Legislature(2001 - 2002)
04/26/2002 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 26, 2002
3:25 p.m.
MEMBERS PRESENT
Representative Lisa Murkowski, Chair
Representative Kevin Meyer
Representative Norman Rokeberg
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
Representative Andrew Halcro, Vice Chair
Representative Pete Kott
COMMITTEE CALENDAR
SENATE BILL NO. 354
"An Act relating to the prices paid by milk processing plants to
suppliers of fluid milk."
- MOVED SB 354 OUT OF COMMITTEE
CS FOR SENATE BILL NO. 274(L&C)
"An Act relating to issuance of a locum tenens permit for a
physician or osteopath; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 512
"An Act relating to cigarette sales; and providing for an
effective date."
- HEARD AND HELD
CONFIRMATION HEARINGS
Boards and Commissions
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: SB 354
SHORT TITLE:PRICES PAID BY MILK PROCESSING PLANTS
SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES
Jrn-Date Jrn-Page Action
03/27/02 2541 (S) READ THE FIRST TIME -
REFERRALS
03/27/02 2541 (S) RES
04/03/02 (S) RES AT 3:30 PM BUTROVICH 205
04/03/02 (S) Moved Out of Committee
04/03/02 (S) MINUTE(RES)
04/03/02 (S) MINUTE(RES)
04/04/02 2631 (S) RES RPT 3DP 1NR
04/04/02 2631 (S) DP: TORGERSON, HALFORD,
STEVENS;
04/04/02 2631 (S) NR: WILKEN
04/04/02 2631 (S) FN1: ZERO(DNR)
04/11/02 (S) RLS AT 10:30 AM FAHRENKAMP
203
04/11/02 (S) MINUTE(RLS)
04/12/02 2751 (S) RULES TO CALENDAR 2OR 4/12/02
04/12/02 2752 (S) READ THE SECOND TIME
04/12/02 2752 (S) ADVANCED TO THIRD READING
4/15 CALENDAR
04/15/02 2776 (S) READ THE THIRD TIME SB 354
04/15/02 2776 (S) PASSED Y14 N4 E1 A1
04/15/02 2776 (S) ELLIS NOTICE OF
RECONSIDERATION
04/16/02 2794 (S) RECONSIDERATION NOT TAKEN UP
04/16/02 2795 (S) TRANSMITTED TO (H)
04/16/02 2795 (S) VERSION: SB 354
04/17/02 2965 (H) READ THE FIRST TIME -
REFERRALS
04/17/02 2965 (H) L&C
04/26/02 (H) L&C AT 3:15 PM CAPITOL 17
BILL: SB 274
SHORT TITLE:PHYSICIANS' LOCUM TENENS PERMITS
SPONSOR(S): SENATOR(S) OLSON
Jrn-Date Jrn-Page Action
02/01/02 2090 (S) READ THE FIRST TIME -
REFERRALS
02/01/02 2090 (S) L&C
02/12/02 (S) L&C AT 1:30 PM BELTZ 211
02/12/02 (S) Heard & Held
02/12/02 (S) MINUTE(L&C)
02/28/02 (S) L&C AT 1:30 PM BELTZ 211
02/28/02 (S) Moved CS(L&C) Out of
Committee
02/28/02 (S) MINUTE(L&C)
03/01/02 2338 (S) L&C RPT CS 5DP SAME TITLE
03/01/02 2338 (S) DP: STEVENS, AUSTERMAN,
DAVIS, LEMAN,
03/01/02 2338 (S) TORGERSON
03/01/02 2338 (S) FN1: ZERO(CED)
04/10/02 2710 (S) RULES TO CALENDAR 4/10/02
04/10/02 2712 (S) READ THE SECOND TIME
04/10/02 2712 (S) L&C CS ADOPTED UNAN CONSENT
04/10/02 2712 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/10/02 2712 (S) READ THE THIRD TIME CSSB
274(L&C)
04/10/02 2713 (S) PASSED Y19 N- E1
04/10/02 2713 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/10/02 2718 (S) TRANSMITTED TO (H)
04/10/02 2718 (S) VERSION: CSSB 274(L&C)
04/10/02 (S) RLS AT 10:30 AM FAHRENKAMP
203
04/10/02 (S) MINUTE(RLS)
04/11/02 2877 (H) READ THE FIRST TIME -
REFERRALS
04/11/02 2877 (H) L&C
04/26/02 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 512
SHORT TITLE:UNFAIR CIGARETTE SALES
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
03/26/02 2684 (H) READ THE FIRST TIME -
REFERRALS
03/26/02 2684 (H) L&C, JUD, FIN
03/26/02 2684 (H) REFERRED TO LABOR & COMMERCE
04/26/02 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
JANEY WINEINGER, Staff
to Senator Lyda Green
Alaska State Legislature
Capitol Building, Room 125
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the sponsor of SB
354, Senator Green.
PETE FELLMAN, Staff
to Representative John Harris
Alaska State Legislature
Capitol Building, Room 513
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions relating to SB 354.
DONALD LINTELMAN
Northern Lights Dairy
HC 60 Box 3300
Delta Junction, Alaska 99737
POSITION STATEMENT: Testified, during discussion on SB 354,
that he doesn't necessarily support that a dairy farmer should
be compensated for the product that's higher in butterfat.
ROBERT WELLS, Director
Division of Agriculture
Department of Natural Resources
1800 Glenn Highway, Suite 12
Palmer, Alaska 99645-6736
POSITION STATEMENT: Indicated that Matanuska Maid was aware of
SB 354.
