05/03/2021 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB44 | |
| HB176 | |
| SB40 | |
| HJR19 | |
| Workers' Compensation Board | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 44 | TELECONFERENCED | |
| *+ | HB 176 | TELECONFERENCED | |
| + | HB 58 | TELECONFERENCED | |
| + | SB 40 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HJR 19 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
May 3, 2021
3:21 p.m.
DRAFT
MEMBERS PRESENT
Representative Ivy Spohnholz, Co-Chair
Representative Calvin Schrage
Representative Liz Snyder
Representative David Nelson
Representative James Kaufman
Representative Ken McCarty
MEMBERS ABSENT
Representative Zack Fields, Co-Chair
COMMITTEE CALENDAR
HOUSE BILL NO. 44
"An Act relating to the practice of accounting."
- HEARD & HELD
HOUSE BILL NO. 176
"An Act relating to insurance; relating to direct health care
agreements; and relating to unfair trade practices."
- HEARD & HELD
SENATE BILL NO. 40
"An Act relating to veterans' benefits services and veterans'
benefits appeal services."
- HEARD & HELD
HOUSE JOINT RESOLUTION NO. 19
Supporting widespread infrastructure investment in the state.
- MOVED CSHJR 19(L&C) OUT OF COMMITTEE
CONFIRMATION HEARING(S):
Alcoholic Beverage Control Board
David Koch - Anchorage
- CONFIRMATION(S) ADVANCED
Board of Social Work Examiners
Sharon Woodward - Juneau
- CONFIRMATION(S) ADVANCED
Workers' Compensation Board
Pamela Cline - Wasilla
- CONFIRMATION(S) ADVANCED
PREVIOUS COMMITTEE ACTION
BILL: HB 44
SHORT TITLE: PRACTICE OF ACCOUNTING; LICENSURE
SPONSOR(s): REPRESENTATIVE(s) THOMPSON
02/18/21 (H) PREFILE RELEASED 1/8/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) STA, L&C
03/11/21 (H) STA AT 3:00 PM GRUENBERG 120
03/11/21 (H) Heard & Held
03/11/21 (H) MINUTE(STA)
03/16/21 (H) STA AT 3:00 PM GRUENBERG 120
03/16/21 (H) Heard & Held
03/16/21 (H) MINUTE(STA)
03/23/21 (H) STA AT 3:00 PM GRUENBERG 120
03/23/21 (H) Moved CSHB 44(STA) Out of Committee
03/23/21 (H) MINUTE(STA)
03/24/21 (H) STA RPT CS(STA) 6DP 1AM
03/24/21 (H) DP: CLAMAN, STORY, KAUFMAN, VANCE,
TARR, KREISS-TOMKINS
03/24/21 (H) AM: EASTMAN
05/03/21 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 176
SHORT TITLE: DIRECT HEALTH AGREEMENT: NOT INSURANCE
SPONSOR(s): REPRESENTATIVE(s) RASMUSSEN
04/16/21 (H) READ THE FIRST TIME - REFERRALS
04/16/21 (H) L&C, HSS
05/03/21 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 40
SHORT TITLE: VETERANS' BENEFITS SERVICES; DISCLOSURE
SPONSOR(s): SENATOR(s) REVAK
01/25/21 (S) PREFILE RELEASED 1/15/21
01/25/21 (S) READ THE FIRST TIME - REFERRALS
01/25/21 (S) STA, L&C
03/04/21 (S) STA AT 3:30 PM BUTROVICH 205
03/04/21 (S) Heard & Held
03/04/21 (S) MINUTE(STA)
03/11/21 (S) STA AT 3:30 PM BUTROVICH 205
03/11/21 (S) Heard & Held
03/11/21 (S) MINUTE(STA)
03/18/21 (S) STA AT 3:30 PM BUTROVICH 205
03/18/21 (S) Moved SB 40 Out of Committee
03/18/21 (S) MINUTE(STA)
03/19/21 (S) STA RPT 4DP
03/19/21 (S) DP: SHOWER, HOLLAND, COSTELLO, REINBOLD
03/19/21 (S) OBJECTION (REGARDING REPORTING OUT OF
COMMITTEE PROCESS)
03/19/21 (S) POSTPONE QUESTION TO MARCH 24 Y14 N2
E3 A1
03/22/21 (S) OBJECTION WITHDRAWN (REGARDING
REPORTING OUT OF COMMITTEE PROCESS)
03/29/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/29/21 (S) Moved SB 40 Out of Committee
03/29/21 (S) MINUTE(L&C)
03/31/21 (S) L&C RPT 5DP
03/31/21 (S) DP: COSTELLO, REVAK, GRAY-JACKSON,
HOLLAND, STEVENS
04/09/21 (S) TRANSMITTED TO (H)
04/09/21 (S) VERSION: SB 40
04/12/21 (H) READ THE FIRST TIME - REFERRALS
04/12/21 (H) MLV, L&C
04/22/21 (H) MLV AT 1:00 PM GRUENBERG 120
04/22/21 (H) Heard & Held
04/22/21 (H) MINUTE(MLV)
04/27/21 (H) MLV AT 1:00 PM GRUENBERG 120
04/27/21 (H) Moved SB 40 Out of Committee
04/27/21 (H) MINUTE(MLV)
04/28/21 (H) MLV RPT 6DP
04/28/21 (H) DP: CLAMAN, RAUSCHER, TARR, STORY,
NELSON, TUCK
05/03/21 (H) L&C AT 3:15 PM BARNES 124
BILL: HJR 19
SHORT TITLE: SUPPORTING INVESTMENT IN INFRASTRUCTURE
SPONSOR(s): LABOR & COMMERCE
04/28/21 (H) READ THE FIRST TIME - REFERRALS
04/28/21 (H) L&C
04/28/21 (H) L&C AT 3:15 PM BARNES 124
04/28/21 (H) Heard & Held
04/28/21 (H) MINUTE(L&C)
05/03/21 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE STEVE THOMPSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced HB 44.
