Legislature(1999 - 2000)
04/06/2000 02:37 PM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 6, 2000
2:37 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Joe Green
Representative Norman Rokeberg
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
Representative Jeannette James
COMMITTEE CALENDAR
HOUSE BILL NO. 292
"An Act adopting the National Crime Prevention and Privacy Compact;
making criminal justice information available to interested persons
and criminal history record information available to the public;
making certain conforming amendments; and providing for an
effective date."
- RESCINDED ACTION OF 3/29/00; MOVED NEW CSHB 292(JUD) OUT OF
COMMITTEE
HOUSE BILL NO. 211
"An Act relating to liability for providing managed care services,
to regulation of managed care insurance plans, and to patient
rights and prohibited practices under health insurance; and
providing for an effective date."
- MOVED CSHB 211(JUD) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 292
SHORT TITLE: DISCLOSURE OF CRIMINAL HISTORY RECORDS
Jrn-Date Jrn-Page Action
1/21/00 1954 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1954 (H) STA, JUD
1/21/00 1955 (H) ZERO FISCAL NOTE (DPS)
1/21/00 1955 (H) GOVERNOR'S TRANSMITTAL LETTER
2/22/00 (H) STA AT 8:00 AM CAPITOL 102
2/22/00 (H) Scheduled But Not Heard
2/29/00 (H) STA AT 8:00 AM CAPITOL 102
2/29/00 (H) Scheduled But Not Heard
3/02/00 (H) STA AT 8:00 AM CAPITOL 102
3/02/00 (H) Scheduled But Not Heard
3/07/00 (H) STA AT 8:00 AM CAPITOL 102
3/07/00 (H) Heard & Held
3/07/00 (H) MINUTE(STA)
3/09/00 (H) STA AT 8:00 AM CAPITOL 102
3/09/00 (H) Heard & Held
3/09/00 (H) MINUTE(STA)
3/16/00 (H) STA AT 8:00 AM CAPITOL 102
3/16/00 (H) Moved Out of Committee
3/16/00 (H) MINUTE(STA)
3/16/00 2566 (H) STA RPT 1DP 4NR
3/16/00 2566 (H) DP: JAMES; NR: SMALLEY, KERTTULA,
3/16/00 2566 (H) HUDSON, WHITAKER
3/16/00 2566 (H) ZERO FISCAL NOTE (DPS) 1/21/00
3/29/00 (H) JUD AT 1:00 PM CAPITOL 120
3/29/00 (H) Moved CSHB 292(JUD) Out of Committee
3/29/00 (H) MINUTE(JUD)
4/06/00 (H) JUD AT 2:00 PM CAPITOL 120
BILL: HB 211
SHORT TITLE: HEALTH CARE INSURANCE
Jrn-Date Jrn-Page Action
4/22/99 914 (H) READ THE FIRST TIME - REFERRAL(S)
4/22/99 914 (H) L&C, JUD, FIN
5/10/99 (H) L&C AT 3:15 PM CAPITOL 17
5/10/99 (H) HEARD AND HELD
5/10/99 (H) MINUTE(L&C)
10/22/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
10/22/99 (H) MINUTE(L&C)
2/04/00 (H) L&C AT 3:15 PM CAPITOL 17
2/04/00 (H) -- Meeting Canceled --
2/16/00 (H) L&C AT 3:15 PM CAPITOL 17
2/16/00 (H) Heard & Held
2/16/00 (H) MINUTE(L&C)
2/16/00 (H) MINUTE(L&C)
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
3/03/00 (H) Moved CSHB 211(L&C) Out of Committee
3/03/00 (H) MINUTE(L&C)
3/08/00 2446 (H) L&C RPT CS(L&C) NT 1DP 2DNP 3NR
3/08/00 2446 (H) DP: ROKEBERG; DNP: CISSNA, BRICE;
3/08/00 2446 (H) NR: MURKOWSKI, HARRIS, HALCRO
3/08/00 2446 (H) ZERO FISCAL NOTE (DCED)
3/24/00 (H) JUD AT 1:00 PM CAPITOL 120
3/24/00 (H) Heard & Held
3/24/00 (H) MINUTE(JUD)
3/31/00 (H) JUD AT 1:15 PM CAPITOL 120
3/31/00 (H) Heard & Held
4/06/00 (H) JUD AT 2:00 PM CAPITOL 120
WITNESS REGISTER
GORDON EVANS, Lobbyist
for the Health Insurance Association of America
211 4th Street, Suite 305
Juneau, Alaska 99801
POSITION STATEMENT: Answered question relating to HB 211.
