SENATE BILL NO. 193 An Act requiring insurance coverage for certain costs of birth; and providing for an effective date. Co-chairman Halford directed that SB 193 be brought on for discussion. BRUCE RICHARDS, aide to Senator Judy Salo, came before committee. He explained that the bill would require 48-hour mandatory coverage of postpartum hospitalization and medical care for a mother and new-born baby for regular vaginal delivery and 96 hours for a Cesarean section. The legislation was introduced in response to a call from a constituent who was not authorized to remain in the hospital after 24 hours and did not believe she was ready to be discharged. Review of the situation indicates this is becoming a nationwide issue. Six states have passed similar legislation, and it is under consideration in 16 others. Mr. Richards referenced subsection (c), commencing at page 1, line 13, and stressed that the bill does not require mothers and infants to remain in the hospital for 48 or 96 hours. If the mother and physician are in agreement, discharge may occur prior to stated time frames. Senator Donley expressed concern over "to what great lengths insurance companies go to avoid providing coverage" and noted that statutory language has previously been twisted in dramatic ways. GORDON EVANS, Health Insurance Association of America, came before committee voicing opposition to the bill. He said the association opposes all legislation which mandates coverage since it tends to raise costs. The instant bill would merely add another law to cure a non-existent problem in Alaska. Mr. Evans pointed to great strides made by the health care industry in providing and delivering quality care at reduced costs. One means of achieving the reduction was to lower the number of in-patient hospital stays for a variety of illnesses, including the length of maternity stay. The average stay for maternity is not the result of a change in policy by insurance companies but the result of a long trend of steady decline. The average stay for vaginal delivery was 4 days in 1970, 2.2 days in 1988, and 2 days in 1993. That decline is consistent with the decline for other services, due to increased medical knowledge and advances in patient care. Mr. Evans acknowledged that the health care industry has not gotten across some key points in "this mostly emotional issue." The issue does not involve debate about "covering medically necessary care." If hospital care is necessary, insurers will cover it for as long as needed. The real issue is whether, and how, insurers and policy holders should cover care that is not medically necessary or which does not need to be provided in an unduly expensive setting such as a hospital versus a home or hotel. Critics of early discharge fail to understand that not paying for unnecessary care or care in unnecessary settings is what enables insurers to offer numerous other services managed care programs provide. Mr. Evans cited "well-baby," dental, and vision coverage as examples. He stressed that "nobody wants a discharge program that jeopardizes the health of a mother or child." The industry would not be utilizing early discharge programs if they were not medically safe. There is a lack of data indicating that early discharge before 48 hours after vaginal and before 96 after a Cesarean section is harmful or unsafe for the mother or baby. Advocates of proposed new mandates within CSSB 193 (L&C) have provided no evidence that insurance companies doing business in Alaska are systematically requiring mothers and infants to be discharged before they are medically ready. There is no empirical evidence to suggest how long a hospital maternity stay should be. The American College of Obstetricians and Gynecologists suggests that: There is relatively little scientific data on the ideal length of hospital stay for delivery. The American Medical Association has taken a similar position. The Health Insurance Association of America believes that services and length of hospital stay for mothers and infants should be determined on a case-by-case basis and on medical necessity for both mother and child as determined jointly by a mother and her doctor. Co-chairman Frank voiced his understanding that if a doctor now determines that a woman should remain hospitalized for longer than 48 hours following a regular birth, no insurance company now doing business in Alaska would refuse to cover that care. Mr. Evans concurred in that understanding. Discussion followed concerning the situation which gave rise to introduction of the legislation. Mr. Evans advised that one of Senator Salo's constituents indicated she was forced to leave the hospital before 24 hours. He acknowledged that an isolated case of early discharge might have occurred, but he said he had no knowledge of such a case. No complaint was filed with the Division of Insurance. NANCY WELLER, Medical Assistance Administrator, Division of Medical Assistance, Dept. of Health and Social Services, came before committee in response to a question from Senator Rieger asking if the proposed bill would impact Medicaid. She explained that while it is unclear whether or not there will be impact, and the sponsor has requested a legal opinion, impact is not anticipated because the legislation does not require hospitalization. The bill speaks to hospitalization or medical care for a certain number of hours following delivery. The Medicaid program provides 24 hours of in-patient care for vaginal delivery and 72 hours for a Cesarean section without a request for prior authorization for extended stay. If the physician feels the mother needs to remain hospitalized for a longer period, the professional review organization is called, medical information is shared, approval is obtained, and Medicaid pays for the care. Medicaid also provides for "any medically necessary services for the