LYNETTE BERGH, Staff
Representative Steve Thompson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis and
explanation of changes in the committee substitute for HB 44 on
behalf of Representative Thompson, prime sponsor.
LESLIE SCHMITZ, CPA, Chair
Board of Public Accountancy
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Provided information and answered questions
during the hearing on HB 44.
CORI HONDOLERO, Executive Administrator
Board of Public Accountancy
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Provided information and answered questions
during the hearing on HB 44.
THOMAS NEILL, CPA, Chair
Uniform Accountancy Act Committee
American Institute of Certified Public Accountants
Seattle, Washington
POSITION STATEMENT: Provided information and answered questions
during the hearing on HB 44.
LESLIE SCHMITZ, CPA
Board of Public Accountancy
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 44.
THOMAS NEILL, CPA, Chair
Uniform Accountancy Act Committee
American Institute of Certified Public Accountants
Seattle, Washington
POSITION STATEMENT: Testified in support of HB 44.
REPRESENTATIVE SARA RASMUSSEN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 176 as prime sponsor.
CRYSTAL KOENEMAN, Staff
Representative Sara Rasmussen
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis of HB 176
on behalf of Representative Rasmussen, prime sponsor.
RENEE GAYHART, Director
Division of Health Care Services
Department of Health & Social Services
Juneau, Alaska
POSITION STATEMENT: Provided information and answered questions
during the hearing on HB 176.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions and provided information
during the hearing on HB 176.
WADE ERICKSON, MD, Owner
Capstone Clinic
Wasilla, Alaska
POSITION STATEMENT: Answered questions and provided information
during the hearing on HB 176.
CLINT FLANAGAN, MD, Founder & Chief Executive Officer
Nextera Healthcare
Longmont, Colorado
POSITION STATEMENT: Testified in support of HB 176.
BRANDON OUSLEY, Chief Executive Officer
Anchorage Fracture & Orthopedic Clinic
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 176.
DIRK CRAFT, Staff
Senator Josh Revak
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 40 on behalf of Senator
Revak, prime sponsor.
ACTION NARRATIVE
3:21:14 PM
CO-CHAIR IVY SPOHNHOLZ called the House Labor and Commerce
Standing Committee meeting to order at 3:21 p.m.
Representatives Spohnholz, Kaufman, Schrage, McCarty, Nelson,
and Snyder were present at the call to order.
HB 44-PRACTICE OF ACCOUNTING; LICENSURE
3:22:29 PM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be HOUSE BILL NO. 44, "An Act relating to the practice of
accounting."
[Before the committee was CSHB 44(STA).]
3:23:11 PM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, as
prime sponsor, introduced HB 44. He explained that the National
Association of the State Boards of Accountancy (NASBA) and the
American Institute of Certified Public Accountants (AICPA)
provided Alaska's Board of Public Accountancy under the
Department of Commerce, Community, and Economic Development
(DCCED) with a summary of areas in which Alaska's statutes and
regulations for public accountancy and certified public
accountants (CPAs) differ from the Uniform Accountancy Act (UAA)
and AICPA's Code of Professional Conduct. He said that the
statute changes under HB 44 would align Alaska's statutes and
regulations for public accountancy with the national
organizations while continuing to protect the public's interest
by ensuring that only qualified professionals are licensed, and
that appropriate standards of competency are established and
enforced.
3:25:45 PM
LYNETTE BERGH, Staff, Representative Steve Thompson, Alaska
State Legislature, on behalf of Representative Thompson, prime
sponsor, read the explanation of changes [included in the
committee packet] in the proposed committee substitute (CS) for
HB 44, which read as follows [original punctuation provided]:
There are three minor changes between the original
bill HB 44 version A and the blank CS of HB44 version
B.
Section 19; Line 4- delete the phrase "or compilation"
Section 20, Line 28- Delete "the board" and insert
"the department"
Section 43, Line 5- Delete "or compilation reports
MS. BERGH pointed out that the sectional analysis includes 44
sections, many of which are redundant. She presented a summary
of the sectional analysis [included in the committee packet],
which read as follows [original punctuation provided]:
The changes in CSHB 44 are intended to better align
Alaska accountancy statutes with national standards,
using the Uniform Accountancy Act (UAA) as a guiding
document. These changes will help ensure a uniform
approach to regulation of the accounting profession in
Alaska. Throughout the current accountancy statutes,
there are antiquated industry terms and definitions.