ACTION NARRATIVE
TAPE 00-50, SIDE A
Number 0001
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee
meeting to order at 2:37 p.m. Members present at the call to order
were Representatives Kott, Green, Rokeberg, Murkowski and Kerttula.
Representative Croft arrived as the meeting was in progress.
HB 292 - DISCLOSURE OF CRIMINAL HISTORY RECORDS
Number 0019
CHAIRMAN PETE KOTT announced that the first order of business would
be HOUSE BILL NO. 292, "An Act adopting the National Crime
Prevention and Privacy Compact; making criminal justice information
available to interested persons and criminal history record
information available to the public; making certain conforming
amendments; and providing for an effective date."
CHAIRMAN KOTT informed members that the committee's previous action
in passing out a committee substitute (CS) on March 29, 2000,
needed to be rescinded. Legislative drafters do not normally
review legislation provided by the governor, he noted. However, in
reviewing the CS required after the March 29 hearing, legislative
counsel had discovered a couple of items that needed to be
corrected. Chairman Kott said he and Anne Carpeneti of the
Department of Law concur with Gerald Luckhaupt, legislative
counsel, that there has been an oversight.
Number 0094
REPRESENTATIVE ROKEBERG made a motion to rescind the committee's
action in passing out HB 292, as amended in the House Judiciary
Standing Committee, with individual recommendations and attached
fiscal note(s). There being no objection, it was so ordered and
the bill was again before the committee.
REPRESENTATIVE ROKEBERG made a motion to adopt as a new proposed CS
version 1-GH2014\D [which had been provided by Mr. Luckhaupt as an
attachment to his memorandum of March 31, 2000, regarding the
oversight]. There being no objection, it was so ordered and
Version D was before the committee.
Number 0205
REPRESENTATIVE KERTTULA made a motion to move HB 292 [Version D]
out of committee with individual recommendations and the
accompanying zero fiscal note. There being no objection, the new
CSHB 292(JUD) was moved out of the House Judiciary Standing
Committee.
HB 211 - HEALTH CARE INSURANCE
Number 0273
CHAIRMAN KOTT announced the next item of business would be a
continuation of the hearing on HOUSE BILL NO. 211, "An Act relating
to liability for providing managed care services, to regulation of
managed care insurance plans, and to patient rights and prohibited
practices under health insurance; and providing for an effective
date." Chairman Kott noted that Bob Lohr of the Division of
Insurance was online to answer questions. He then requested a
subcommittee report on Version N [adopted as a work draft 3/31/00].
Number 0305
REPRESENTATIVE GREEN offered a subcommittee report. He informed
the committee that legislative staff members Janet Seitz and Kevin
Jardell had "allowed the legislators to go about their business"
while they met with members of both the doctors' group and the
insurance group. As a result, they had ironed out all differences
with the exception of the medical necessity and liability
provisions. There is now a revised draft, Version S [1-LS0472\S,
Ford, 4/5/00], upon which changes from Version N have been
highlighted for committee members. Representative Green offered to
quickly review the changes, then concluded by saying he sees
nothing that adversely affects the state.
Number 0428
REPRESENTATIVE MURKOWSKI added that Version S has no reference to
medical necessity or liability provisions. Those have not been
incorporated anywhere in the draft, he concluded.
Number 0450
CHAIRMAN KOTT summarized, saying all of the issues have been
resolved with the exception of the two on which consensus could not
be reached, and that the bill had been brought back before the
committee to address those policy issues.
REPRESENTATIVE GREEN explained that when the subcommittee had
reconvened and gone through the other changes, there was further
debate on those two unresolved issues. "We did not see any
movement," he said. "They both have good reasons for why they feel
the way they do." The subcommittee finally had decided to simply
leave the two contentious issues out of the draft, he concluded.
Number 0520
REPRESENTATIVE KERTTULA brought attention to a letter that the
committee had received via fax from Mr. Burgan expressing concern
about not having been heard. She wondered if the two contentious
issues are mostly the ones about which Mr. Burgan is concerned.
REPRESENTATIVE ROKEBERG noted that he was planning to bring that up
after the committee had adopted the work draft.