DAVE GRAHAM, Staff
to Senator Donald Olson
Alaska State Legislature
Capitol Building, Room 510
Juneau, Alaska 99801
POSITION STATEMENT: Presented CSSB 274(L&C) on behalf of the
sponsor, Senator Olson.
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Commerce & Economic Development
PO Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT: Related the Alaska State Medical Board's
concerns with CSSB 274(L&C) and answered questions.
ANNE HENRY, Special Projects Coordinator
Division of Mental Health & Developmental Disabilities
Department of Health & Social Services
PO Box 110620
Juneau, Alaska 99811-0620
POSITION STATEMENT: Urged the committee to maintain Section 3
of CSSB 274(L&C).
DR. HEAD, Chief of Staff
Norton Sound Health Corporation;
Alaska State Medical Board
550 West Seventh Ave., Suite 1500
Anchorage, AK 99501
POSITION STATEMENT: Related the Alaska State Medical Board's
thoughts on CSSB 274(L&C).
JIM JORDAN, Executive Director
Alaska State Medical Association
4107 Laurel Street
Anchorage, Alaska 99508
POSITION STATEMENT: During discussion of CSSB 274(L&C), related
ASMA's position.
DALE ANDERSON, Legislative Assistant
to the House Finance Committee
Alaska State Legislature
Capitol Building, Room
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 512 on behalf of the sponsor.
ACTION NARRATIVE
TAPE 02-66, SIDE A
Number 0001
CHAIR LISA MURKOWSKI called the House Labor and Commerce
Standing Committee meeting to order at 3:25 p.m.
Representatives Murkowski, Meyer, Rokeberg, and Crawford were
present at the call to order. Representative Hayes arrived as
the meeting was in progress.
SB 354-PRICES PAID BY MILK PROCESSING PLANTS
CHAR MURKOWSKI announced that the first order of business would
be SENATE BILL NO. 354, "An Act relating to the prices paid by
milk processing plants to suppliers of fluid milk."
Number 0079
JANEY WINEINGER, Staff to Senator Lyda Green, Alaska State
Legislature, explained the current situation for dairy farmers
in Alaska. If the fat content of a particular dairy farmer's
milk drops below the specified butterfat content, the dairy
farmer is penalized in the dairy's payment. If the fat content
of a particular dairy farmer's milk rises above the specified
butter fat content, the dairy farmer is not paid for that
increased butterfat. She informed the committee that in the
Lower 48, federal and state laws have devised a system of milk
marketing orders which guarantee the farmer gets a fair price
for the milk produced. Senate Bill 354 merely injects that same
fairness into the marketplace in Alaska by stipulating that if a
milk processor opts to penalize a dairy farmer for low fat
content, it also must reward those farmers with a high fat
content. Ms. Wineinger deferred any questions to Pete Fellman.
Number 0187
PETE FELLMAN, Staff to Representative John Harris, Alaska State
Legislature, added that this [proposed] statute isn't mandatory
and would only come into play if [the processor chose to
implement] a deduction.
CHAIR MURKOWSKI related her understanding that if a milk
processing plant pays a reduced price for low fat milk, then the
milk processing plant must pay a proportionately higher price
for the higher fat milk. However, if a milk processing plant
doesn't differentiate [in their prices] between high fat and low
fat milk, then the plant wouldn't be required to compensate for
milk with the higher fat content.
MR. FELLMAN agreed.
CHAIR MURKOWSKI pointed out that information in the bill packet
specifies that currently Matanuska Maid Dairy penalizes milk by
one-tenth of one percent [for each one-tenth of one percent in
butterfat content below 3.2 percent]. Therefore, under SB 354
Matanuska Maid Dairy would have to pay one-tenth of one percent
additional compensation over the set fee [for milk containing a
butter fat higher than 3.2].
MR. FELLMAN said that was correct. In further response to Chair
Murkowski, Mr. Fellman explained that in the Lower 48 there are
milk marketing orders and federal standards. Individual
producers come together and set the standard according to their
area. Therefore, the producers negotiate with the processor in
developing a standard and thus the standard can vary from region
to region. Since the federal government has recognized value in
protein, fat, and high quality milk, the federal government has
seen fit to reward the dairy farmers with milk marketing orders
that recognize the dairy farmers' efforts to manage their milk
in a better fashion. Mr. Fellman, in further response to Chair
Murkowski, confirmed that the milk marketing orders do allow for
additional compensation for milk with high butterfat content.
CHAIR MURKOWSKI pointed out that Matanuska Maid's butterfat plan
has been in effect since October 1, 1985. Therefore, she
questioned why, after 17 years, this legislation is being
offered now.
MR. FELLMAN related that some dairy farmers received letters
from Matanuska Maid saying that their prices were going to be
reduced if their butterfat didn't increase. Although this
butterfat plan has been in effect, he said he wasn't sure that
the issue has come up in the past.
CHAIR MURKOWSKI surmised then that Matanuska Maid hasn't
necessarily been penalizing the milk producers, although there
is a butterfat plan in effect.
MR. FELLMAN said that he didn't know, although he did know that
the processor has penalized dairy farmers for quality milk, milk
with high bacteria counts. However, the processor pays for
higher quality milk. Such a situation is acceptable to dairy
farmers. The butterfat count is a similar situation, and
therefore if there are going to be penalties for low butterfat
counts, then there should be some compensation when high
butterfat counts are produced.
Number 0681
REPRESENTATIVE ROKEBERG inquired as to the number of dairy
farmers and processors in Alaska.
MR. FELLMAN answered that there are two processors: Northern
Lights Dairy and Matanuska Maid. There are three dairies in the
north and about five to six dairies in the Palmer area. In
further response to Representative Rokeberg, Mr. Fellman stated
that Matanuska Maid hasn't testified on SB 354, although
Matanuska Maid is aware of this legislation.