CSHB 44 updates the following terms:
? "out-of-state exemption" is removed entirely to
allow for firm mobility
? "Partnership, limited liability company,
corporation, or other legal entity" are replaced with
the term "firm"; the updated definition of firm will
now include sole proprietors
? "quality review" is replaced with "peer review"
? Sections 37-43 updates/adds new definitions for the
following accountancy terms:
o "attest function"
o "compilation service"
o "permit"
o "practice of public accounting"
o "report"
o "state"
o "preparation of financial statements"
3:29:18 PM
REPRESENTATIVE SCHRAGE asked whether an out-of-state company
could provide remote service to Alaska businesses without having
a physical presence within the state.
MS. BERGH deferred to Ms. Schmitz.
3:30:11 PM
LESLIE SCHMITZ, CPA, Chair, Board of Public Accountancy,
Division of Corporations, Business, and Professional Licensing
(CBPL), Department of Commerce, Community, and Economic
Development (DCCED), responded that out-of-state firms are
currently allowed to perform services in Alaska after undergoing
an application process. She expressed that the removal of the
out-of-state exemption and the move toward firm mobility would
give the board more jurisdiction over accounting firms that
provide services in Alaska. Under UAA, she said, the firms are
governed by the regulations in their own states; under the
proposed legislation, an Alaska consumer who experiences a
problem with work performed in Alaska could file a complaint
with the State of Alaska as well as with the accountant's home
state.
3:31:37 PM
REPRESENTATIVE MCCARTY asked whether those firms currently
licensed in Alaska are required to pay for both a "license" and
a "corporate business license."
MS. SCHMITZ replied that her understanding is that there is a
professional licensing fee. She deferred to Ms. Hondolero on
the question of business licensing.
3:32:38 PM
CORI HONDOLERO, Executive Administrator, Board of Public
Accountancy, Division of Corporations, Business, and
Professional Licensing (CBPL), Department of Commerce,
Community, and Economic Development (DCCED), responded that an
out-of-state firm is currently required to be licensed and also
to obtain an out-of-state permit. She said this proposed
legislation would change that process.
REPRESENTATIVE MCCARTY asked whether individual accountants
working at a licensed firm are currently also required to be
licensed in Alaska.
MS. HONDOLERO replied, "Currently, yes." She clarified that
individual accountants have their own licenses, and the
accounting firms are also licensed.
REPRESENTATIVE MCCARTY asked whether the requirement also
pertains to anyone doing business "with the state" who resides
outside of the state.
MS. HONDOLERO responded that there is already individual
mobility in Alaska, so this proposed legislation would allow for
firm mobility.
REPRESENTATIVE MCCARTY clarified his question.
MS. HONDOLERO deferred to Mr. Neill.
3:34:26 PM
THOMAS NEILL, CPA, Chair, Uniform Accountancy Act Committee,
American Institute of Certified Public Accountants, explained
that firm mobility would allow firms from outside Alaska to
perform services within the state. Under the mobility
construct, he said, the firm would not be required to acquire a
license from the state, nor would the individual certified
public accountants (CPAs) be required to get individual licenses
in Alaska. Depending on state tax statutes, he said, a business
license may be required. He said that if he enters Alaska with
a staff to do an attest service for an Alaska business, he needs
to register with the state for payroll taxes as well as file any
required Alaska business, occupation, or corporate taxes. He
said that the mobility construct doesn't relieve a firm from its
tax burden, it just relieves the licensure requirement.
3:35:44 PM
CO-CHAIR SPOHNHOLZ asked Ms. Hondolero whether business
licensing is an effective way to track non-resident accounting
firms and individual accountants practicing in Alaska.
MS. HONDOLERO expressed that it's her understanding that a
business license is required, but that she would research the
question.
3:36:28 PM
REPRESENTATIVE MCCARTY expressed concern at the possibility of
not being able to track who is doing business within the state.
3:37:10 PM
MR. NEILL offered that, in the case of a complaint filed against
an out-of-state business or individual who entered Washington
physically or electronically to do business, Washington may
pursue the licensee in whatever state the individual is licensed
in. As a result, he said, Washington doesn't lose the ability
to discipline the individual or firm. He added that there is no
escape from the disciplinary process, either by the individual's
home state or the state they're doing business in.
3:38:12 PM
REPRESENTATIVE MCCARTY noted that in Alaska, any investigative
fees incurred by professional boards are borne by those licensed
by that board.
CO-CHAIR SPOHNHOLZ added that Washington is often the source of
professionals practicing in other states, while Alaska is often
the recipient of such services.
3:39:14 PM
REPRESENTATIVE NELSON asked when Alaska last adapted its
accountancy statutes to reflect national standards.
REPRESENTATIVE THOMPSON responded that he believes it's been
several years. He then deferred to Ms. Schmitz.
3:40:03 PM
MS. SCHMITZ expressed agreement with Representative Thompson.
She said that the one of the larger issues is that of "quality
review," which UAA has now termed "peer review."
3:41:18 PM
CO-CHAIR SPOHNHOLZ clarified that UAA means Uniform Accountancy
Act and not University of Alaska Anchorage.
MS. SCHMITZ answered yes.
CO-CHAIR SPOHNHOLZ asked Ms. Schmitz to research the year of
Alaska's last statutory updates.
MS. SCHMITZ said that she would have the information at the next
hearing.
3:41:48 PM
REPRESENTATIVE NELSON asked whether the most recent changes
dealt with issues similar to those in the proposed legislation.