CHAIRMAN KOTT thanked the subcommittee for its work and suggested
adopting the work draft generated by the subcommittee.
Number 0574
REPRESENTATIVE GREEN made a motion to adopt Version S [1-LS0472\S,
Ford, 4/5/00] as the working document before the committee. There
being no objection, it was so ordered.
Number 0620
REPRESENTATIVE ROKEBERG directed attention to page 5, lines 18-23,
of Version S. He noted that there had been discussion in the
subcommittee relating to whether the Director of Insurance has
authority under AS 21.390.20(b)(2) relating to the "non-
hospital/medical service corporations," which are required to file
their rates with the commissioner. Other health insurance
companies are not required to file, he noted. The statute he had
cited allows the commissioner to "come in and review things as
necessary." At the subcommittee's request, he indicated, the
Office of the Attorney General had provided a letter dated April 6,
2000; it says that while there is possibly the ability, there is no
express authority to routinely review those rates. In light of
that, Representative Rokeberg suggested returning to the old
language that said the Director of Insurance, at the director's
request, could require the managed care entity to provide actuarial
demonstration of the increased cost.
Number 0753
REPRESENTATIVE ROKEBERG thanked subcommittee members for their
"Herculean job." He expressed pleasure with the resulting product,
whatever its limitations. He said it is a matter of reality and
what can be achieved. He also thanked members of the insurance
industry, the medical association and other groups including
organized labor that had participated in or observed the process
over the past two weeks. Representative Rokeberg again pointed out
that the subcommittee had left open the two primary issues,
regarding medical necessity and liability. He said he is open to
whatever the committee wishes to do on these issues, but isn't too
optimistic that they can come to grips with them in a manner that
would satisfy everybody.
Number 0847
REPRESENTATIVE ROKEBERG returned to the issue Representative
Kerttula had raised, two letters from Brady & Company, dated April
3 and April 6, signed by Mr. Ed Burgan. Of the two, he believes
the one dated April 3 is the more important; it indicates Mr.
Burgan had been available to testify before the committee on
Friday, March 31, but was not given a chance to testify.
Representative Rokeberg said Mr. Burgan has been fighting this bill
and has been unresponsive to requests for information from the
outset. He himself takes exception to Mr. Burgan's statements and
to language used in the subsequent letter regarding the committee.
However, he believes that points in the April 3 letter are
appropriate to bring to the committee's attention.
CHAIRMAN KOTT announced a brief at-ease at 2:51 a.m. After copies
of the letters were distributed, he called the meeting back to
order at 2:57 p.m.
Number 1010
REPRESENTATIVE ROKEBERG, at Chairman Kott's request, commented on
Mr. Burgan's first letter. Apparently, the committee had closed
testimony and sent the bill to a subcommittee without being aware
that Mr. Burgan was available to testify. Representative Rokeberg
then presented the salient points in Mr. Burgan's first letter.
The first relates to mitigating conflicts with the Employee
Retirement Income Security Act (ERISA), with the suggestion of
incorporating language that this [HB 211] would not supersede
provisions of ERISA. Representative Rokeberg commented that these
people complaining about the bill are not covered by the bill
because they "are ERISA," unless there is federal law or state case
law that says that the qualitative elements of any health care
legislation can be applied to them. They want to make sure that
they are exempt by putting this in the bill, he concluded. He
added that he finds that incredible, on its face.
Number 1103
REPRESENTATIVE CROFT asked if it matters.
REPRESENTATIVE ROKEBERG said it does. He thinks it is appropriate,
on quality care issues, to hold everyone to the same standard.
REPRESENTATIVE CROFT observed, "We can't supersede ERISA if we
wanted to. And if we're ... in conflict with it, we'd be in
conflict with it and superseded it. So, 'infringe upon' is the
only one that works here?"
REPRESENTATIVE ROKEBERG responded that there is case law saying
that the states are able to "stick their nose under the tent" on
qualitative issues, and there may be provisions in federal law that
specifically would allow the state to do that. This is related to
the primacy of the state in regulating and selling insurance, which
is very important. He agreed it could be called "encroaching on
ERISA," but said that is going to be a matter of case law, and
nothing can be done legislatively to force that issue, to his
belief. However, those people are seeking protection against that.