REPRESENTATIVE ROKEBERG turned to the standard used at Matanuska
Maid and inquired as to why the 3.25 butterfat threshold in the
legislation was chosen.
MR. FELLMAN replied that the 3.25 butterfat content is the
federal standard. In the Lower 48 the milk marketing order sets
the standard. However, the processors in the State of Alaska
[currently] set the standard.
REPRESENTATIVE ROKEBERG inquired as to how often the milk is
tested.
MR. FELLMAN responded that every tank of milk picked up from the
farm is tested for butterfat and bacteria content. In further
response to Representative Rokeberg, Mr. Fellman emphasized that
the tests, which look at butterfat, protein, water, and solid
non-fat, are very accurate.
CHAIR MURKOWSKI pointed out that failing to comply with this
legislation falls under Title 45, the Unfair Trade Practices
Act. She highlighted that failing to comply results in a
penalty of not more than $25,000 per violation, which she viewed
as high. There is also a civil penalty of not more than $5,000.
Number 1062
DONALD LINTELMAN, Northern Lights Dairy, testified via
teleconference. Mr. Lintelman explained that so much [low
butterfat milk was produced] that the Northern Lights Dairy
couldn't produce whole milk due to the lack of cream.
Therefore, the dairy began to penalize the farmers for [low
butterfat contents]. The [low butterfat contents] continued for
a number of months, which resulted in the dairy purchasing
Jersey cows in order [to produce whole milk]. He noted that
this year [the butterfat content] is higher because the farmers
are feeding the cows more hay than grain. Mr. Lintelman
informed the committee that the dairy is paying "$19.00 a
hundred" for this test. He explained that when there is extra
cream, it has to be pasteurized, boxed, and frozen before being
shipped to Matanuska Maid. The Northern Lights Dairy doesn't
need milk with a butterfat higher than 3.25. If SB 354 is
passed and pressure increases on the Northern Lights Dairy, then
it may stop picking up milk from [farms that produce high
butterfat] and thus their milk will have to be sent to Matanuska
Maid.
CHAIR MURKOWSKI surmised that Mr. Lintelman doesn't necessarily
support that a dairy farmer should be compensated for the
product that's high in butterfat.
MR. LINTELMAN replied, "That is true." In further response to
Chair Murkowski, Mr. Lintelman specified that in the past the
Northern Lights Dairy has penalized farmers for a lower
butterfat content. However, penalties haven't been issued since
the tests have shown the [butterfat content to be high enough]
for the dairy to make whole milk.
CHAIR MURKOWSKI explained that under SB 354 so long as the milk
processing plant isn't penalizing the dairy farmers for the
lower butterfat content, the plant doesn't have to compensate
the dairy farmers for the higher butterfat content.
MR. LINTELMAN stressed, "If we were going to penalize them, we'd
have to go less than $19 a hundred. We're paying $19 a hundred
for 3.25 [percent butterfat]." He said that the plant doesn't
pay for butterfat contents higher than 3.25 because the milk
samples vary from day to day. Mr. Lintelman stated that he
didn't want to get into a hassle with this. Therefore, it might
be better for Northern Lights Dairy to drop the two dairy farms
and merely deal with its own milk. He related that he doesn't
have the time or labor to deal with this.
MR. LINTELMAN, in further response to Chair Murkowski, specified
that the milk at the Northern Lights Dairy is tested on average
about twice a week.
Number 1338
REPRESENTATIVE MEYER related his understanding that different
types of cows produce different quality milk.
MR. LINTELMAN agreed that the Jerseys and Brown Swiss may
produce more cream than the Holstein. In further response to
Representative Meyer, Mr. Lintelman informed the committee that
in the Delta Junction area the dairy farmers mainly have
Holstein cows.
Number 1366
ROBERT WELLS, Director, Division of Agriculture, Department of
Natural Resources, testifing via teleconference, announced that
he was available to answer questions. In response to Chair
Murkowski, Mr. Wells explained that he doesn't have a direct
connection with Matanuska Maid, which has a creamery corporation
board of seven members that are appointed by the Board of
Agriculture. However, Mr. Wells said he was sure that the
chairman of [the creamery corporation] is aware of SB 354. Mr.
Wells related that he had spoken with the chairman this morning
and the chairman had said he had forwarded some correspondence
[to the committee].
CHAIR MURKOWSKI remarked that she understood that Mr. Wells was
affiliated with Matanuska Maid.
MR. WELLS explained that although Matanuska Maid is an asset of
the Agricultural Revolving Loan Fund, the day-to-day decisions
are made by Matanuska Maid's manager in Anchorage. The manager
is responsible to the creamery corporation board.
CHAIR MURKOWSKI noted that the committee did receive information
from Matanuska Maid regarding how the quality bonus programs
work.
Number 1469
REPRESENTATIVE CRAWFORD inquired as to how the milk industry is
fairing in Alaska. He also inquired as to whether SB 354 would
endanger what's left of the milk industry.
MR. WELLS informed the committee that there has actually been a
rebound in the milk industry in the last 12-18 months because of
the disposals at Point McKenzie. The largest dairy is currently
milking 300 cows and will soon be milking 350 cows. The average
of the other dairies is between 60-140 cows. In the Matanuska
Susitna Valley there are now eight operating dairies. Mr. Wells
commented that it's a challenge for both the producers, dairy
farmers, and processors because of the vertical integration and
current marketplace as well as the competitive pricing.
However, Alaskans do support Alaskan grown products because of
the freshness and quality.