REPRESENTATIVE THOMPSON responded yes. He said that there are
continuing regulation changes, but changes in statute only take
place every few years.
REPRESENTATIVE NELSON expressed his intent to support HB 44.
3:42:53 PM
REPRESENTATIVE THOMPSON disclosed that his wife owns a CPA firm
and has served on the Board of Public Accountancy.
REPRESENTATIVE SCHRAGE made the same disclosure.
3:43:37 PM
REPRESENTATIVE THOMPSON noted that his invited testifiers would
like to comment.
3:44:00 PM
LESLIE SCHMITZ, CPA, Board of Public Accountancy, Division of
Corporations, Business, and Public Licensing (CBPL), Department
of Commerce, Community, and Economic Development (DCCED), shared
that she is an Anchorage-based CPA and is serving in her eighth
and final year on the board. She stated the board's support for
HB 44 and pointed out that the board worked with the Alaska
Society of Certified Public Accountants to assure a transparent
process in the proposed legislation, sought assistance with
technical edits from the American Institute of Certified Public
Accountants, and reached out to licensees and stakeholders for
feedback. She said that the Uniform Accountancy Act (UAA) is an
"evergreen" model licensing law developed to provide a uniform
approach to regulation of the accounting profession; the
proposed legislation, which closely follows UAA language, would
enhance public protection and modernize terminology.
3:46:17 PM
THOMAS NEILL, CPA, Chair, Uniform Accountancy Act Committee,
American Institute of Certified Public Accountants (AICPA),
stated AICPA's support for the proposed legislation. He said
UAA is a model act with the goal of providing the 55 licensing
jurisdictions in the U.S. with a consistent framework for
regulation of the CPA profession. He said that when firm
mobility was first contemplated more than 20 years ago, the
concern was that firms already licensed within a state would
lose business to out-of-state firms; experience has shown that
this did not occur. The concerns regarding potential loss of
revenue to the state were also groundless, he said, because
firms are required to follow state statutes regarding business,
occupation, corporate, and individual taxes for both the revenue
earned within the state and payroll taxes for the time the firm
spent operating in the state. He said that 30 states have
enacted mobility statutes and that, in his role as chair of the
UAA committee, he has not heard any negative feedback. He
pointed out that one of the key advantages of firm mobility for
Alaska businesses would be having access to professional
services.
3:48:36 PM
CO-CHAIR SPOHNHOLZ asked whether Washington's sales tax applies
to professional services.
MR. NEILL said that sales tax does not apply, but business and
occupation taxes do.
CO-CHAIR SPOHNHOLZ asked whether there are payroll taxes in the
State of Washington.
MR. NEILL responded yes. For example, he said, his Washington-
based firm is registered with the Oregon Secretary of State's
office and pays corporate income taxes and individual taxes for
work performed in Oregon; his employees, who then have Oregon
wages, file Oregon income tax. The same types of provisions
exist in Alaska, he said.
3:50:09 PM
CO-CHAIR SPOHNHOLZ announced that HB 44 was held over.
HB 176-DIRECT HEALTH AGREEMENT: NOT INSURANCE
3:50:15 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 176, "An Act relating to insurance;
relating to direct health care agreements; and relating to
unfair trade practices."
3:50:57 PM
REPRESENTATIVE SARA RASMUSSEN, Alaska State Legislature, as
prime sponsor, introduced HB 176, which would establish direct
health care agreements for medical providers to provide direct
primary care to patients. She emphasized that direct health
care agreements do not take the place of insurance.
3:52:21 PM
CRYSTAL KOENEMAN, Staff, Representative Sara Rasmussen, Alaska
State Legislature, presented the sectional analysis of HB 176 on
behalf of Representative Rasmussen, prime sponsor, which read as
follows [original punctuation provided]:
Section 1: AS 21.03.025 Direct health care
agreements. Adds a new section to AS 21.03 creating
direct health care agreements.
Subsection (a) outlines that a direct health care
agreement is between a health care provider and a
government entity, individual patient, employer
of a patient, or a representative of a patient.
The health care agreement must:
? Describe the services to be provided by
the health care provider;
? Specify the fees associated with the
agreement;
? Prominently state that the agreement is
not health insurance and that it does not
meet health insurance mandates that may be
required by federal law; and
? Prominently state that patients under the
agreement are not entitled to the
protections under existing state insurance
statutes.
Subsection (b) allows for the policy to be
terminated after a 30-day written notice from
either party.
Subsection (c) provides that the direct health
care agreement and health care services provided
under the agreement are subject to other consumer
protection statutes and regulations.
Section 2: AS 45.45.915 Direct health care
agreements. Adds a new section under Trade Practices.
Subsection (a) prevents health care providers
from declining or terminating direct health care
agreements based on a patient's protected class
under federal or state law that prohibits
discrimination.
Subsection (b) provides that a provider may
decline or terminate a direct health care
agreement if the provider is unable to provide
the level or type of care the patient requires.
The provider shall ensure the patient is
transferred to a health care provider who is able
to provide the level or type of care required and
agrees to provide said care.
Subsection (c) provides definitions for a "direct
health care agreement" and a "health care
provider."
Section 3: AS 45.50.471(b) Unlawful acts and
practices. Updates definitions for "unfair methods of
competition" and "unfair or deceptive acts or
practices" to include violating direct health
agreements under AS 45.45.915.