pregnant woman and the child following delivery." If the mother is only Medicaid eligible because she is pregnant, she "gets two months of all health care services covered by the program following discharge from the hospital." Senator Rieger voiced his understanding that should Medicaid be impacted by the proposed bill, current program procedures would remain unchanged. Mrs. Weller concurred, advising of her understanding that the bill does not require 48 hours of hospitalization. In response to a question from the Senator, Mrs. Weller said that children born to women on Medicaid receive "an automatic one-year coverage of Medicaid without reapplying for coverage." In response to questions from Co-chairman Frank, Mrs. Weller explained that Medicaid policies are similar to those of insurance companies in terms of provision of 24 hours of care for vaginal delivery in a hospital. If the mother requires additional care, the physician calls and requests permission for an extended stay. The Co-chairman advised of his understanding that the legislation would require that the mother remain in the hospital for 48 hours unless she and the physician agree on earlier discharge. Since that appears to differ from present Medicaid policy in terms of length of stay and pre-approval for an extended stay, it is difficult to understand why no cost would be involved. Mrs. Weller reiterated that the bill does not mandate an in- patient setting. It is thus questionable whether there will be impact on the program. Co-chairman Frank referenced the sponsor's intent that the patient remain in the hospital rather than merely under a doctor's care. Bruce Richards returned before committee to explain that the term "medical care" would cover home visits and return visits to the doctor. Co-chairman Frank again questioned the fact that the bill appears to mandate 48 hours while Medicaid specifies 24 hours, with prior approval for exceptional cases. He suggested that should the proposed bill pass, there would be an inconsistency between what private health care providers are required to cover and what Medicaid provides. At the present time, private insurance and Medicaid appear to be comparable. Should the proposed bill pass, Medicaid would become substandard relative to the new mandate. Mr. Richards voiced his belief that the proposed bill would cover Medicaid. He suggested there would be no increase in costs because Medicaid is living up to the spirit of the law at the present time. Authorization after 24 hours is forthcoming under Medicaid. Medicaid also pays for medical care once the patient is discharged. In response to additional questions from Co-chairman Frank, Mr. Richards explained that the proposed legislation responds to "a small problem in Alaska." It is more prevalent in the "Lower Forty-eight" due to health maintenance organizations. The intention is to "nip this problem in the bud." Some places in California are discussing discharge as soon as six hours after delivery. While no evidence indicates 48 hours is the "magic number," there is also no evidence to suggest that early discharge is safe. The American Academy of Pediatrics has asked for a moratorium on the issue. Co-chairman Frank advised of difficulty envisioning a situation in which a doctor recommends continued hospitalization but the hospital nevertheless discharges the patient. Mr. Richards said that the question is not whether the individual will be discharged but "Who is going to pay for the coverage if they stayed longer." People pay for medical insurance to cover situations such as that. Amendments contained within the proposed bill relate to the insurance title rather than health codes. Senator Rieger asked if reference to "insurer" would cover HMOs. Mr. Richards responded affirmatively. In response to a further question from Senator Rieger, Mr. Richards stressed that the proposed bill does not require a patient to remain in the hospital for 48 hours. Under bill language, the decision to leave earlier would be made by the patient and her doctor. Language commencing at page 1, line 14, and carrying over to page 2, lines 1 and 2, reflects the sponsor's intent that the decision be made by both the patient and doctor in consultation with one another. Senator Rieger referenced correspondence from a pediatrician who indicated that the best way to ensure a baby gets off to a healthy start is follow-up visits, especially in the first week. That is what is most commonly not covered by insurance. Mr. Richards explained that lack of bill provisions relating to follow-up care reflects Alaska's geography and the manner in which health care is provided across the state. Co-chairman Frank voiced reluctance to place arbitrary time periods in statute. He then questioned why the decision on length of stay should not be left to the doctor to decide. END: SFC-96, #33, Side 1 BEGIN: SFC-96, #33, Side 2 The Co-chairman next asked how a stay beyond 48 hours would be covered. Mr. Richards responded that most insurance companies would cover medically necessary costs. Co-chairman Frank suggested that the focus of the bill is "this feeling that the mother may not be ready to leave" rather than reliance on a medical professional's opinion. Mr. Richards explained that the physician would consult with the patient prior to making a decision. That is why bill language relates to a decision by the mother and the "health care provider" rather than the doctor alone. Co-chairman Frank suggested that a specific time frame might not be necessary if the decision is left to the doctor. That appears to be more logical than placing an arbitrary limit in statute. Mr. Richards reiterated that the bill deals only with who is going to pay for the initial 48 hours. Co- chairman Frank again voiced concern over legislative mandate of a specific time frame, saying that it moves away from