REPRESENTATIVE CRAWFORD expressed concern that if Alaska loses
its milk industry, milk prices would increase due to the lack of
competition. Therefore, Representative Crawford said that he
didn't want to do anything to jeopardize Alaska's milk industry.
MR. WELLS remarked that Representative Crawford has a very
legitimate concern, especially after the September 11, 2002,
tragedy which illustrated how supply lines can be interrupted.
He pointed out that at any given moment, there is only a few
weeks worth of groceries in the state. Mr. Wells highlighted
the unique situation of the Division of Agriculture in that it
supports the dairy farmers while being involved in the ownership
of Matanuska Maid. He expressed the need to be careful with any
legislation that would impact pricing and place [Alaska's
dairies] in a noncompetitive position.
Number 1630
CHAIR MURKOWSKI reiterated her understanding that Matanuska
Maid's penalty with regard to milk with a butterfat content
lower than 3.2 percent hasn't been enforced. She inquired as to
Mr. Wells' knowledge of the situation.
MR. WELLS said that was his understanding as well. He
characterized the letters sent to the dairy farmers as a warning
that if the plant continued to receive milk [with a butterfat
content less than 3.2 percent], action would have to be taken.
CHAIR MURKOWSKI turned to Mr. Lintelman's testimony regarding
the fact that certain cows produce milk with low butterfat
content.
MR. WELLS said that the predominant dairy breed is the Holstein,
which doesn't produce as high a butterfat content as other
breeds. However, with good feed rations and good care, the
Holstein breed is able to provide the minimal butterfat content.
Still, Mr. Wells recognized the situation in which the lack of
butterfat can lead to a dairy's inability to produce whole milk.
MR. FELLMAN interjected that a Holstein is able to produce over
4 percent butterfat content. He informed the committee that as
a cow goes into lactation, it generally produces a higher volume
of milk with a lower volume of butterfat. As the cow's milk
production decreases and lactation progresses, the volume of
milk decreases while the butterfat content generally increases.
He explained that dairy farmers in the Lower 48 under the milk
marketing orders understand that they will receive less money
for their milk by the hundred weight, but they will produce more
milk per cow. Therefore, as the milk production decreases, the
butterfat increases as does the milk price and thus balances out
those cows that aren't producing during the peak of their
lactation. At this point, the issue of pricing and fairness
comes into play.
Number 1880
REPRESENTATIVE MEYER related his understanding that the Holstein
breed produces higher volumes of milk, although there may be
lower butterfat contents. He recalled the testimony that grain
versus hay impacts the butterfat content of the milk. However,
the cost of the food has to be factored in the equation. The
additional cost of the food producing higher fat contents may
result in the higher milk price, he suspected. He asked if
there are some federal subsidies to dairy farmers.
MR. FELLMAN addressed the issue of subsidies. He explained that
in the Lower 48 there is the CCC tax, which is money that is
taken out of the milk check and placed into a fund that is used
for subsidies during feed shortages. He pointed out that most
subsidies revolve around grain production. In the State of
Alaska there is no subsidy for any milk.
REPRESENTATIVE MEYER inquired as to why there are no subsidies
for milk in Alaska. He recalled hearing that some dairy farmers
were being paid to not produce as much milk as normal.
MR. FELLMAN explained that although the State of Alaska isn't
involved in any dairy subsidies, one can apply for insurance
during a feed shortage. The aforementioned is a federal
program. In order to qualify for that insurance, one must make
a payment to the [Farm Service Agency]
FSA. In further response to Representative Meyer, Mr. Fellman
reiterated that the level of fat can be impacted by the type of
grain or hay a cow is fed. However, at certain times of the
year, a cow will produce higher or lower fat depending upon the
cycle of lactation.
REPRESENTATIVE MEYER asked whether a bill such as SB 354 is
necessary or will the market take care of it.
MR. FELLMAN noted that in most cases it costs more to produce
higher fat milk, although there is currently no compensation for
that higher fat milk. Mr. Fellman related his belief that if
one can be penalized for low fat milk, one should be able to
receive similar compensation for [high fat milk].
Number 2258
CHAIR MURKOWSKI, determining there was no one else who wished to
testify, closed public testimony on SB 354.
REPRESENTATIVE MEYER remarked that with as few dairy farmers as
Alaska has he didn't foresee too much impact regardless of
whether SB 354 passes or not.
REPRESENTATIVE ROKEBERG expressed concern with the
"proportionately higher price" definition. He pointed out that
there isn't a cap on [the butterfat content] when it's on the
high side and asked if there should be a cap.
TAPE 02-66, SIDE B
CHAIR MURKOWSKI agreed that the definition was odd. However,
she expressed the need to keep in mind that this provision goes
into effect only if the processing plant charges a penalty for
the lower fat. Chair Murkowski pointed out that the testimony
doesn't sound as if anyone is being assessed the penalties.
REPRESENTATIVE CRAWFORD related his understanding that the
testimony sounded like these penalties were assessed 18 months
ago [at the Northern Lights Dairy], and these penalties seemed
to be a good incentive for the dairy farmers to increase the
butterfat content. [Mr. Lintelman] says that he doesn't use the
excess butterfat when the content is higher and thus he doesn't
have any way in which to market that butterfat. Representative
Crawford said he wished that Matanuska Maid would've weighed in
on this matter so that the committee would know what it does
with the excess butterfat milk.
MS. WINEINGER related her belief that Matanuska Maid operates
completely differently than the Northern Lights Dairy. She
explained that Matanuska Maid implements a penalty for [low]
butterfat content and pays extra for [high] butterfat content
because she believes that Matanuska Maid fully utilizes that
butterfat whereas the Northern Lights Dairy doesn't have a need
for that [high butterfat] cream.