3:55:40 PM
REPRESENTATIVE SNYDER noted that the sponsor statement uses the
term "direct primary care" but the text of the proposed
legislation uses the term "direct health care", which she
thought may broaden the care provided beyond primary care.
REPRESENTATIVE RASMUSSEN responded that it was her understanding
that a prior version of the proposed legislation was considered
during the Thirty-First Alaska State Legislature but that there
was the need to expand the proposed legislation to include other
healthcare providers such as chiropractors and dentists.
MS. KOENEMAN clarified that both terms are used interchangeably
within the healthcare industry.
CO-CHAIR SPOHNHOLZ recalled understanding that the restriction
to primary care was the policy decided upon during the Thirty-
First Alaska State Legislature, and that the sponsor statement
is not consistent with the text of the proposed legislation.
3:57:41 PM
REPRESENTATIVE SNYDER asked whether additional regulation would
be needed to enforce and monitor the implementation of the
program under the proposed legislation.
REPRESENTATIVE RASMUSSEN deferred to Ms. Koeneman.
3:58:30 PM
MS. KOENEMAN replied that Representative Rasmussen's staff is
working on the questions of implementation and enforcement.
3:59:28 PM
RENEE GAYHART, Director, Division of Health Care Services,
Department of Health & Social Services, said that Medicaid is
considered to be "comprehensive health coverage," and providers
bill Medicaid for services. She said that the idea is for
Medicaid to be exempt from HB 176.
CO-CHAIR SPOHNHOLZ expressed that there seems to be no clear
regulatory authority, and if the proposed legislation is to
cover areas of health care beyond primary care, then every board
that regulates a health care provider could be involved.
4:00:55 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community, and Economic Development, expressed
agreement that various boards would be involved in regulation
and oversight of the provisions under HB 176. She said that the
Special Litigation and Consumer Protection section of the Office
of the Attorney General would likely be involved to oversee
consumer protections.
4:02:05 PM
REPRESENTATIVE NELSON asked for an explanation of how an
individual would use the health care agreement.
4:02:44 PM
WADE ERICKSON, MD, Owner, Capstone Clinic, explained that a
direct health care agreement is an alternate payment model. A
patient pays a defined amount of money on a subscription basis,
and the health care provider provides the defined service. He
said that primary care has a fee of approximately $100 per
month, and the service includes "relatively unlimited access"
with reduced additional costs. He said that the provider's
overhead is reduced by approximately 25 percent, and
hospitalizations, as well as visits to emergency rooms and
urgent care centers, have been reduced significantly. He said
the likely users of such agreements would be the uninsured
population or those with high-deductible insurance plans, and
some states are testing the model for their Medicaid programs.
4:05:28 PM
REPRESENTATIVE NELSON asked about the difference between a
direct care agreement and urgent care.
DR. ERICKSON explained that urgent care is a type of primary
care, usually offered by primary care physicians and defined by
"open access" and extended hours. He said that agreements may
or may not include urgent care, and that the defined agreement
is an important aspect of the proposed legislation.
4:07:03 PM
REPRESENTATIVE MCCARTY asked whether a statute would be required
in order to participate in direct care agreements.
DR. ERICKSON responded that's correct. He said that the current
regulations under AS 21 are vague enough that it could be
construed that the provisions are regulated by the Division of
Insurance. The purpose of the proposed legislation is to
exclude that type of regulation, he said, because direct care
agreements are intended to not replace or be a form or
insurance.
REPRESENTATIVE MCCARTY asked about the difference between paying
"out-of-pocket" and having a direct care agreement.
DR. ERICKSON answered that the difference is access. The
current system is a "fee-for-service" model, existing on a cash
basis. When insurance companies are involved, he said, the
price offered to the insurance company is different from the
price offered to the patient, especially when factoring in
copays, coinsurance, and deductibles.
REPRESENTATIVE MCCARTY asked whether direct care agreements
could free health care providers from being locked into
contracts with insurance companies.
DR. ERICKSON replied that there are several ways in which
providers and patients could enter into direct care agreements.
He said that Capstone Clinic would be working on a hybrid model,
accepting Medicare and Medicaid patients, and other types of
patients. He said that insurance companies mandate that
providers cannot have concurrent agreements with insured
patients.
REPRESENTATIVE MCCARTY directed attention to the text of the
proposed legislation, page 1, lines 10 through 14, which read as
follows:
The health care provider may not assess charges or
receive compensation other than the periodic fee for
health care services and additional fees specified in
the agreement. However, a patient may submit a health
care insurance claim and the health care provider may
assess charges or receive compensation for health care
services not included in the agreement.
REPRESENTATIVE MCCARTY expressed that the text may give the
provider the option to bill insurance, and he mentioned
"superbills."
DR. ERICKSON replied that an insurance policy and a direct care
agreement may cover different services, and that a patient may
be reimbursed by insurance for services not covered by the
direct care agreement.
REPRESENTATIVE MCCARTY said that he went to Costa Rica to have a
hip replacement. He then summed up his understanding of the
concept of direct care agreements, and asked what services would
be offered.
