Legislature(1997 - 1998)

01/14/1998 09:00 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         January 14, 1998                                      
                           9:00 a.m.                                           
MEMBERS PRESENT                                                                
Senator Gary Wilken, Chairman                                                  
Senator Loren Leman, Vice-Chairman                                             
Senator Lyda Green                                                             
Senator Jerry Ward                                                             
Senator Johnny Ellis                                                           
MEMBERS ABSENT                                                                 
COMMITTEE CALENDAR                                                             
SENATE BILL NO. 197                                                            
"An Act relating to health care services provided by, and                      
practices of, a health maintenance organization; and prohibiting               
health maintenance organizations from limiting free speech of                  
health care providers."                                                        
     HEARD AND HELD                                                            
PREVIOUS SENATE COMMITTEE ACTION                                               
No previous Senate committee action.                                           
WITNESS REGISTER                                                               
Senator Dave Donley                                                            
Alaska State Capitol                                                           
Juneau, Alaska  99801-1182                                                     
POSITION STATEMENT:  Sponsor of SB 197.                                        
Dr. Robert H. Banks                                                            
Alaska Chiropractic Society                                                    
401 E. 36th Ave.                                                               
Anchorage, Alaska  99503                                                       
POSITION STATEMENT:  Supports SB 197.                                          
Katie Campbell                                                                 
Division of Insurance                                                          
Dept. of Commerce and Economic Development                                     
P.O. Box 110805                                                                
Juneau, AK  99811-0805                                                         
POSITION STATEMENT:  Answered questions regarding the Division of              
Gordon Evans                                                                   
Health Insurance Association of America                                        
318 4th Street                                                                 
Juneau, AK  99801                                                              
POSITION STATEMENT: HIAA believes SB 197 is unnecessary but                    
Theresa Obermeyer                                                              
3000 Dartmouth Drive                                                           
Anchorage, AK                                                                  
POSITION STATEMENT:  No stated position on SB 197.                             
ACTION NARRATIVE                                                               
TAPE 98-1, SIDE A                                                              
Number 001                                                                     
          SB 197 - REGULATING HEALTH MAINTENANCE ORGS.                         
CHAIRMAN WILKEN called the Senate Health, Education and Social                 
Services (HESS) Committee to order at 9:02 a.m. and announced the              
presence of Senators Leman and Ellis.  Senator Green arrived at                
9:15 a.m. and Senator Ward arrived at 9:25 a.m.                                
SENATOR DAVE DONLEY, sponsor of SB 197, gave the following overview            
of the measure.  Alaska has not experienced the difficulties states            
in the Lower 48 have with the emergence of HMOs.  SB 197 is a                  
preemptive strike requiring HMOs to follow certain rules that                  
benefit the public when they do arrive in Alaska.  HMOs have been              
controversial and have inspired many successful initiative drives              
nationwide requiring them to follow some of the provisions                     
contained in SB 197, especially the provision related to gag                   
SENATOR DONLEY described each section of the bill.  Section 1                  
requires that HMOs and health insurers establish guidelines                    
explaining when treatment can be denied to ensure that patients                
understand the circumstances under which they will not receive                 
health care.  Section 2 guarantees members' access to chiropractic             
health care services.  HMOs currently use a "gatekeeper" to approve            
or disapprove the use of chiropractic services as a treatment                  
option.  The "gatekeeper" can be a nurse or physician who is                   
trained in a different discipline and may be biased against                    
chiropractic care.  Section 2 allows the patient to select                     
chiropractic care and visit a chiropractor during the first 30 days            
of an injury, after which a review process will occur to analyze               
whether or not continued chiropractic care is appropriate.                     