Number 1187
REPRESENTATIVE ROKEBERG noted that Mr. Burgan's second point was
objection to the "three levels of appeal" in the internal and
external utilization review. He said he isn't sure that Mr. Burgan
entirely understands that. As it is structured, there are two
internal reviews and one external review. The first internal
review is the first phone call; the second level is the actual "72-
hour and/or ... 18-day appeal"; and the next one is external
review. Perhaps there should be a "shorthand" method put in place
there, Representative Rokeberg added, but he doesn't think so.
REPRESENTATIVE ROKEBERG turned attention to Mr. Burgan's third
point, which speaks to medical necessity. He told members he tends
to agree with what Mr. Burgan has to say: there needs to be a
definition of medical necessity, but not in statute. It needs to
be in the plan, to guide the plan about what is included and what
is excluded from the benefits in each particular plan, and each
plan is going to vary. Representative Rokeberg noted that this is
at odds with what the medical association says. However, there has
been discussion in the subcommittee about allowing medical
necessity but putting some kind of fence around it, to have a cost-
containment measure in there. In his own opinion, the AMA
[American Medical Association] definition is "any willing
provider," which is totally unlimited; although language indicates
cost alternatives or containment in scope, it isn't entirely
required.
REPRESENTATIVE ROKEBERG reported that Mr. Burgan's fourth point is
disagreement with who is included in the definition of a managed
care entity. Representative Rokeberg said that is a central
definition in the bill; Mr. Burgan's objections relate to the
definitions of what an employer and employee health care
organization is. He surmised that Mr. Burgan does not want the
definition to include the organizations he represents, and
Representative Rokeberg suggested that, indeed, the definition does
include them. "On the other hand, he does have the ERISA fence
around [them]," Representative Rokeberg added. "But if there was
a non-ERISA group, which is ...." He asked Gordon Evans the
definition of an ERISA group.
Number 1396
GORDON EVANS, Lobbyist for the Health Insurance Association of
America, suggested it is simply a group that is self-insured.
REPRESENTATIVE ROKEBERG noted that the fifth point in Mr. Burgan's
letter questions Representative Rokeberg's reasons for taking up
the bill. He pointed out that the two letters from Mr. Burgan
maintain a negative position on the bill because the suggestions
provided had been ignored. Representative Rokeberg suggested it is
important that the committee consider those letters.
Number 1458
CHAIRMAN KOTT asked if any of the issues raised in the two letters
were addressed in Version K of the bill [which had passed out of
the House Labor & Commerce Committee as CSHB 211(L&C)].
REPRESENTATIVE ROKEBERG answered that the external review had been
an ongoing drafting project for more than a year, and the issue of
medical necessity is "on everybody's radar scope." He said he
thought he had explained the ERISA matter. Regarding the managed
care entity, he assumes that they [Mr. Burgan and associates] would
like to have the words "employer" and "employer health care
organization" removed from the bill so it would not include them.
Number 1515
REPRESENTATIVE ROKEBERG said he thinks the medical necessity
argument has merit in terms of its substance. "It's how we get
there that's the issue," he added.
Number 1524
REPRESENTATIVE CROFT expressed a desire to discuss the substantive
issues that remain: whether medical necessity and liability will
be in the statute or out. The insurance plan determines what
conditions are covered, he noted, but the question with which the
committee has to struggle is whether the treatment for that covered
condition can be determined by the insurance company or by the
doctors.
Number 1630
CHAIRMAN KOTT thanked Representative Croft and said that is exactly
what he intends to do. However, because of concern about whether
Mr. Burgan had had an opportunity to testify, he thought the
committee had needed to hear the points Mr. Burgan had forwarded to
the committee in his first letter. Chairman Kott agreed that the
committee needs to determine what direction to take with two major
issues. He asked whether it was the will of the committee to leave
"medical necessity" undefined or to define it using the language
provided in the AMA version, Version K [CSHB 211(L&C)]. He offered
his opinion that the AMA definition is unconstrained, too broad.
Two other definitions had been provided to the committee from other
states, he noted.
Number 1706
REPRESENTATIVE MURKOWSKI explained that the subcommittee had not
focused much attention on the second issue, liability, because they
had reached an impasse on medical necessity; rather than spend a
lot of time reaching an impasse on liability also, they didn't hear
much from either side on it. However, one point raised by the
insurance companies was that a liability provision may come out of
federal legislation in progress now; it might be prudent to hold
off on adopting a liability provision now and revisit the issue
next year, Representative Murkowski suggested.