the professional judgment aspect of individual cases. Individuals want insurance to cover costs, and costs should be medically reasonable and necessary. Senator Sharp inquired regarding the frequently of incidences in which a physician has recommended a stay longer than 24 hours for which an insurance company has refused to pay. Mr. Richards described that occurrence in Alaska as "very small." The problem is growing outside of Alaska and only starting to show here. BOB STALNAKER, Director, Division of Retirement and Benefits, Dept. of Administration, next came before committee. Co-chairman Halford referenced fiscal note information estimating a monthly per-employee charge of $1.78. Mr. Stalnaker explained that the $104.0 note (dated 2/21/96) stemmed from analysis of potential impact of increased hospital stays. Numbers were predicated on what the department thinks experience will be. State plans are experience rated. In such situations, it is common for the department to show costs in the analysis section. Mr. Stalnaker directed attention to an updated zero fiscal note and referenced amounts set forth within analysis language. The current plan pre-certifies pregnant women for one day for a vaginal delivery. If complications arise, coverage is not denied, regardless of the length of stay, if there is medical necessity. Experience shows that most women who go to the hospital for delivery want to leave as quickly as possible. Mr. Stalnaker said he was unaware of individuals or physicians disagreeing with the present approach. He subsequently noted that he knew of one case where the individual was upset because she was not pre-certified for two days. Mr. Stalnaker acknowledged attempts in California to bring the time down to six hours. With increased managed care there is a "tendency to try to squeeze it as much as possible." What is happening nationally is a reaction to that. There is a reasonable point somewhere. That is why the department is neutral on the proposed bill. Mr. Stalnaker advised that he was not aware of any cases where the state disagreed with a doctor on what was prescribed for a particular patient. Co-chairman Frank said he was more comfortable leaving the decision on length of stay to the doctor's discretion rather than mandating a minimum. Senator Rieger inquired concerning the co-payment for an extended stay. Mr. Stalnaker advised of an 80% co-payment per the state health plan. A state employee can purchase an addition 10% coverage. The co-payment applies to any services, including delivery. Senator Rieger suggested that at a market cost of $600 a day for hospitalization, mothers would not frivolously remain if the extended stay would cost them $120. Mr. Stalnaker concurred, saying that the foregoing was considered when the department analyzed the bill. While experience might raise costs, the department does not know what those costs might be. It is not reasonable to assume that a mother would want to incur additional, unnecessary costs. He acknowledged that the legislation might not measurably impact the plan. However, it could increase stays. That will not be known until the department has some experience with the issue. Senator Rieger voiced his understanding that under the status quo, which is policy rather than law, the stay is 24 hours. It is then up to the discretion of the doctor, only, for the patient to remain beyond that time. Should the proposed bill become law, remaining for the next 24 hours would be up to the discretion of the doctor and the patient. Hospitalization beyond 48 hours would, again, be up to the discretion of the doctor. Mr. Stalnaker concurred. Senator Rieger then voiced his belief that, in light of the co- payment, it is unlikely there will be great impact from the bill. Brief discussion of co-payments for insurance plans followed between Co-chairman Frank and Mr. Stalnaker. HARLAN KNUDSON, Alaska Hospital and Nursing Home Association, next came before committee, voicing support for the bill. He acknowledged pressure on both insurers and health care providers to lower costs. He questioned the qualifications of both himself and committee members to deal with an issue involving women and infants. He further attested to a lack of understanding of conditions in Alaska by out-of-state insurance companies when a physician calls to request authorization for extended hospitalization. He urged that members discuss the legislation with their wives, mothers, and sisters prior to a vote. When Senator Rieger asked about the actual cost of an extra hospital day, Mr. Knudson noted that, in delivery of care, hospitals tend to bunch charges into the first day. Subsequent days are generally less costly. Co-chairman Halford referenced the updated fiscal note reflecting impact of $125.0 to $250.0 in the analysis portion and questioned whether figures should be presented in that fashion or spread across cost columns. He said he was not convinced that notation in the analysis portion meets the letter of fiscal note law. He acknowledged, however, that that policy issue is not unique to the proposed bill. Discussion followed between Co-chairman Frank and Mr. Stalnaker regarding the impact of health care cost increases on the state plan. In the course of his comments, Mr. Stalnaker described deductibles and caps as methods of cost control. Further discussion followed concerning insurance provisions of state agreements with five employee labor unions and the commissioner's plan which covers non-union employees. Mr. Stalnaker noted that the state has experienced three years of no cost increases. The dynamics of health insurance increases "are starting to hit the plan again." The proposed bill will not "matter in the big scheme of things." It will not have material impact on the plan as a whole. Co-chairman Halford directed that the bill be held for further review.