Legislature(2001 - 2002)
01/22/2001 01:30 PM Senate JUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE JUDICIARY COMMITTEE
January 22, 2001
1:30 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chair
Senator John Cowdery
Senator Gene Therriault
Senator Johnny Ellis
MEMBERS ABSENT
Senator Dave Donley, Vice Chair
COMMITTEE CALENDAR
SENATE BILL NO. 37
"An Act relating to collective negotiation by physicians with
health benefit plans; and to health benefit plan contracts with
individual competing physicians."
HEARD AND HELD
SENATE BILL NO. 21
"An Act increasing the maximum civil fine that may be imposed by
the State Medical Board as a disciplinary sanction."
MOVED SB 21 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
No previous committee action.
WITNESS REGISTER
Mr. Kristopher Knauss
Staff to Senator Pete Kelly
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Read Sponsor Statement for SB 37
Mr. Michael Haugen, Executive Director
Alaska Physicians and Surgeons, Inc.
4120 Laurel Street, Suite 206
Anchorage, AK 99508
POSITION STATEMENT: Supports SB 37
Mr. Ed Sniffen, Assistant Attorney General
Department of Law
1031 W 4th Avenue, Suite 200
Anchorage, AK 99501-1994
POSITION STATEMENT: Testified on SB 37
Mr. Dave Williams, Director
Division of Medical Assistance
Department of Health &
Social Services
PO Box 110601
Juneau, AK 99801-0601
POSITION STATEMENT: Testified on SB 37
Ms. Katie Campbell
Division of Insurance
Department of Community &
Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Testified on SB 37
Ms. Laura Sarcone
Alaska Chapter of American Nurse Practitioners
1444 Hillcrest
Anchorage, AK 99503
POSITION STATEMENT: Opposed to SB 37
Mr. Jim Jordan, Executive Director
Alaska State Medical Association
4107 Laurel Street
Anchorage, AK 99508
POSITION STATEMENT: Testified on SB 37
Senator Donald Olson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 21
Ms. Catherine Reardon, Director
Division of Occupational Licensing
Department of Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Supports SB 21
ACTION NARRATIVE
TAPE 01-1, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee meeting
to order at 1:30 p.m. Present were Senator Cowdery, Senator Ellis
and Chairman Taylor.
SB 37-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE
MR. KRISTOPHER KNAUSS, legislative aide to Senator Pete Kelly, read
the following sponsor statement.
Senate Bill 37 levels the playing field for Alaska's
patients and the physicians who care for them. It allows
independent, competing physicians to jointly negotiate
contract provisions with insurance companies without
violating federal anti-trust laws. However, it includes
a clearly established process to be followed for these
joint negotiations to occur and involves active state
oversight as required for a state action doctrine. By
allowing joint negotiations to occur, a more fair and
equitable negotiation process between doctors and
insurance companies is created and doctors are given the
ability to better protect their patients.
SB 37 is not a union-creating device. It is not mandatory
for either the doctor or an insurance company to engage
in these negotiations.
SB 37 is needed because health management organizations
(HMOs) do not yet exist in Alaska, it is likely that they
will be established here in the future. Currently there
are preferred provider organization (PPO) plans that,
while not as restrictive as HMOs, can limit which
specialists a doctor may refer a patient to, or the
treatments a doctor may prescribe. SB 37 would allow
doctors to negotiate with insurers on these limitations.
Currently patients have no advocates other than their
doctors. By allowing doctors to discuss and jointly
negotiate definitions such as "medical necessity,"
patients can receive better care. Physicians could use
their own judgment in determining medical emergencies and
would not be required to rely on the insurance company's
interpretation of undefined contract terms.
For example, if a patient visits the doctor to have an
injured knee examined, the doctor may recommend an MRI.
Next the doctor must contact the insurance company for
approval. If the insurance company does not approve this
treatment, but instead recommends physical therapy for
two weeks, the doctor must relay that to the patient. In
order for the insurance company to pay for the patient's
care, the doctor must follow the insurance company's idea
of good medicine, one that is based on the bottom line.
If doctors could negotiate contractual terms, that
patient could receive the MRI and the course of treatment
could follow the doctor's recommendations, not costs to
the insurer.