Section 3 pertains to the limitations HMOs can impose on the                   
communication between physicians and patients.  In the Lower 48,               
some HMOs may prohibit doctors from informing patients of certain              
alternative treatments when those treatments are not available                 
through the HMO plan, even when those treatments are the most                  
appropriate.  SENATOR DONLEY emphasized that health care providers             
should always be free to talk to patients about their medical                  
conditions.  The gag order provision has inspired all but 14 states            
to enact a similar prohibition on gag orders.  Section 3 also                  
requires an HMO to give written notice of cause before terminating             
an employee.                                                                   
Number 126                                                                     
SENATOR ELLIS asked why Senator Taylor's name was listed as the                
sponsor on the fiscal note.  SENATOR DONLEY answered that error was            
made by the department.                                                        
SENATOR ELLIS noted that former Senator Jay Kerttula sponsored                 
legislation in 1990 to eliminate any barriers in statute to the                
establishment of HMOs in Alaska, since they are considered the free            
market approach to providing more people with less expensive health            
care.  The bill passed overwhelmingly, however no HMOs have been               
established.  He questioned why that is and asked whether SB 197               
might deter the establishment of HMOs in Alaska.  SENATOR DONLEY               
replied that even in a free market, governments prohibit cartels               
and illegal activities to protect consumers from unscrupulous and              
unfair  practices.  SB 197 sets basic guidelines to ensure HMOs                
provide a fair, economic alternative.                                          
Number 194                                                                     
SENATOR ELLIS commented that he strongly supports consumer                     
protection, but repeated his question as to whether SB 197 will                
discourage HMOs from establishing businesses in Alaska.  SENATOR               
DONLEY replied that his past experience with insurance companies               
makes it very difficult to predict how they will act because their             
reasons for their actions are sometimes untrue.  He explained that             
the provisions contained in SB 197 should not inhibit any fair HMO             
from practicing in Alaska.                                                     
Number 232                                                                     
SENATOR LEMAN referred to the provision that requires two doctors              
to make a determination and asked whether it will create an                    
unnecessary barrier in some cases.  SENATOR DONLEY stated that the             
Alaska Medical Association specifically endorsed that section of               
the bill.  He explained it would be unnecessary if one could                   
guarantee that the physician who acts as the "gatekeeper" in the               
HMO is always straightforward and has no undue pressure to make an             
inaccurate evaluation but there is no way to guarantee that will be            
the situation in all cases.                                                    
SENATOR LEMAN agreed there are complex cases where two diagnoses               
would be sensible, but he questioned whether SB 197 will add to the            
cost of health care when the diagnosis is simple and                           
straightforward.  SENATOR DONLEY thought two diagnoses probably are            
unnecessary in every case, but believed there is no way to draw the            
line to ensure that in those problem cases consumers get                       
protection.  An organization can easily create a system where two              
diagnoses automatically occur, if that is the standard required by             
statute.  He added two diagnoses will only occur if a consumer                 
complains and is dissatisfied with the first diagnosis.                        
Number 266                                                                     
CHAIRMAN WILKEN asked if there were other disciplines, such as                 
midwifery, that might want the same availability afforded to                   
chiropractors in SB 197.  SENATOR DONLEY thought there probably                
were but was not familiar with any at this time.                               
SENATOR WILKEN asked if Section 2 requires that a report be written            
after the initial 30 day period of chiropractic care, and that a               
second chiropractor then evaluate and treat the patient.  He also              
asked where the physician enters into this process.  SENATOR DONLEY            
answered that chiropractors have traditionally had problems with               
review of their work by physicians with a different area of                    
expertise because many doctors are biased toward their own                     
discipline.  Chiropractors want to be reviewed by others in their              
profession, which is what Section 2 requires.  He supports that                
approach because it is the consumer who has made the choice to get             
chiropractic treatment.                                                        
Number 311                                                                     
SENATOR WILKEN asked if the first chiropractor's report is given to            
both a second chiropractor and the HMO, at which point the HMO can             
demand or recommend treatment by a physician.  SENATOR DONLEY said             
that according to lines 27-29, the HMO can send the patient to its             
chiropractor after it reviews the report.  SENATOR WILKEN                      
questioned whether the patient must go to the HMO's chiropractor at            
that point.  SENATOR DONLEY explained that the patient can continue            
to go to his/her own chiropractor but, under the terms of the                  
service agreement, must check for cost containment and be checked              
by the HMO chiropractor to ensure that the treatment is                        
CHAIRMAN WILKEN announced that Senators Green and Ward had joined              
the committee.                                                                 
Number 332                                                                     
SENATOR ELLIS asked how the provisions in SB 197 would be enforced.            