CHAIR MURKOWSKI surmised that Ms. Wineinger was saying that were
SB 354 adopted, it wouldn't have much impact on Matanuska Maid
because this is already the current practice.
MS. WINEINGER deferred to Mr. Fellman.
MR. FELLMAN disagreed with [Ms. Wineinger's] statements. Mr.
Fellman specified that although Matanuska Maid assesses
penalties, to his knowledge Matanuska Maid hasn't taken any
money from milk checks. However, Matanuska Maid has indicated
the intention to deduct money from the milk checks if the milk
fat doesn't increase. Mr. Fellman further specified that
Matanuska Maid does not pay for the additional fat.
REPRESENTATIVE ROKEBERG noted his concern with Mr. Lintelman's
comments that he would stop picking up milk from the local
dairies if he is forced to pay for the high butterfat content.
However, Representative Rokeberg said he understood the bill not
to make Mr. Lintelman have to [pay for the high butterfat
content].
MR. FELLMAN reiterated that if there is no penalty assessed,
then there is no requirement to pay extra.
Number 2081
REPRESENTATIVE MEYER moved to report SB 354 out of committee
with individual recommendations and the accompanying zero fiscal
note. There being no objection, SB 354 was reported from the
House Labor and Commerce Standing Committee.
SB 274-PHYSICIANS' LOCUM TENENS PERMITS
CHAIR MURKOWSKI announced that the next order of business would
be CS FOR SENATE BILL NO. 274(L&C), "An Act relating to issuance
of a locum tenens permit for a physician or osteopath; and
providing for an effective date."
Number 2022
DAVE GRAHAM, Staff to Senator Donald Olson, Alaska State
Legislature, presented CSSB 274(L&C) on behalf of the sponsor,
Senator Olson. Mr. Graham informed the committee that Senator
Olson introduced SB 274 at the request of the Alaska State
Medical Association (ASMA) in order to expand the locum tenens
permit to allow [state licensed] physicians to bring in a
physician to take over a practice while the state licensed
physician is out. The ASMA would like to expand the definition
such that physicians could be invited to observe and practice
for short periods of time in order to determine whether the
physician wanted to employ the invited physician. Testimony
during the Senate Labor & Commerce Standing Committee revealed
that hospitals would [like this expansion as well], particularly
from state mental health institutions that are having
difficulties filling slots with licensed physicians. The locum
tenens is viewed as a way in which to be more flexible in
staffing and attracting physicians to permanent employment. Mr.
Graham pointed out that the main reason ASMA brings this
legislation forward is because the physicians in the state are
getting older and thus will ultimately need to be replaced. The
average age of an Alaskan physician is 51. He related that
Senator Olson views this legislation as benefiting the delivery
of health services.
Number 1872
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce & Economic Development (DCED), related
that although the Alaska State Medical Board was able to obtain
75 percent consensus on SB 274, the board still has some
concerns with the legislation. She indicated that two members
of the board are on-line and can speak to the board's concerns.
She informed the committee that the board would prefer that the
legislation refer to 180 calendar days rather than 240 calendar
days during which an individual could hold a locum tenens permit
during any consecutive 24 months. Under CSSB 274(L&C) the locum
tenens permits are initially valid for 90 days and under one
circumstance can be extended another 60 days. Therefore,
allowing one to hold a locum tenens permit for 180 days would
allow one to hold two locum tenens permits or one with a 60-day
extension. However, the current language of the bill allows two
90-day locum tenens permits of which one can be extended by 60
days. Ms. Reardon pointed out that the condition for extension
is when one has submitted an application for permanent
licensure; the board would like to encourage people to obtain
the permanent licenses.
MS. REARDON informed the committee that the board also requests
that Section 3 of CSSB 274(L&C) be deleted because the board
doesn't believe there should be any situations in which locum
tenens permits should be extended indefinitely or pass the
limitations established in Section 2. Section 3 allows the
board to extend a locum tenens permit beyond the specified time
limits if it's determined that the extension is necessary "to
provide essential medical services for the protection of public
health and safety."
MS. REARDON directed attention to page 2, line 9, and noted the
preference for the term "packet" rather than "form" because the
board wants to ensure that all the necessary paperwork is
completed. The board felt that the word "form" could be
construed to mean the first ten pages of the packet. However,
there is no intention to require a completed application, she
said. She noted that the board is also concerned with the
protection of public health and safety and thus wants to ensure
that all physicians practicing in the state have been fully
investigated. Hospitals and the [Department] of Health & Social
Services are concerned with the public health and safety risk
created by a vacancy in a needed area of service.
Number 1589
REPRESENTATIVE CRAWFORD inquired as to who these locum tenens
physicians would be and their general qualifications.
MS. REARDON answered that some of the locum tenens physicians
may be newer physicians while others may be long-time physicians
who choose to move around the country serving in a temporary
capacity. She related her belief that there are organizations
that match physicians with positions that need to be filled.
Number 1589
REPRESENTATIVE CRAWFORD inquired as to how the pay of the locum
tenens physicians compares to that of local physicians.
MS. REARDON said that she didn't have an answer. However, she
related that hospitals and facilities have expressed a
preference for permanent full-time physicians over juggling
locum tenens. She further related that locum tenens physicians
are usually more expensive [than permanent full-time physicians]
because of the expense of getting the locum tenens physician to
the area and housing him/her.
CHAIR MURKOWSKI directed attention to page 2, line 6, and
related her belief that a permit "shall" be extended for 60 days
with completion of the packet. She asked whether there would be
any other reason that would result in not granting an extension.
If there are grounds for the board not to extend the permit,
Chair Murkowski wanted the board to have the authority not to
extend the permit.