MR. KNAUSS introduced Mr. Mike Haugen, Executive Director for the
Alaska Physicians and Surgeons, and said that Mr. Haugen will be
able to answer any technical questions the committee members may
have. Mr. Knauss commented that SB 37 was originally SB 256 from
last year's session. SB 256 passed the Senate and ran out of time
in the House.
Number 249
SENATOR COWDERY asked if other states have implemented this type of
program.
MR. KNAUSS responded that the states of Texas and Washington have
implemented this type of program.
SENATOR COWDERY asked if there have been any major problems in
Texas and Washington.
MR. KNAUSS responded that there have been no major problems.
Number 307
SENATOR THERRIAULT asked if SB 37 was drafted from model
legislation.
MR. KNAUSS responded that it was drafted after the Texas statute,
but SB 37 is more detailed than the Texas version.
SENATOR THERRIAULT said that he has talked with Darren Whitehurst
who is staff to Texas Senator Harris. Mr. Whitehurst has been
working with the Texas attorney general (AG) on implementation of
their statute. Mr. Whitehurst indicated there have been a lot of
problems with the proposed "reg" packages. One problem is that
groups that have been formed have the right to negotiate, but in
getting together groups of doctors to put the groups together, they
still ran afoul of either the Texas or the federal antitrust
statutes. Senator Therriault asked if this potential problem has
been dealt with in the language of SB 37.
Number 422
MR. MIKE HAUGEN, Alaska Physicians and Surgeons (APS), responded by
saying that this is a new issue that he has not heard of before and
he will look into the problem. He said he finds the question
interesting because at what point does a protection under a bill
like this engage if you are simply trying to get a group of doctors
to decide whether or not they are going to negotiate.
MR. HAUGEN indicated he has submitted written testimony to the
committee.
Number 472
CHAIRMAN TAYLOR asked if Alaska could amend or change federal anti-
trust requirements if Alaska law states that it is no longer within
the area of control of antitrust.
MR. HAUGEN responded that under the state action doctrine the
Supreme Court set out an exemption from the federal antitrust laws
that effectively gave states the authority to create an exemption.
This is what APS is asking the State of Alaska to do.
CHAIRMAN TAYLOR asked if the primary purpose of SB 37 was to
bargain for or gather together plans, as opposed to fixing the
price for any given service.
MR. HAUGEN said it could be for both, depending on whether or not
the carrier has what is deemed substantial market power. Alaska
has two large carriers, Aetna and Blue Cross. The percentage rules
would deem both carriers to have substantial market power. Under
these guidelines, a group of physicians would be allowed to
negotiate fees, provided that the carrier and physicians wanted to
negotiate and the AG approved the negotiations. In other words, it
is completely voluntary, even the fee component.
CHAIRMAN TAYLOR said he thought fees were not authorized in SB 37.
MR. HAUGEN said that fees are authorized provided that certain
requirements are met.
CHAIRMAN TAYLOR requested a copy of the federal law that provides
for the exemption, because Mr. Haugen has indicated that the
federal government has modified the definition of antitrust so that
doctors can negotiate for price.
MR. HAUGEN commented that this is a question that the committee may
want to raise with Mr. Jordan of the state medical association. To
Mr. Haugen's knowledge, lawyers for the American Medical
Association have reviewed this and their conclusion is that Texas
does comply.
CHAIRMAN TAYLOR said that he would like to be well briefed on the
antitrust aspects, both state and federal, of this amendment before
moving forward with the bill.
Number 823
MR. HAUGEN continued by saying that he represents 165 physicians
from Anchorage in an independent practice association (IPA) called
Alaska Physicians and Surgeons (APS). APS is one of the groups
that will potentially do contracting.
MR. HAUGEN said APS strongly disagrees with some of the issues
brought up by the AG's office. APS feels that a bill like SB 37
will promote competition. It is prohibitively expensive for most
small carriers to put much effort into Alaska given the dominance
of Aetna and Blue Cross. If small carriers had the assurance they
would be dealing with a large group of doctors when negotiating a
contract, they would be much more likely to invest the money
required to market a new plan in Alaska. This will give consumers
additional choices and promote competition.
