a steady source of income for                
education and the other was to encourage people to have another                
look at their interest in either developing or not developing ANWR.            
                                                                               
Number 2279                                                                    
                                                                               
CHAIRMAN BUNDE observed the committee lacked a quorum at this time.            
He expressed his appreciation to Representative Cowdery bringing               
the issue up for discussion.  He asked if there were further                   
questions from the committee.  There being none, he thanked Mr.                
Pignalberi for his comments and indicated HJR 58 would remain in               
committee.                                                                     
                                                                               
ADJOURNMENT                                                                    
                                                                               
Number 2300                                                                    
                                                                               
CHAIRMAN BUNDE adjourned the House Health, Education and Social                
Services Standing Committee at 4:05 p.m.                                       

Document Name Date/Time Subjects