MS. REARDON agreed that the language reads as if the extension
is automatic. Therefore, she surmised that the permit would be
extended and any problems would be addressed with the person as
a licensee. She suspected that the board could probably
[impose] a summary suspension if the risk [the locum tenens
physician] posed to public health and safety was sufficient to
do so. For clear and immediate danger to public health and
safety, statute specifies that licenses can be summarily
suspended and the person must receive a hearing within seven
days.
CHAIR MURKOWSKI related that changing the language from "shall"
to "may" appears to provide the option of rejecting an
applicant. However, she questioned whether the application
process for a locum tenens physician is different than that for
a licensee.
MS. REARDON asked to review the statute while testimony
continued.
Number 1321
ANNE HENRY, Special Projects Coordinator, Division of Mental
Health & Developmental Disabilities, Department of Health &
Social Services (DHSS), informed the committee that the
department worked with [the interested parties] in order to find
some comfort with this legislation. However, the board still
isn't comfortable with the legislation. Ms. Henry noted
appreciation for the clarification in Section 1, which speaks to
temporarily employed folks. Areas throughout the state have
difficulties obtaining psychiatrists to come and work.
Furthermore, there is great difficulty with recruiting in the
Alaska Psychiatric Institute (API). Because of the turnover,
the ability to [grant extensions] is a critical piece for the
department. If there is a language change in Section 2, Ms.
Henry expressed the need for the 60-day extension to continue.
CHAIR MURKOWSKI turned to Ms. Reardon's suggestion of reducing
the validity of permits and extensions to 180 [calendar] days.
MS. HENRY related her belief that [the department] would be very
upset with such a change. Ms. Henry then urged the committee to
maintain Section 3 in the bill because the business of health is
so unpredictable that [the department] would like for the board
to have the discretion provided in Section 3.
Number 1154
DR. HEAD, Chief of Staff, Norton Sound Health Corporation;
Alaska State Medical Board, testified via teleconference. He
related that the state medical board has discussed this proposed
law at length. He said he thought [CSSB 274(L&C)] embodies
necessary modifications in the current locum tenens language.
Furthermore, he liked that the legislation allows locum tenens
for various reasons. Since the board is charged with
protecting the public and the patients, that's why some of the
modifications were [desired]. Dr. Head said he understood Ms.
Henry's concern with regard to the requested change for permits
and extensions for locum tenens physicians to only be valid 180
calendar days rather than 240 calendar days because of her wish
to have coverage for facilities across the state. However, Dr.
Head charged that the coverage can be maintained under the
legislation while also protecting the public. He pointed out
that if a locum tenens physician is in a location for 90 days
and there is the need for the locum tenens physician to fill the
position for a longer period, then the physician would merely
have to complete a full application for permanent licensure.
Therefore, another 60-day extension could be granted and the
locum tenens physician could go through the same scrutiny as
every active full-time license holder in the state. Dr. Head
said that the board believes that [coverage] can be accomplished
by encouraging an active full-time license. The Norton Sound
Health Corporation hires locum tenens physicians fairly
frequently and each one of them has elected to obtain an active
full license. Dr. Head expressed concern that if physicians are
allowed to work indefinitely under locum tenens licenses, then
the state may become a magnet attracting physicians seeking a
lax system in which their past isn't completely scrutinized.
Alaska doesn't want to become a location for questionable
practitioners, he said. Dr. Head remarked that [the board]
wants to maintain control in an effort to protect the public
while being able to fulfill the needs of the state.
Number 0967
REPRESENTATIVE ROKEBERG related that he read Section 2 to allow
an extension of up to 240 days. The new language would only
seem to apply when one applies for permanent licensure.
Therefore, he surmised that there must currently be a method to
obtain an extension beyond the 60 days.
DR. HEAD agreed that the current law does allow for [a locum
tenens permit to be held for up to] 240 days. However, the
[board] is requesting that be changed to 180 days within a 24
consecutive month period, which allows for two 90-day periods.
The language specified 180 days because [the board] was told
that many locum tenens physicians do come up and cover clinics
for three months each summer, and therefore 180 days in a two-
year period allow that to continue under a locum tenens permit.
Number 0882
CHAIR MURKOWSKI turned to the existing statutes, which specify
that a permit is valid for 60 consecutive days and if
circumstances warrant an extension may be granted and extensions
can't exceed 240 days. Therefore, she understood Dr. Head to be
proposing a reduction in the extension to 180 days as well as
not allowing for any extenuating circumstances beyond the 180
days. Such tightening moves in the opposite direction of the
bill sponsor's [intent].
DR. HEAD agreed. Dr. Head pointed out that the current statute
reads such that [locum tenens permits and extensions] could
continue indefinitely if, as specified under Section 3, there is
a determination [that the extension] is necessary for essential
services for the protection of public health and safety. He
emphasized that [the board] does want to take into account
public health and safety, which is why there is the desire to
maintain as much scrutiny as possible. Therefore, [the board]
is saying that in order for a person to work longer than [180
days], the person should have to obtain an active full-time
license and go through a background check. Therefore, those
physicians that are afraid of the background check won't
maintain a license in the state and will go elsewhere. Under
the current statute, a physician practicing in an essential
health care shortage area could practice indefinitely on a locum
tenens physician license and never subject themselves to the
scrutiny of their past practices.
REPRESENTATIVE ROKEBERG asked whether [in such a situation] the
board would intercede.
DR. HEAD said that the board has no way of interceding. The
board isn't given the right to investigate, to the degree such
is done for active full-time licenses, a locum tenens
physician's past unless he/she has applied for an active full-
time license.