Number 1773
REPRESENTATIVE ROKEBERG noted that subcommittee discussion had
included the observation that under common law, if a cause of
action arises against a provider, a person is not restricted in
filing a lawsuit. What the liability language in Version K does is
create a new cause of action. He thinks it is easier to define the
cause of action if there is a failure to provide, he said, the
theory being that the plan itself should be held responsible if it
[its administrators] make the medical decisions. If the patient
were denied coverage and there were an issue about that, that would
give rise to a cause of action. There may be some difficulty under
tort law drafting that pleading without a statutory cause of
action, Representative Rokeberg said, adding, "I don't think that
any patient is necessarily going to be deprived of their right to
sue by not having a liability section [in HB 211]." He suggested
the liability section just makes it easier to sue.
Number 1850
CHAIRMAN KOTT announced that because the committee had been
discussing liability, they would proceed with that topic. He noted
that the relevant language is contained in Section 2 of Version K.
REPRESENTATIVE CROFT read in part from Section 2 of Version K,
which stated:
(b) A managed care entity is civilly liable for damages
for harm to a covered person (1) proximately caused by
its failure to exercise ordinary care; or a health
treatment decision that constitutes a failure to exercise
ordinary care ....
REPRESENTATIVE CROFT said that is codifying the standard under
which everyone operates in everything. One has to use reasonable
care toward people to whom one owes a duty, and one clearly owes a
duty to the people for whom one is caring under a managed care
plan. Although Representative Rokeberg had said it does not change
anything, Representative Croft said he thinks it clarifies that
managed care providers have a duty to act with ordinary care toward
these people.
Number 1964
REPRESENTATIVE CROFT made a motion to adopt Amendment 1, to
incorporate Section 2 from Version K into Version S wherever
appropriate.
Number 1974
REPRESENTATIVE ROKEBERG objected. He explained that he would
prefer not to include the liability language because it is a "cost
driver" and establishes a new cause of action. He stated:
What we get down to eventually, what the judge would do,
would get back to the same thing we are discussing here.
The ordinary care standard would be placed beside medical
necessity to determine whether ordinary care had been
provided, and they're all wrapped together. A judge
could not say that the provider was or was not providing
the ordinary standard of care without being able to
define what medical necessity was, because that would be
the argument.
Number 2060
REPRESENTATIVE KERTTULA asked if anyone could give her an example
of how liability would be approached now.
REPRESENTATIVE ROKEBERG answered that if somebody had suffered
damages as a consequence of being denied something like an
experimental drug, there could be a cause of action saying that
someone should have done something or should not have. He added,
"I think you can do that now and . . . there's no statutory medical
necessity."
REPRESENTATIVE KERTTULA asked if including liability language would
be just a codification of what the law is now.
Number 2098
REPRESENTATIVE MURKOWSKI responded that it has to result from the
failure to provide care or treatment covered by the health care
plan. "So if your experimental drug is not covered by the health
care plan, you're not there," she concluded.
REPRESENTATIVE ROKEBERG suggested that was a bad example.
Number 2110
REPRESENTATIVE KERTTULA asked whether this is the standard now, as
understood from common law and case law.
REPRESENTATIVE ROKEBERG said that is the issue: Does one allow the
plan the right to define "medical necessary" or to list exclusions
in the plan? "This is the debate that's been going on for
decades," he observed.
Number 2132
REPRESENTATIVE KERTTULA asked: If the committee left out a
definition of "medical necessity" and looked only at the duty to
exercise ordinary care, "isn't that what we would have without
codifying it?"
REPRESENTATIVE ROKEBERG suggested that the two are so intertwined
that they cannot be separated.
Number 2148
REPRESENTATIVE CROFT observed that non-ERISA plans now are covered
by the ordinary standard of care. The question is whether ERISA
plans are or are not covered by that same standard. "Normally," he
said, "we can't substantively touch ERISA plans, but by this
provision, . . . we can sneak under. That's how it can be both a
do-nothing - besides codify the general standard that everyone
lives under - and a cost driver." It is not clear now whether
ERISA plans are covered, he indicated. This would be saying that
even ERISA plans must meet the same standard. He said the question
becomes whether this is the appropriate standard. It ties it back
to a covered care or treatment, and it establishes for ERISA the
same liability that applies to everybody in the non-ERISA world.