MR. HAUGEN said SB 37 is a voluntary bill. Physicians, carriers
and the AG have to agree not only on the contractual terms but also
on the fees that are negotiated. The AG can simply say no if it
were felt that the doctors have gotten out of line or the fees
negotiated would harm consumers. This is a mechanism that allows
physicians to discuss contract issues and patient advocacy issues
with carriers without the threat of the Federal Trade Commission
(FTC) coming in and investigating them.
MR. HAUGEN stated that APS is strongly in favor of SB 37, even
though it is not a perfect bill.
Number 952
SENATOR THERRIAULT referred to a letter submitted by the AG's
office which says SB 37 needs to clarify whether negotiations are
voluntary or not. The letter points to sections C and D, saying
that the language implies that all health benefit plans are
required to negotiate with the authorized third party unless it can
prove that it does not have substantial market power. Senator
Therriault asked if there is somewhere in SB 37 that clearly states
negotiations are voluntary on both sides.
Number 1001
MR. HAUGEN responded that this is clearly stated on page 5, line
12, section 2:
(2) within 14 days after receiving a health benefit plan's
decision to decline to negotiate or to terminate negotiations, or
within 14 days after requesting negotiations with a health benefit
plan that fails to respond within that time, report to the attorney
general that negotiations have ended or have been declined;
SENATOR THERRIAULT read from SB 37, page 3, subsection (e):
(e) In exercising the collective rights granted by (a) and (c)
of this section,
(1) physicians may communicate with each other with
respect to the contractual terms and conditions to be negotiated
with a health benefit plan;
(2) physicians may communicate with an authorized third
party regarding the terms and conditions of contracts allowed under
this section;
SENATOR THERRIAULT then asked if this is the section where language
would be added to clearly state that physicians could get together
to form groups.
MR. HAUGEN thought this would be the correct section.
Number 1071
SENATOR ELLIS asked about the earlier reference to "model
legislation" and whether this was modeled after the Texas statute
or a national organization recommending model legislation to states
all across the country.
SENATOR THERRIAULT said that this is what he was alluding to
[indisc.].
SENATOR ELLIS commented that right now he is not in the frame of
mind for Texas to be a model for Alaska.
Number 1024
SENATOR THERRIAULT wondered if a doctor thought her patient needed
an MRI would she be able to pursue whatever course she thought
necessary or would she have to go through an insurance company for
approval.
MR. HAUGEN said this would be considered preauthorization for a
procedure and preauthorization can be negotiated. Preauthorization
may make a lot of sense for an expensive procedure but a routine
procedure could have a different standard.
Number 1184
CHAIRMAN TAYLOR asked how doctors set fees.
MR. HAUGEN said this is a very big question. Setting fees in
medicine is different from setting fees in other businesses - it is
not what the market will bear. A given price can be charged for a
procedure but ultimately what is paid is what the insurance carrier
is willing to pay. This is a case-by-case proposition for a
physician.
CHAIRMAN TAYLOR commented that he does not necessarily want big
insurance companies negotiating with APS for the level of coverage
a patient will receive.
Number 1558
MR. DAVE WILLIAMS, Division of Medical Assistance (DMA), Department
of Health and Social Services, said he would be happy to answer any
questions.
SENATOR THERRIAULT asked if DMA has taken a position on SB 37.
MR. WILLIAMS replied that he had only read the bill an hour ago and
DMA does not yet have a position.
Number 1581
CHAIRMAN TAYLOR asked if he had any concerns with SB 37.
MR. WILLIAMS responded that he did have a question regarding the
definition of a health benefit plan: Is Medicaid a part of this
plan? Medical Assistance would also want to negotiate - they have
that ability now.
Number 1651
SENATOR THERRIAULT asked during a negotiation, which is the group
negotiating?
MR. WILLIAMS answered that rates are set during public meetings;
negotiations are not with any group in particular. DMA listens to
the group concerns, thinks about what is right, what covers the
Medicaid population, and what insures access to the services.