DR. ERICKSON responded that HB 176 is, from a contractual
standpoint, intentionally vague. He said that the goal of the
proposed legislation is to define direct health care agreements
outside of the provisions under AS 21, subsequently allowing the
free market to both define the services, and determine who
provides them. He then addressed Representative Snyder's
earlier note about consumer protections, and he clarified that
the Department of Law would handle consumer protections, and
individual provider governing boards would be in the charge of
the practices.
4:14:51 PM
REPRESENTATIVE SNYDER pointed out that some states exempt direct
primary care agreements from the statutory insurance code. She
asked whether exempting direct care agreements from the
provisions under AS 21 would streamline the regulatory process.
MS. WING-HEIER responded that doing so would make the process
more complicated for the providers; they would have to file a
certificate of authority with the state, provide financials and
operating practices, and be subject to taxes.
4:17:05 PM
CO-CHAIR SPOHNHOLZ opened invited testimony on HB 176.
4:17:30 PM
DR. ERICKSON, having previously responded to to questions, now
testified in support of HB 176. He said that the proposed
legislation would benefit employers and patients, especially
those with high-deductible insurance plans, and that it would
increase access to care for individuals experiencing financial
barriers.
4:19:01 PM
REPRESENTATIVE MCCARTY asked whether the agreements would be put
in place by the clinic or by a third party.
DR. ERICKSON replied that he believes most individual clinics,
like his, would be handling their own agreements.
REPRESENTATIVE MCCARTY asked, "What's a bonding element to know
that those facilities are going to be good for ... the money
that's being paid out?"
DR. ERICKSON asked for clarification.
REPRESENTATIVE MCCARTY asked how to ensure that a facility will
provide the service for which it's being paid instead of taking
money from consumers and leaving the state.
DR. ERICKSON replied that agreements have termination clauses.
He said that if a clinic doesn't have a good reputation, it
won't get many enrollees in its plan.
4:21:17 PM
CLINT FLANAGAN, MD, Founder & Chief Executive Officer (CEO),
Nextera Healthcare, described a history of patients experiencing
difficulty in accessing health care, as well as paying high co-
pays or deductibles, and physicians spending time on
administrative paperwork instead of taking care of patients. He
said that his clinics began instituting care agreements, in
which patients' primary and urgent care needs would be met in
exchange for a regular, monthly fee. He explained that
insurance could still be used for catastrophic health needs such
as an emergency room visit or surgery, but regular care was
handled through the agreement. He said that Nextera Healthcare
has 30 clinics in Colorado and nearly 80 clinics across the
country, and that approximately 84 percent of its members are
employers.
DR. FLANAGAN pointed out that insurance is not billed for
primary care. He said that in a fee-for-service practice, a
doctor might see 35 patients per day, while in a care agreement
practice a doctor might spend up to an hour with a patient,
seeing 10 to 15 patients per day. He said that because fee-for-
service doctors see more patients and don't spend as much time
with them, those patients tend to see specialists more often and
to have more visits to the emergency room or urgent care. He
pointed out that the term "direct primary care" was defined by
primary care physicians, and he stressed that a direct primary
care agreement is not health insurance. He said that the
doctors are board certified and licensed through the state, and
that he's never heard of a doctor taking money for an agreement
and then leaving the state. He said that the client retention
rate of over 95 percent.
4:26:43 PM
REPRESENTATIVE SNYDER asked for a breakdown of who ultimately
pays for the agreements.
DR. FLANAGAN responded that most of the care recipients at
Nextera Healthcare have memberships through employers, and that
the employers typically pay 100 percent of the cost for the
employee, often including dependents. He said that
approximately 20 percent of the members pay for their own
memberships out of pockets, and that they are often insured,
with high-deductible plans. He said the average patient hits
their insurance deductible once every seven years, so the care
agreement members use the agreement for regular primary care and
urgent care, and they use their insurance for any catastrophic
health issues. He said that their doctors are available for
same-day urgent care appointments, as well as after-hours care
and telehealth.
4:29:14 PM
BRANDON OUSLEY, Chief Executive Officer (CEO), Anchorage
Fracture & Orthopedic Clinic, shared that he is an advocate for
health care savings. He said that direct care agreements allow
management of health care facilities to budget, provide better
service to employees, and track productivity. He said that he
sees direct care agreements as proactive, prepaid medical care,
and he expressed that surgery outcomes for direct primary care
patients are better than those for fee-for-service patients. He
said that patients in direct primary care agreements are better
able to maintain their health care and remain more engaged than
fee-for-service patients, who would need to pay a co-pay for
every visit.
4:32:46 PM
REPRESENTATIVE MCCARTY stated that he is trying to understand
the details. He expressed the opinion that by having insurance,
someone is "prepaying" for health care. He asked how a direct
primary care agreement would help an individual manage their
health.
MR. OUSLEY explained that when health care is prepaid, the level
of engagement is different, and the patient and provider are
more of a team. A patient who has regular insurance, he said,
may hesitate to make a doctor's appointment due to high copays
or unmet deductibles. With direct primary care, it's much
easier to text the clinic or set up a telehealth appointment
when the bill has already been taken care of, he said. He said
that surgical outcomes tend to be better because the level of
engagement is higher; after a surgery the doctor and patient are
able to check in often.
4:36:19 PM
CO-CHAIR SPOHNHOLZ added that surgeries have improved outcomes
because people with direct care agreements address their
underlying health issues, not because the surgeon uses the
agreements.