Number 0693
CHAIR MURKOWSKI inquired as to how long it takes to become
licensed, the cost, and the difference between background checks
for locum tenens versus [an active full-time physician].
MS. REARDON said that generally it takes about two months to
submit all of the information for a complete application. Once
everything is received and the applicant's answers and documents
don't create cause for investigation, the executive
administrator can issue a temporary license allowing the
applicant to practice until the board meets and makes the final
decision. However, the amount of time [to achieve a complete
application] is dependent upon third parties, such as hospital
verification, that the division nor the applicant can control.
CHAIR MURKOWSKI posed a situation in which a physician
practicing under a locum tenens permit reaches 240 days and
decides to stay. That locum tenens physician would need to
submit an application for full licensure. In such a situation,
she asked whether the locum tenens physician could receive a
permit to stay and practice until licensure is obtained or is
there a window when this physician would be "out of luck."
MS. REARDON answered that there could be a window when the
physician would be out of luck; it's dependent upon how long the
locum tenens physician waited to start the permanent licensure
process. The temporary licenses can only be issued if all the
documents from the outside organizations are in; without those
documents the locum tenens physician with 240 days would have to
stop practicing until the documents come in.
CHAIR MURKOWSKI specified that she is trying to understand the
reason for Section 3. She surmised that a locum tenens
physician that is a general practitioner would have an avenue
allowing practice between the extensions granted and her ability
to obtain full licensure.
MS. REARDON replied no. In response to an earlier question
regarding the fees, Ms. Reardon informed the committee that the
locum tenens fee and application form is a $150 nonrefundable
application fee and $200 permit fee. The permanent license has
a fee of $250 nonrefundable application fee and a $590 license
fee for a two-year license.
MS. REARDON then returned to an earlier question regarding the
"shall" language on page 2, line 6. Ms. Reardon opined that
changing "shall" to "may" would allow denial of the extension.
The specific denial authority can be found in AS 08.64.240.
References to license are treated as including permits. The
aforementioned statute specifies the reasons for which an
extension could be denied. Ms. Reardon surmised that the board
would specify that under certain circumstances, the permit would
be extended while under other circumstances the full board or
individual board member would make the decision. She suggested
that the language could read as follows: "shall be extended
unless it is denied for one of the reasons in AS 08.64.240."
TAPE 02-67, SIDE A
Number 0001
JIM JORDAN, Executive Director, Alaska State Medical
Association, testified via teleconference. He informed the
committee that ASMA's main interest in SB 274 lies in Section 1,
which expands the uses of locum tenens permits for the purpose
of evaluation of a physician for full-time employment. This
legislation takes care of an unfair situation that currently
exists. Currently, on a de facto basis large group practices
are able to use locum tenens permittees as substitutes for one
of the many physicians in the practice and review those
physicians for potential employment. That option isn't
available to the sole practitioner of a small practice.
CHAIR MURKOWSKI inquired as to ASMA's position on Section 3,
which allows an indefinite extension when the board determines
that it's medically necessary to protect public health and
safety.
MR. JORDAN indicated that ASMA hasn't specifically reviewed [or
taken a position on] Section 3. However, the obvious concern is
that there are certain medical specialties that are difficult to
find, such as pathologists and radiologists. He related his
belief that it might be important to have continuity, especially
in a situation in which it takes longer than 180 days to find a
specialist, such as a pathologist, to hire permanently.
Therefore, it may be more advantageous to have the consistency
of the [locum tenens pathologist] while hiring for a permanent
pathologist.
Number 0242
REPRESENTATIVE ROKEBERG pointed out that Section 1 deletes the
60-day validity. He said he wasn't sure that there shouldn't be
a cap on the timeframe, and therefore he asked if Mr. Jordan had
a suggestion.
MR. JORDAN related his understanding that Representative
Rokeberg was asking whether the 60-day period should apply to
the locum tenens employees that are present for the sake of
being scrutinized for employment. Mr. Jordan said that 60 days
should be a sufficient timeframe in which to evaluate for
employment purposes. Mr. Jordan explained that under the
current construction of SB 274 the locum tenens permit, whether
for the purpose of substituting for an absent physician or for
scrutinizing the physician for future employment, would last 90
days along with the other extensions specified.
REPRESENTATIVE ROKEBERG said that seems reasonable, although he
said he wasn't sure the statute would read that way.
Representative Rokeberg pointed out that the committee packet
includes a letter from ASMA specifying that ASMA supports a
locum tenens permit being extended beyond 240 days for the
purpose of substituting for a physician or a specific specialty
that's otherwise unavailable in that location.
MR. JORDAN said, "I stand corrected."
REPRESENTATIVE ROKEBERG asked if the level of review should be
raised [for an extension beyond 240 days].
MR. JORDAN responded that such would seem fair to him. In
further response to Representative Rokeberg, Mr. Jordan
confirmed that ASMA supports permits and extensions of 240 days
rather than the board's suggested 180 days.
Number 0492
MS. REARDON returned to the earlier question regarding the
difference between the application documents for locum tenens
permittees and those seeking permanent licensure. The locum
tenens application doesn't require the verification privileges
from all the hospitals in which the applicant has held
privileges in the five years preceding the application in
Alaska. The American Medical Association (AMA) profile and the
National Practitioner Database Report aren't required for the
locum tenens application. However, the locum tenens applicants
must have a clearance report from the Federation of State
Medical Boards databank. The aforementioned are the most
significant differences in the application. The type of
verification of post graduate training is also different.