Number 2241
REPRESENTATIVE ROKEBERG said he thought that made sense. He wasn't
certain, but he thought Representative Croft was correct about the
distinction between the ERISA and non-ERISA.
Number 2256
REPRESENTATIVE ROKEBERG cautioned that including a reference to
liability would definitely upset the "Brady Company crew" as well
as the insurers.
REPRESENTATIVE CROFT protested that line of thinking.
Number 2277
CHAIRMAN KOTT invited further discussion of Amendment 1.
REPRESENTATIVE ROKEBERG maintained his objection. He added that
his vote on this matter would have nothing to do with the merits of
the measure, but that he wanted to see a bill he was sponsoring
pass this session.
Upon a roll call vote, Representatives Croft and Kerttula voted in
favor of Amendment 1. Representatives Rokeberg, Kott and Murkowski
voted against it. [Representative Green was temporarily absent.]
Therefore, Amendment 1 failed by a vote of 3-2.
Number 2354
CHAIRMAN KOTT turned attention to medical necessity, the second
major topic.
Number 2366
REPRESENTATIVE ROKEBERG offered Amendment 2, which he said was the
AMA language with the proviso that the plan can set out a different
definition of "medical necessity." He explained that this
amendment would require that a plan define in its contract exactly
what it means by medical necessity or, by default, the AMA language
would apply. Amendment 2 [originally an amendment to Version N,
labeled 1-LS0472\N.2, Ford, 3/31/00] read:
Page 3, following line 18:
Insert a new paragraph to read:
"(1) a provision that defines "medical
necessity"; unless the plan sets out a different
definition, "medical necessity" shall be defined as
meaning those health care services or products that a
prudent physician would provide to a patient for the
purpose of preventing, diagnosing, or treating an
illness, injury, disease, or its symptoms in a manner
that is
(A) consistent with generally accepted
standards of medical practice;
(B) clinically appropriate in terms of
type, frequency, extent, site, and duration; and
(C) not primarily for the convenience of
the patient, physician, or other health care provider;"
Renumber the following paragraphs accordingly.
Page 4, line 10:
Delete "(6)"
Insert "(7)"
Number 2432
REPRESENTATIVE CROFT responded:
To say it means this unless you mean something different
avoids the central question that we have been trying to
get to a vote, which is if a plan covers a condition, but
they are trying to give you a treatment that your doctor
or you think is insufficient for that covered condition,
can you go beyond the scope of the contract to say, "This
is medically necessary"? "You want to treat me with
drugs. I say surgery is what I need. You're telling me
no, and I think for this covered condition . . . it is
medically necessary get this form of treatment."
He said the subcommittee had worked hard to get agreement on the
technical issues, and people deserve some kind of clear decision in
this area. However, [Amendment 2] is not a decision. It is still
trying to "word smith it."
REPRESENTATIVE CROFT made a motion to amend Amendment 2 by deleting
the phrase "unless the plan sets out a different definition."
CHAIRMAN KOTT announced a brief at-ease at 3:31 p.m.
TAPE 00-50, SIDE B
Number 0001
CHAIRMAN KOTT called the meeting back to order at 3:33 p.m.
REPRESENTATIVE ROKEBERG noted that there had been testimony in the
subcommittee that concerned the external review process, which has
both mandatory and discretionary conditions. He called attention
to page 9, line 2 [of Version S] as an example, and read, "The
external appeal agency shall include among the evidence to be taken
into consideration ...." He noted that it goes on to list
subparagraphs (A) through (D). Then on line 12, it says "the
external appeal agency may also take into consideration the
following evidence", followed by (A) through (I).
REPRESENTATIVE ROKEBERG said these are basically what defines
medical necessity. However, there is a distinction made between
the mandated "shall" and the discretionary "may," depending on the
circumstances. One problem in trying to come up with a statutory
definition of medical necessity is that each contract will be
somewhat different because the pricing and underwriting will be
different. One would have to underwrite to the "plain vanilla"
definition every time one made up a health care plan. One couldn't
have a menu of services in the plan unless one redefined medical
necessity at every step. That is what patient choice is all about.
That is also how to contain costs. That is why this is an argument
between the insurance companies and doctors. The patients are
caught in the middle. It is the legislature's responsibility to
protect the patients, but there is a dual goal of affordability and
quality care.