Number 1799
MS. KATIE CAMPBELL, life and health actuary for the Division of
Insurance (DI), Department of Community and Economic Development,
commented that SB 37 is geared toward a managed care market where
HMOs are actually negotiating fees. In Alaska fees are not
negotiated. Insurance companies collect bill data from physicians
and statistics are run on that data. It is then determined what
percentile of billed charges will cover most of the charges. For
example, if the price range is $1,000 to $4,000, at some point most
of the physicians are covered 100 percent. Alaska regulations say
that databases have to be updated every six months for the most
recent charges. Fees for a service are not negotiated; fees are
paid based on what most physicians are charging for a service.
CHAIRMAN TAYLOR asked what happens if physician A charges $1,000
for a certain procedure, the overall state average is $1,500, and
another physician charges $2,000.
MS. CAMPBELL replied the insurer would pay up to what ever the
reimbursement level is set at. For example, if there are 20 MRIs
ranging from $1,000 to $3,000 and the fee for 15 of the procedures
is under $1,800 and the reimbursement level is set at $1,800, "they
will pay up to the $1,800 or the $1,500." The insurer will pay up
to the average. Therefore, 80 or 90 percent of the billed charges
will be covered 100 percent.
CHAIRMAN TAYLOR asked what happens to the remainder.
MS. CAMPBELL answered it will be "balanced billed" - charged to the
insured - or it will be written off because it is under contract
with the insurance company that they agree not to bill beyond that
charge if they are under contract with the provider.
Number 2003
SENATOR THERRIAULT clarified that under contract they will agree
not to charge what they normally would have, they will reduce the
charge or they will preserve their right to bill the patient for
the extra amount.
Number 1950
MS. CAMPBELL said it is common under contract with the providers
that they will not bill their patients beyond what is determined to
be usual, customary and reasonable. If there is a contract with
the provider, the provider will not charge the excess to the
insured. Otherwise, the provider has the option to bill the
insured directly. This is how the insured market works in Alaska
because Alaska does not have HMOs or an organization that sets
fees. This legislation is based on national legislation where
there is more managed care.
Number 2003
SENATOR THERRIAULT asked for Ms. Campbell's comments on limited
providers and whether this proposal will give Alaska the ability to
attract competition for insurance coverage.
MS. CAMPBELL responded that it is questionable as to whether or not
this legislation will draw competition to Alaska. The market in
Alaska is vulnerable because there is a large federal and state
population that is not insured, high fixed costs for operating, and
a small population.
Number 2071
MS. CAMPBELL commented that DI's primary concern with SB 37 is the
potential impact on the consumer. Negotiations will result in
higher fees. All studies on antitrust have projected some level of
increase for health care. Even small increases in cost result in
more uninsured. Small employers are already struggling with large
costs of health care and many have been dropping coverage and
reducing benefits.
Number 2176
MR. ED SNIFFEN, Fair Business Practices Division (FBP) for the
Department of Law, said he is responsible for a lot of the state's
antitrust review and enforcement, and he has submitted detailed
comments to the committee.
MR. SNIFFEN said FBP has some legal and policy concerns about SB
37. The policy concerns are whether or not there has been a
demonstrated need for this type of legislation. The legal concerns
deal with the potential antitrust impact the bill might have.
MR. SNIFFEN added that there is a national policy favoring
competition and disfavoring negotiated agreements among competitors
in a market place. The exception comes in the form of the state
action immunity doctrine. The doctrine says that competition can
be replaced with a well regulated and thought out plan to supplant
what competition otherwise takes care of. In this particular case,
FBP does not believe that SB 37, in its current form, addresses
these concerns because there is no provision that allows for this
type of detailed and interactive state participation in the
negotiations with physicians. FBP does not believe the FTC will
agree that SB 37 meets the state action immunity doctrine.
MR. SNIFFEN said there is no provision that allows the AG's office
to review and approve the proposed negotiations in determining
whether negotiations are within the authority of SB 37. SB 37 does
not require a third party representative to provide the AG with
detailed information for making any type of determination on the
price or cost that is being negotiated. SB 37 imposes substantial
responsibility on the AG to review and approve negotiated contracts
only after a third party representative has submitted them within
30 days.
MR. SNIFFEN said there are other provisions of the bill that do not
implicate the level of state involvement that will be required to
get around the state action immunity defense.
Number 2320
CHAIRMAN TAYLOR asked if FBP has prepared amendments to overcome
these difficulties.