MR. OUSLEY replied, "That is correct."
4:36:53 PM
REPRESENTATIVE MCCARTY asked how direct care agreements benefit
providers.
4:37:47 PM
DR. FLANAGAN explained that direct care agreements mean higher
fixed revenue. In a fee-for-service insurance setting, he said,
the type of revenue makes it very difficult to run a clinic.
During COVID-19, he said, primary care practices saw a 50 to 75
percent decrease in revenues because providers were not seeing
patients face-to-face. In fixed revenue circumstances, he said,
providers are spending time with patients instead of on the
administrative work that goes with dealing with insurance
companies.
CO-CHAIR SPOHNHOLZ noted that instead of spending time on all of
the tasks that surround billing, the clinic just charges a
credit card every month.
4:40:04 PM
REPRESENTATIVE MCCARTY expressed frustration with insurance
billing.
4:40:27 PM
CO-CHAIR SPOHNHOLZ announced that HB 176 was held over.
SB 40-VETERANS' BENEFITS SERVICES; DISCLOSURE
4:40:50 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be SENATE BILL NO. 40, "An Act relating to veterans'
benefits services and veterans' benefits appeal services."
4:41:16 PM
DIRK CRAFT, Staff, Senator Josh Revak, Alaska State Legislature,
on behalf of prime sponsor Senator Josh Revak, introduced SB 40.
He said that SB 40 would require those who provide veteran
benefit services or benefit appeal services, for compensation,
to notify veterans before taking them on as a client that those
services are provided for free through a veteran service
organization. He said that the veteran must sign and date a
disclosure affirming that he/she knows free services are
available, with a civil penalty of $1,000 per instance levied
against providers who don't provide the information. He
described SB 40 as aiming to increase awareness of available
services for veterans, dependents, and survivors.
4:42:31 PM
REPRESENTATIVE NELSON commented that the proposed legislation
was heard in the House Special Committee on Military and
Veterans' Affairs and that he supports it.
4:42:57 PM
CO-CHAIR SPOHNHOLZ announced that SB 40 was held over.
HJR 19-SUPPORTING INVESTMENT IN INFRASTRUCTURE
4:43:15 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE JOINT RESOLUTION NO. 19, "Supporting widespread
infrastructure investment in the state."
4:43:48 PM
REPRESENTATIVE KAUFMAN directed the committee's attention to
page 1, lines 6 and 7, of the text of HJR 19, which read as
follows:
WHEREAS the state received a grade of C- when last
reviewed by the American 7 Society of Civil Engineers
in 2017; and
REPRESENTATIVE KAUFMAN shared that average capital spending in
the 10 years before the 2017 review was approximately $1 billion
per year. He wondered how the state could spend $10 billion on
infrastructure over 10 years and end up with a grade of C-.
CO-CHAIR SPOHNHOLZ responded, "The state of Alaska has a history
of building things but not always maintaining them." She shared
the example of the Port of Alaska at Anchorage, which has not
been maintained and is well beyond its original, planned
lifespan. She pointed out that the average capital budget over
the past five years was $123 million per year, with most of it
intended to attract federal highway money. She explained that
the money has been used to build new infrastructure, mostly
roads, instead of being used to maintain current infrastructure.
REPRESENTATIVE KAUFMAN commented that the state can't afford
projects that don't serve the public good or are difficult to
maintain due to design or execution. In consideration of HJR
19, he said, there may be the need for a stronger statement
regarding the quality of production.
CO-CHAIR SPOHNHOLZ expressed agreement with the need to maintain
projects and noted that HJR 19 doesn't address maintenance. She
said that specific projects from the 2017 report include several
projects for which federal funds can be used such as the Port of
Alaska and water and sewer infrastructure.
REPRESENTATIVE KAUFMAN mentioned the importance of delivering
value.
4:48:55 PM
The committee took an at-ease from 4:48 p.m. to 4:49 p.m.
4:49:48 PM
CO-CHAIR SPOHNHOLZ opened public testimony on HJR 19. After
ascertaining that no one wished to testify, she closed public
testimony.
4:50:13 PM
REPRESENTATIVE NELSON moved to adopt Conceptual Amendment 1 to
HJR 19, to add the word "Senate" in between "U.S." and ";" on
page 3, line 11.
4:50:17 PM
CO-CHAIR SPOHNHOLZ objected for the purpose of discussion, then
removed her objection after seeking clarification. There being
no further objection, Conceptual Amendment 1 was adopted.
4:51:00 PM
REPRESENTATIVE SCHRAGE moved to report HJR 19, [as amended], out
of committee with individual recommendations. There being no
objection, CSHJR 19(L&C) was reported out of the House Labor and
Commerce Standing Committee.
4:51:19 PM
The committee took a brief at-ease.
4:51:42 PM
CO-CHAIR SPOHNHOLZ noted that the motion to report HJR 19 out of
committee did not reference [that the committee had amended the
proposed joint resolution]. She asked Representative Schrage to
restate the motion.
4:51:46 PM
REPRESENTATIVE SCHRAGE moved to report HJR 19, as amended, out
of committee with individual recommendations. There being no
objection, CSHJR 19(L&C) was reported out of the House Labor and
Commerce Standing Committee.