Number 0122
REPRESENTATIVE CROFT referred to page 8 [beginning on line 19 of
Version S], which read in part:
(d) An external appeal process must include at least the
following:
(1) a fair, de novo determination based on coverage
provided by the plan and by applying terms as defined in
the plan; however, nothing in this paragraph may be
construed as providing coverage of items and services for
which benefits are excluded under the plan or coverage;
REPRESENTATIVE CROFT said that is clearly limited to the plan. The
next section says, "An external appeal agency shall determine,"
based on the medical needs. That looks good, he said, but it says,
"and in accordance with the scope of the covered benefits in the
plan." Medical necessity beyond the scope of the contract is
"out," and he does not think that provision (H), which he
paraphrased as "may take into consideration evidence of the
community standard," provides authority to go beyond the scope of
the plan. He thinks it can be a rational public policy choice for
Representative Rokeberg to make, to stay within the plan, but it is
important to be clear about the choice being made.
REPRESENTATIVE CROFT noted that Version S says, "Only those covered
by the plan and only those treatments covered by the plan." Even
if there is a good argument that treatment which has been denied
was medically necessary for one's covered condition, someone would
not get it because it would say somewhere in there, "We don't do
tonsillectomies." Representative Croft said he is not criticizing
Representative Rokeberg's policy decision, but he cautioned not to
mischaracterize what Version S does, which is to "limit to the
plan." [Amendment 2] is a decision about whether to provide for
medical necessity beyond the scope of the plan.
Number 0216
REPRESENTATIVE ROKEBERG responded that Representative Croft was
making a good distinction about whether it is inside or outside of
the plan, and that is really the crux of the matter. Setting the
scope of the plan sets the underwriting criteria for the plan. He
said it only makes sense that one would be able "to have an
underwriting fence around it in order to have an actuarially sound
basis for rating it." If the external appeal agency could decide
to step outside the scope of the plan, there would have to have a
basis for it, in statute. The discretionary items in the bill
allow some "wiggle room," but he agrees that this bill says one
must stay within the plan. He characterized the AMA definition of
medical necessity as "we believe this is necessary and we don't
care what it costs." Representative Rokeberg said he thinks that
is the right attitude for a doctor to have in terms of what the
best care for the patient is. But, on the other hand, he thinks
one ought to take those costs into consideration, depending on what
type of malady it is.
Number 0299
REPRESENTATIVE KERTTULA summarized: "The bottom line is that
whatever we say is medical necessity is going to be the base line.
If we adopt that definition, that's the bottom. Plans can add or
detract, whatever they want to do, but if we [define] medical
necessity, that, at least, is going to be required."
REPRESENTATIVE ROKEBERG interjected that it depends on the
definition of medical necessity. Under the AMA definition,
anything goes. There is no limit on what could be charged.
REPRESENTATIVE KERTTULA continued, "But if we define it, that's
going to be the standard that is going to be used across the board
for everybody if we go outside the plan."
Number 0334
REPRESENTATIVE ROKEBERG concurred. He added that some language in
the AMA definition speaks to certain levels but does not mandate;
it is almost entirely discretionary. He said he could understand
that because doctors think of themselves as both scientists and
artists. "It's the art of the possible," he added. "This is why
this thing hasn't been satisfactorily resolved in any jurisdiction
in this country." He said he doesn't know if it is resolvable.
Number 0405
REPRESENTATIVE CROFT specified that his amendment to Amendment 2 is
on lines 3 and 4, to delete: "a provision that defines 'medical
necessity'; unless the plan sets out a different definition." What
would be left would be a paragraph beginning, "'Medical necessity'
shall be defines as ...."
Number 0425
CHAIRMAN KOTT noted that it deletes language up to the word
"definition" on line 4.
REPRESENTATIVE ROKEBERG announced that he had to leave for a House
Finance Committee meeting. He commented, "If you add anything to
it, the bill's dead, so I might as well go out and try to salvage
another one." In reply to Chairman Kott's question as to whether
he objects to the amendment to Amendment 2, Representative Rokeberg
affirmed that.
Upon a roll call vote, Representatives Murkowski, Croft, Kerttula,
Green and Kott voted in favor of the amendment to Amendment 2.
Representative Rokeberg voted against it. Therefore, the amendment
to Amendment 2 was adopted by a vote of 5-1.
CHAIRMAN KOTT brought attention back to Amendment 2, as amended.