SENATOR DONLEY said enforcement would occur through complaints to              
the Division of Insurance and Attorney General's Office.  He                   
offered to get more information from the Division of Insurance on              
that mechanism.                                                                
SENATOR DONLEY commented that when he was first elected 12 years               
ago, the Division of Insurance's mission statement said nothing                
about consumer protection. Now the division's latest mission                   
statement, produced in the last year, emphasizes consumer                      
protection.  He believed the division has made a lot of progress in            
that area over the last decade.  SENATOR DONLEY also noted that he             
has collected petitions in support of SB 197 containing over 3,000             
Number 360                                                                     
DR. ROBERT H. BANKS, representing the Alaska Chiropractic Society,             
testified via teleconference from Anchorage.  Dr. Banks stated that            
HMOs have grown to become a dominant force in health care in the               
last ten years, however along with unprecedented growth has come               
unprecedented consumer abuse.  The sad reality of HMOs is not that             
it is managed care, but that it is rationed care.  The American                
Chiropractic Association has created an internet site to try to                
document health care abuses; he provided three examples from 170               
cases that have been formally substantiated.  Many of the cases                
demonstrate a complete lack of morality and professional ethics.               
SB 197 mandates chiropractic care as the treatment for low back                
pain, and eliminates the use of gag clauses.  The gag clause,                  
simply stated, is an agreement, by the doctor, to not reveal                   
treatment options to the patient if the insurance company has                  
deemed them to be too expensive or otherwise logistically or                   
financially undesirable. Dr. Banks urged committee members to                  
support SB 197.                                                                
Number 413                                                                     
KATIE CAMPBELL, Division of Insurance, informed the committee that             
she was available to relay questions to Stan Gallington of the                 
division, who was unable to attend.                                            
SENATOR ELLIS asked how the Division of Insurance will enforce the             
provisions of SB 197 and handle complaints.  MS. CAMPBELL responded            
they would be handled through the division's consumer service area             
complaint process.                                                             
SENATOR ELLIS stated SB 197 has a zero fiscal note because no HMOs             
are currently located in Alaska. He asked what the division                    
projects the cost of processing complaints to be if one or two HMOs            
existed.  MS. CAMPBELL offered to provide Senator Ellis with that              
information at a later date.                                                   
SENATOR LEMAN asked if the division has calculated how SB 197 might            
increase or decrease the costs of health care in Alaska.  MS.                  
CAMPBELL replied the division has not done any research specific               
to SB 197 and very little on HMOs overall since there have been no             
applications to date.                                                          
Number 448                                                                     
GORDON EVANS, representing the Health Insurance Association of                 
America (HIAA), a trade association representing about 225                     
commercial health insurance companies, gave the following                      
testimony.  HIAA has a mixed reaction toward SB 197.  It believes              
SB 197 is unnecessary since no HMOs currently exist, or are likely             
to be established in Alaska because it does not have a large enough            
population to support one.  HIAA does support Sections 1 and 3,                
because it does not support inhibiting doctor-patient communication            
but objects to Section 2, as it creates a special privilege for one            
type of provider over others. Section 2 is unnecessary because                 
Alaska already has an anti-discrimination statute for medical                  
CHAIRMAN WILKEN asked Mr. Evans to submit HIAA's position to the               
committee in writing.  MR. EVANS questioned whether SB 197 had an              
additional referral to the Senate Labor and Commerce Committee.                
CHAIRMAN WILKEN noted the only referral is to the Senate HESS                  
Number 488                                                                     
THERESA OBERMEYER, representing herself, expressed several opinions            
on various topics but had no stated opinion on SB 197.                         
CHAIRMAN WILKEN announced SB 197 would be held in committee until              
Friday, January 16, and adjourned the meeting at 9:45 a.m.                     

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