^CONFIRMATION HEARING(S):
^CONFIRMATION HEARING(S):
^Alcoholic Beverage Control Board
Alcoholic Beverage Control Board
^Board of Social Work Examiners
Board of Social Work Examiners
^Workers' Compensation Board
Workers' Compensation Board
4:52:07 PM
CO-CHAIR SPOHNHOLZ announced that the final order of business
would be confirmation hearings for consideration of the
governor's appointees to the Alcoholic Beverage Control Board,
the Board of Social Work Examiners, and the Workers'
Compensation Board. [The confirmation hearings commenced on
4/30/21.]
CO-CHAIR SPOHNHOLZ stated that the House Labor and Commerce
Standing Committee has reviewed the qualifications of the
governor's appointees and recommends that the names be forwarded
to a joint session for consideration: David Koch, Alcoholic
Beverage Control Board; Sharon Woodward, Board of Social Work
Examiners; and Pamela Cline, Workers' Compensation Board. She
said that signing the report regarding appointments to boards
and commissions in no way reflects an individual member's
approval or disapproval of the appointee, and the nomination is
merely forwarded to the full legislature for confirmation or
rejection.
4:53:32 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:53 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 44 Bill version A.PDF |
HL&C 5/3/2021 3:15:00 PM HSTA 3/11/2021 3:00:00 PM |
HB 44 |
| HB 44 Testimony - Received as of 2.23.21.pdf |
HL&C 5/3/2021 3:15:00 PM HSTA 3/11/2021 3:00:00 PM |
HB 44 |
| HB 44 Legal Services Memo 3-17-2021.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM HSTA 3/23/2021 3:00:00 PM |
HB 44 |
| HB 44 Legal Services Memo 3-15-2021.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM HSTA 3/16/2021 3:00:00 PM |
HB 44 |
| HB44 Additional Information - AKCPA Amendment Memo 3.4.21 .pdf |
HL&C 5/3/2021 3:15:00 PM HSTA 3/11/2021 3:00:00 PM |
HB 44 |
| CS HB 44 (STA) Fiscal Note, DCCED, 4.6.21.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM |
HB 44 |
| CS HB 44 (STA) v. I.PDF |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM |
HB 44 |
| HB 176 Sectional Analysis.pdf |
HL&C 5/3/2021 3:15:00 PM |
HB 176 |
| HB 176 v. A.PDF |
HL&C 5/3/2021 3:15:00 PM |
HB 176 |
| HB 176 Supporting Document - Direct Primary Care Laws and Providers.pdf |
HL&C 5/3/2021 3:15:00 PM |
HB 176 |
| HB 176 Sponsor Statement.pdf |
HL&C 5/3/2021 3:15:00 PM |
HB 176 |
| SB 40 VSO duties.pdf |
HL&C 5/3/2021 3:15:00 PM SSTA 3/4/2021 3:30:00 PM |
SB 40 |
| SB 40 Letter of Support Ron Siebels.pdf |
HL&C 5/3/2021 3:15:00 PM SL&C 3/29/2021 1:30:00 PM |
SB 40 |
| SB 40 Research VSO duties 4.13.2021.pdf |
HL&C 5/3/2021 3:15:00 PM HMLV 4/22/2021 1:00:00 PM |
SB 40 |
| SB 40 Fiscal Note 3.4.21.pdf |
HL&C 5/3/2021 3:15:00 PM HMLV 4/22/2021 1:00:00 PM |
SB 40 |
| SB 40 Sponsor Statement 2.23.21.pdf |
HL&C 5/3/2021 3:15:00 PM HMLV 4/22/2021 1:00:00 PM |
SB 40 |
| SB 40 Testimony Challenge Alaska 3.8.21.pdf |
HL&C 5/3/2021 3:15:00 PM HMLV 4/22/2021 1:00:00 PM |
SB 40 |
| SB 40 Testimony Received by 4.25.2021.pdf |
HL&C 5/3/2021 3:15:00 PM |
SB 40 |
| SB 40 ver A 3.12.21.pdf |
HL&C 5/3/2021 3:15:00 PM HMLV 4/22/2021 1:00:00 PM |
SB 40 |
| HJR 19 v. A.PDF |
HL&C 5/3/2021 3:15:00 PM |
HJR 19 |
| HJR 19 Supporting Document - Associated General Contractors, 4.28.21.pdf |
HL&C 5/3/2021 3:15:00 PM |
HJR 19 |
| HJR 19 Supporting Document - Presentation, Alaska Telecom Association, 4.28.21.pdf |
HL&C 5/3/2021 3:15:00 PM |
HJR 19 |
| HJR 19 Supporting Document - Presentation, Port of Alaska, 4.28.21.pdf |
HL&C 5/3/2021 3:15:00 PM |
HJR 19 |
| CS HB 44 (STA) Explanation of changes version A to I.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM |
HB 44 |
| CS HB 44 (STA) Sponsor Statement, v. I.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM |
HB 44 |
| CS HB 44 (STA) Sectional Analysis, v. I.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM |
HB 44 |
| HB 176 Letters of Support Received as of 5.3.21.pdf |
HL&C 5/3/2021 3:15:00 PM |
HB 176 |
| CS HB 44 (STA) Sectional Analysis v. I.pdf |
HL&C 5/3/2021 3:15:00 PM HL&C 5/12/2021 3:15:00 PM |
HB 44 |