Number 0504
REPRESENTATIVE CROFT said Amendment 2 is essentially the AMA
definition. It still seems to him that the Washington language
discussed in subcommittee "has more sideboards" and would be less
objectionable, and less likely to kill the bill, because it is
something that Washington insurers are somewhat grudgingly living
under, and a lot of companies operate in both Washington and
Alaska. Although it is somewhat weaker, he would prefer the
Washington language.
REPRESENTATIVE CROFT explained that he'd had to amend
Representative Rokeberg's amendment because he did not want it
standing. He suggested that the committee table Amendment 2 and
move the Washington language. He emphasized that he thinks there
has to be some definition of "medical necessity" outside of the
contract to make sure that medically necessary care is provided.
He restated his preference for the Washington language. In
response to Representative Green's question about how much of the
Washington language he wanted, he said he wanted the whole thing.
"If you delete that last sentence, I think you just took out the
heart of the matter again," he added.
Number 0552
REPRESENTATIVE CROFT made a motion to table Amendment 2. There
being no objection, it was so ordered.
Number 0568
REPRESENTATIVE CROFT made a motion to adopt Amendment 3, the so-
called Washington language, as follows:
The medical reviewers from a certified independent review
organization will make determinations regarding the
medical necessity or appropriateness of, and the
application of health plan coverage provisions to, health
care services for an enrollee. The medical reviewers'
determinations must be based upon their expert medical
judgment, after consideration of relevant medical,
scientific, and cost-effectiveness evidence, and medical
standards of practice in the state of Alaska. Except as
provided in this subsection, the certified independent
review organization must ensure that determinations are
consistent with the scope of covered benefits as outlined
in the medical coverage agreement. Medical reviewers may
override the health plan's medical necessity or
appropriateness standards if the standards are determined
upon review to be unreasonable or inconsistent with
sound, evidence-based medical practice.
REPRESENTATIVE CROFT pointed out that amendments may be needed to
make the language conform to HB 211. He said what he likes about
the Washington language over the AMA language is the last sentence
of the former. He added, "You almost start with the provision
language and then give the ability to break outside of it, but the
burden of proof is on you that it is unreasonable and you need to
step out."
Number 0611
REPRESENTATIVE GREEN wondered whether that might help soothe the
"opening wound" with Representative Rokeberg. He commented, "Part
of the objection he made, that last sentence kind of helps it back
in."
REPRESENTATIVE CROFT agreed. "It is language that is an at least
another jurisdiction," he observed, "and it is language that does
seem to have you say you start with the plan, and you have the
burden of proving why you need to go outside of it, rather than you
start with the plan plus a statutorily defined medical necessity."
Number 0657
CHAIRMAN KOTT restated Amendment 3.
REPRESENTATIVE MURKOWSKI objected for purposes of discussion. She
said she felt she had to take up Representative Rokeberg's banner
[in his absence], albeit reluctantly. Her concern focused on the
last sentence and the ability to override. She thinks that just
puts one back in that position without the cap or the sideboards,
"because you have a review process that's out there, and looking at
the standards on an unreasonable or inconsistent with sound
evidence-based medical practice, you could probably argue those
terms all day." Representative Murkowski said she likes this
language better than the AMA definition, and one reason is that it
talks about the cost effectiveness evidence. "It's better, but it
still does not give me the degree of comfort that I would like,"
she concluded. "I just haven't seen anything that is better than
this."
Number 0755
CHAIRMAN KOTT declared a brief at-ease, beginning at 3:50 p.m. The
meeting was called back to order at 4:08 p.m.
REPRESENTATIVE MURKOWSKI clarified that she had not withdrawn her
objection to Amendment 3.
Number 0791
REPRESENTATIVE KERTTULA stated that this is an incredibly difficult
issue, and "it is hard to figure out how to drive any kind of path
here."
Upon a roll call vote, Representatives Croft, Green, Kott and
Kerttula voted in favor of Amendment 3. Representative Murkowski
voted against it. Therefore, Amendment 3 was adopted by a vote of
4-1.
Number 0862
REPRESENTATIVE CROFT made a motion to move CSHB 211 [Version S], as
amended, from committee with individual recommendations and
attached zero fiscal note. There being no objection, CSHB 211(JUD)
was moved from the House Judiciary Standing Committee.
Number 0875
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 4:10 p.m.
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