MS. REARDON noted that one must submit quite a few items for the
locum tenens permit, such as verifications from all the states
in which the individual was ever licensed. However, if an
applicant didn't inform the division of one of the states in
which the applicant was licensed, the division might be able to
find out from the AMA profile. Furthermore, the Federation of
State Medical Boards Disciplinary Database should show
disciplinary action in other states.
CHAIR MURKOWSKI asked if any consideration had been given with
regard to the possibility of doing additional background checks
in order to accommodate the indefinite extensions.
MS. REARDON replied no and explained that it probably wasn't
considered because one is fairly close [to having all the
documents for a permanent position] when the locum tenens permit
is obtained.
REPRESENTATIVE ROKEBERG inquired as to how the databanks are
used.
MS. REARDON explained that [an applicant] completes and submits
a request for physician profile form, which is ultimately sent
to the division. In further response to Representative
Rokeberg, Ms. Reardon specified that filing the form costs $20
and is paid directly to ASMA. The National Practitioner
Databank Report is requested by the division on-line.
REPRESENTATIVE ROKEBERG asked if [the National Practitioner
Databank Report] could be added to Section 3. With regard to
"the board or its designee" determining the extension,
Representative Rokeberg asked who its designee would be.
MS. REARDON clarified that the board has an executive
administrator, an employee of the Division of Occupational
Licensing, who it generally designates. In some cases, the
board has designated that an individual board member has
designated an individual to do things.
REPRESENTATIVE ROKEBERG pointed out that Section 1(a) specifies,
"A member of the board or its executive secretary may grant a
temporary permit".
MS. REARDON said that the board has never designated someone
beyond an individual board member or a division employee. Ms.
Reardon confirmed that there is personnel in place to do the
verifications.
REPRESENTATIVE ROKEBERG surmised that any adjustment to the fee
schedule could be done by regulation.
MS. REARDON related that the concerns of the division aren't
related to the fee schedules.
Number 0918
REPRESENTATIVE ROKEBERG directed attention to Section 1 and
inquired as to why the 60-day language was deleted. He inquired
as to the default.
MS. REARDON answered that the locum tenens permit is valid for
90 days. She explained that this was a reorganization of the
language so that the purposes and the length could be separated.
In further response to Representative Rokeberg, Ms. Reardon said
that the 240-day timeframe is in current statute. She explained
that when there is a request for an extension, the extension is
for the requested time up to 60 days.
REPRESENTATIVE ROKEBERG inquired as to the term of art that
would be used were the committee to amend Section 3 to include
the two other databanks.
MS. REARDON National Practitioner Databank and the American
Medical Association of Osteopathic Association.
CHAIR MURKOWSKI expressed the desire to review the "shall"
language in Section 2. Therefore, Chair Murkowski announced
that CSSB 274(L&C) would be held.
REPRESENTATIVE ROKEBERG asked if Senator Olson would have any
difficulties with the committee adding the two databanks in
Section 3.
MR. GRAHAM answered that he didn't believe Senator Olson would
have a problem.
[CSSB 274(L&C) was held over.]
HB 512-UNFAIR CIGARETTE SALES
CHAIR MURKOWSKI announced that the final order of business would
be HOUSE BILL NO. 512, "An Act relating to cigarette sales; and
providing for an effective date."
Number 1206
REPRESENTATIVE ROKEBERG moved to adopt CSHB 512, Version 22-
LS1646\F, Ford, 4/26/02, as the working document. There being
no objection, Version F was before the committee.
DALE ANDERSON, Legislative Assistant to the House Finance
Committee, Alaska State Legislature, testified on behalf of the
sponsor of HB 512, the House Finance Committee. Mr. Anderson
provided the following testimony:
This CS came as a collaborative effort between
industry and the Department of Revenue and ... our
drafters. House Bill 512 was introduced to start a
discussion on the effects on business practices that,
to some, have been looked upon as unfair and
predatory. House Bill 512 encourages fair and honest
competition and safeguards the public against unfair,
dishonest, and fraudulent business practices existing
in transactions involving the sale of cigarettes in
the wholesale and retail trades in the state. The
bill creates a general trade practice regulation
prohibiting sales below cost. The law considers the
practice of selling below cost to attract patronage in
the form of deceptive advertising, which diverts
businesses from dealers who maintain a fair pricing
policy [and] ultimately [results] in lessened
competition and market disruption. The basic purpose
of [HB] 512 is to prevent predatory pricing and ensure
that fair competition among both the retail and
wholesale distributors of cigarettes in the state. It
is difficult for us to sort out the intricacies of the
tobacco business so we've asked several people that
are on-line now to help us with the discussion.
Number 1309
CHAIR MURKOWSKI inquired as to what has brought about HB 512.
Does Alaska have a problem with predatory pricing and cigarettes
being used as a loss leader, she asked.
MR. ANDERSON said that is what has been told. The CS clarifies
the intent of the statute. Furthermore, Section 1 [of Version
F] broadens the language to refer to all sales [of cigarettes]
by licensed sellers in the state. [The CS] also addresses
enforcement issues that were of concern to the department. Mr.
Anderson pointed out that [Version F] changes the percentage of
sales from two percent to four percent. One of the large issues
that is addressed by the fiscal note is the cost survey issues.
With the changes encompassed in Version F, Mr. Anderson said he
believes there will be significant changes in the fiscal note.
MR. ANDERSON, in response to Chair Murkowski, specified that
Title 43 deals with business practices.
REPRESENTATIVE MEYER recalled that at one point retailers were
paid to place [cigarettes] on prime shelf space. Representative
Meyer asked if that is still the case and what this legislation
attempts to balance.
MR. ANDERSON said he didn't know the answer and would defer to
those on-line.
CHAIR MURKOWSKI announced that HB 512 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:25 p.m.
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