MR. SNIFFEN replied he did not know what amendments could be made
to overcome these concerns. It has been suggested that if there
were no price related provisions, SB 37 could be structured so that
nonprice terms could be negotiated without antitrust infractions.
Nonprice terms can have a significant impact on price terms,
depending on what the terms are, what they require, and how
specific they get. Even if price terms were removed there would
still be significant antitrust concerns.
CHAIRMAN TAYLOR asked if he has reviewed the Texas law.
SIDE B
MR. SNIFFEN answered that he has not reviewed it in any detail, but
he understands that the Texas law deals with HMOs that are not in
Alaska. Texas is having some difficulty implementing regulations
to carry out the law but he does not have any information on the
details.
MR. SNIFFEN said Washington law is limited to nonprice terms
without the ability to negotiate for price terms. Washington
regulations allow for significant involvement with the Department
of Health. The regulations require certain protest procedures to
occur for submission of detailed information. There is an appeal
process where hearing officers take testimony. The state has a
detailed and active involvement in the process.
CHAIRMAN TAYLOR asked if it was true that insurance companies do
not have to adhere to antitrust laws.
MR. SNIFFEN said that he does not know if that is true as a general
statement. He does know that there are some exceptions in the
antitrust law for certain insurance entities that are regulated by
the state. Under certain provisions of the Employment Retirement
Income Security Act of 1974 (ERISA), any state law dealing with
employee benefits are preempted by ERISA. He does not know if SB
37 would have some of these problems as well. But there have been
some judicial decisions that have narrowed the scope of those
limitations.
SENATOR COWDREY asked about the problems other states have had.
MR. SNIFFEN responded that his understanding from the Texas
Assistant Attorney General is that there have been problems in
drafting the regulations and they were not able to finish them as
soon as they wanted. He does not know if these problems were
insurmountable but they were more than anticipated. He will find
out more details on this and submit his findings to the committee.
SENATOR COWDERY asked if the antitrust issue would not be the same
in all states that have similar laws.
MR. SNIFFEN replied yes, because this is a federal issue.
Washington dealt with their law by excluding some price terms and
provided for significant state involvement. The jury is still out
on whether or not the Texas law will pass FTC muster.
SENATOR COWDERY asked how long the Texas and Washington laws have
been in effect.
MR. SNIFFEN said the Texas law passed in late 1999 or early 2000
and Washington's law has been in effect since 1996.
SENATOR COWDERY commented that he would like to know how other
states have solved their antitrust problems.
CHAIRMAN TAYLOR read from the State Action Doctrine and asked if
this is the definition FBP is working with:
In general, the state action doctrine states that the
antitrust actions do not apply to actions by a state
operating its sovereign capacity, or to private conduct
compelled or approved by the state.
MR. SNIFFEN said that was the start of the definition but it has
been refined through a number of cases. The letter he sent to the
committee contains a number of these cases. The U. S. Supreme
Court has defined and refined what the test is, which means that
Alaska needs to undertake a level of involvement that is very
active before it can supplant this type of competition to get
around the antitrust law.
CHAIRMAN TAYLOR said he would like it if Alaska's physicians and
care providers had at least some opportunity to negotiate with
large carriers. The committee needs to know the level of state
intervention or action that must be in the legislation to get
within the Parker Doctrine of acting within sovereign capacity or
approving the private conduct of others so that state or federal
antitrust laws are not violated.
MS. LAURA SARCONE, Alaska Chapter of the American College of Nurse
Midwives (ACACNM), said she is testifying in opposition to SB 37.
She read the following statement:
SB 37 will give broad antitrust immunity to negotiations
between individuals, competing physicians, and health
benefit plans. This bill will protect price fixing,
drive up health care costs, and let physicians obstruct
opportunities for advanced nurse practitioners and nurse
midwives to participate as providers in health benefit
plans.
Advanced nurse practitioners are health care providers
who increase access, improve outcomes, lower costs, and
increase satisfaction rates. Their scope of practice
under Alaska law recognizes the value of the services
they provide to the citizens of our vast and diverse
state.
SB 37 gives physicians leverage to legally establish some
of the more onerous anticompetitive practices such as
price fixing. While at the same time eliminating options
for the public or individual providers to challenge such
conduct and practice. Consumers, employers, and the
state and federal government as purchasers of health care
will be stripped of any remedy for higher prices. State
and federal antitrust law enforcement will be barred.
Physicians can already form physician only individual
practice associations or IPAs and negotiate as a group
with health benefit plans.
SB 37 will allow physicians to form cartels and negotiate
with health benefit plans. The special antitrust
protections afforded physicians by this bill are not
available to any other self-employed professionals.
ACACNM believes the immunity proposed in this bill is
unnecessary. Antitrust law already provides a remedy
against anticompetitive abuses by health benefit plans in
their dealings with health care providers. State and
federal laws and initiatives can address the practices of
health benefit plans. Permitting provider cartels will
not solve problems it will only create new ones. This
bill will be particularly harmful to advanced nurse
practitioners and certified nurse midwives whose expanded
role in health care has often been opposed by physicians.
Advanced nurse practitioners and certified nurse
midwives are health care providers who increase access,
improve outcomes, lower costs, and increase satisfaction
rates.
In 1998 over 1400 Alaskan mothers chose a certified nurse
midwife to attend the birth of their baby. That
represents 16.7 percent of all vaginal births that
occurred in the state that year. It has been said that
this bill does not and cannot impact other contractual
relationships such as one between an advanced nurse
practitioner and a health benefit plan. But I would like
to outline one scenario of what could happen. For
instance, after negotiating a behind closed door contract
with a group of physicians, a health benefit plan may
elect not to renew or not to enter into a contract with
an advanced nurse practitioner. The advanced nurse
practitioner may believe that some aspect of the
physician contract has influenced this decision,
effectively serving as a restraint of trade. But under
SB 37, the advanced nurse practitioner has no recourse.
Alaskans insured by that health plan have lost the option
to choose nurse practitioner or nurse midwifery care.
SB 37 legislates away important trade and practice
protections that advanced nurse practitioners and other
nonphysician providers currently enjoy. Some have
suggested that advanced nurse practitioners could create
their own bill, allowing them to also negotiate
collectively with health benefit plans. The reality of
the health care market place is that health benefit plans
must negotiate with physicians. They need physicians in
order to conduct their business and offer a full range of
medical services. They do not need advanced nurse
practitioners in the same way. Advanced nurse
practitioners will never have the market share or
bargaining power of physicians. We want to care for
patients and do business in the marketplace with the
anti-trust laws protection. We do not need or want to be
protected from antitrust laws.
In conclusion, advanced nurse practitioners and certified
nurse midwives are health care providers who increase
access, improve outcomes, lower costs, and increase
satisfaction rates. Consumers in Alaska want to choose
the health care provider who best meets their needs. SB
37 will both limit choice and increase costs and Alaskans
deserve better than this.
CHAIRMAN TAYLOR asked if it is Ms. Sarcone's belief that insurance
companies are constrained by antitrust law.
MS. SARCONE replied that she said physicians can already form
independent practice associations. They can negotiate through this
system. Ms. Sarcone deferred to Mr. Sniffen on this question.
MR. SNIFFEN responded by saying that insurance companies are
constrained by some antitrust concerns but there are exemptions for
certain insurance companies that are regulated by the state. He
will furnish the committee with a more detailed answer at a later
date.
CHAIRMAN TAYLOR commented that he thought insurance companies were
exempt under state and federal law. If they are constrained by
antitrust, what is to prevent Aetna and Blue Cross from agreeing to
make their plans the same. Is there anything that would constrain
them from doing this?
MR. SNIFFEN replied that the McCarren-Ferguson Act says there is a
statutory exemption for certain types of insurance entities from
the Sherman, Clayton and FTC Acts, which are the primary acts that
comprise the antitrust laws. The activity that would otherwise
violate the antitrust law has to be part of the business of
insurance, authorized and regulated by the state. It will then be
immune from attack. What might prevent insurance companies from
doing this could be state regulation, which has supplanted this
type of antitrust behavior.
MR. JIM JORDAN, Executive Director for the Alaska State Medical
Association (ASMA), said that ASMA has provided the committee with
written testimony. MR. JORDAN said he would like to respond to
some of the earlier testimony and questions.
MR. JORDAN said the language in SB 37 is modeled after the American
Medical Association's (AMA) model language, as is the Texas
language. This language has been "Alaskanized." SB 37 also
includes provisions that are not in the AMA model. These
provisions have to do with definitive areas the AG will review in
making a decision as to whether or not a particular negotiation
falls within the parameters of the law.
CHAIRMAN TAYLOR asked if ASMA has gone to the AG's office for
agreement.
MR. JORDAN replied that the issue with the AG's office is what
constitutes sufficient state oversight in order to qualify for the
state action exception. The language dealing with the parameters
in establishing what the levels of review are in regards to what
they should contain are taken from Pennsylvania's act, which is in
process. It was attempting to provide a checklist of the items
that will satisfy that standard. This will not preclude the FTC
from looking at any negotiations that will take place in the
future.
CHAIRMAN TAYLOR asked him to comment on the testimony given by Ms.
Sarcone.
MR. JORDAN said the AG has the act of oversight that will look at
these questions. "In 25.30.20, sub I," one of the concerns was
dealing with access - dealing with protections for access to
quality patient care. There are protections in the oversight the
AG can give. There is a prohibition from the physicians, in their
activity involving negotiations, from involving themselves in any
activity that will involve a boycott.
CHAIRMAN TAYLOR reflected that a boycott would not be needed to
actually draw up a plan that favors physician deliveries over
midwife deliveries. It would not take a boycott, just an amendment
to the plan.
CHAIRMAN TAYLOR announced that SB 37 would be discussed again at a
later date.
SB 21-FINES BY THE STATE MEDICAL BOARD
SENATOR DONALD OLSON, sponsor of SB 21, read the following
statement:
I introduced SB 21 to increase the monetary sanction that
the state medical board may impose on a licensee upon a
finding of a professional or ethical misconduct. The
bill increases the maximum penalty from the $10,000 limit
that is currently in statute to $25,000.
I feel the justification for SB 21 is twofold. First of
all, the maximum sanction of $10,000 does not provide a
sufficient monetary deterrent, given the economic status
of many licensees. Most often, the severity of the
penalty is in no manner equivalent to the damage caused
in extreme cases of misconduct. Furthermore, the $10,000
limit has not been changed since it was first enacted 14
years ago.
A second reason for SB 21 is the increasing costs that
the board is experiencing in its caseload management of
misconduct litigation and allegations. It is not unusual
for the costs of a misconduct determination to exceed the
$10,000 penalty limit. Since the activities of the board
are wholly supported by licensure fees and fines,
increased costs of operation usually translate into
license fee increases. SB 21 offers a second way to meet
increasing caseload costs. It expands the board's cost
recovery ability through increased fines. In practice
then, the financial burden for this regulatory activity
may be shifted from the general membership to the
wrongdoers themselves.
Currently, the board has 188 cases that are open for
potential investigation and adjudication by the Division
of Occupational Licensing. During calendar year 2000,
130 new cases were opened and 133 closed. This effort
resulted in 35 disciplinary actions against medical board
licensees. In fiscal year 2000, the costs of pursuing
misconduct charges exceeded $160,000.
MS. CATHERINE REARDON, Director for the Division of Occupational
Licensing, Department of Community and Economic Development (DCED),
said DCED and the medical board support SB 21. SB 21 will give the
medical board options for appropriate sanctions and effective
deterrents for certain types of misconduct.
SENATOR THERRIAULT asked what type of notice was put out to
individual licensed physicians that this was being considered.
MS. REARDON answered that a notice was not mailed to licensed
holders. The medical board met January 18th and 19th. It would
have been generally noticed that the meeting was going to take
place. The meeting was scheduled a month ago and SB 21 was not on
the list of topics at that time.
SENATOR THERRIAULT asked for a list of all licensed physicians in
the Fairbanks area.
MS. REARDON agreed to furnish the list.
SENATOR THERRIAULT moved to pass SB 21 with individual
recommendations. There were no objections and it was so ordered.
CHAIRMAN TAYLOR adjourned the meeting at 2:55 p.m.
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