HB 219-FIRE AND EMERGENCY MEDICAL SERVICES  8:59:41 AM CHAIR MUNOZ announced that the final order of business would be HOUSE BILL NO. 219, "An Act exempting certain emergency medical and fire department services from regulation as insurance." 8:59:47 AM REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, speaking as the sponsor of HB 219, paraphrased from the following written sponsor statement: HB 219 allows local fire and emergency medical agencies to solicit funding as a form of prepayment for services. This type of program has been successful in allowing such organizations to raise needed operating funds while limiting financial risk to those that may need the agency's services. In a typical scenario, an individual or family pays a set fee to the local emergency medical service on an annual basis. The agency then will respond and transport the individual or family member without additional charge to the individual. Under current statute, it is the opinion of the Division of Insurance that this type of activity is deemed insurance and is regulated by that division. HB 219 will clarify that this type of program is not insurance and is not regulated by the division. 9:02:05 AM REPRESENTATIVE GARDNER requested the sponsor explain the reference in the sponsor statement to "limiting financial risk to those that may need the agency's services." 9:02:26 AM MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State Legislature, began by clarifying that medical and fire services are interchangeable in the scenarios presented. Basically, an individual who pays a fee upfront for fire and emergency medical services and who requests those services may see a bill for the services, but won't have to pay it. To be clear, he pointed out that the individual's insurance company may be billed, but the individual wouldn't be held responsible for any of the additional charges beyond the fee. REPRESENTATIVE FEIGE highlighted that it takes funds in order to have a fire department, staff, and equipment ready and warm. Therefore, there has to be a mechanism to raise the funds ahead of time to pay its bills, training costs, and insurance. He related that even with an upfront fee, the service is still dependent upon volunteer staff. The benefit of the upfront fee for the community is that the insurance rates for the community can be lowered if the fire department can reach a certain level of proficiency, equipment, and staff. Therefore, there is a financial benefit to the community to have a fire department as well as an emotional benefit in terms of potential fires in the community. 9:06:09 AM REPRESENTATIVE GARDNER acknowledged that the current sources of funding for fire and emergency medical services may be inadequate to meet the needs or maintain the level of response capability desired. She then inquired as to the proportions of the funding for fire and emergency medical agencies, which she assumed included some state funds, federal funds, grants, donations, and insurance payments. MR. PASCHALL answered that it varies per department. Therefore, there are departments that are funded through tax levies and departments that are funded totally from voluntary funds [and in between]. In the case of the fire department with which he works, over the last year about 20 percent of its funding was generated from donations, about 40 percent of its funding was from the community corporation, and the remaining 40 percent of its funding was from the department's contract with the Alaska Division of Forestry to provide additional assistance for wild land fire protection. The contract funds are the single largest source of revenue because they can earn enough money in one year that it can be spread out over years when it doesn't earn money. 9:08:19 AM REPRESENTATIVE GARDNER surmised that although the fire department has made a contract with the Alaska Division of Forestry and has an obligation to respond, the department still has to rely on volunteers. She asked if that places the department in a difficult position. MR. PASCHALL noted that his fire department has additional equipment available specifically for the contract services in order to avoid depleting the response capabilities to the community as a whole. Furthermore, volunteers are hired to standby for the Alaska Division of Forestry contract. Since any fire during high fire season is a risk to wild land fires, the division allows the fire department to respond to a structure fire because they respond as well. The only time the contract services would take away from the local resources is when equipment is moved to the location of a fire. REPRESENTATIVE FEIGE clarified that the contract with the Alaska Division of Forestry isn't very specific as it's basically a contingency situation in which the division agrees to pay so many dollars per hour per day when it uses the department to fight a state fire. He emphasized that it's not guaranteed ahead of time, and thus that element of funding isn't steady. 9:10:39 AM REPRESENTATIVE AUSTERMAN inquired as to how many local organizations currently have a fee for service arrangement [such that it's a fundraising method]. MR. PASCHALL related that he knew of two fire departments that operate under the subscription arrangement and one ambulance service that's part of a fire department that waives the fee if they provide services. The City of Delta Junction had an ordinance to do this, but discontinued it because the city's attorney and the Division of Insurance told them it would be regulated as insurance. REPRESENTATIVE AUSTERMAN related the assumption that additional cost would be the only reason to not offer [the subscription arrangement]. MR. PASCHALL agreed. REPRESENTATIVE FEIGE interjected that essentially it's a hindrance for communities that aren't a municipality and don't have the ability to raise funds through taxation on their own. REPRESENTATIVE AUSTERMAN said he understands the principle behind the [subscription arrangement]. 9:13:45 AM CHAIR MUNOZ directed attention to the committee packet in which documents relate that there may be only 20 percent participation in the subscription fee arrangement. She inquired as to what happens to those who don't subscribe when they have a fire and there is a reluctance to respond. She also inquired as to whether the funds from 20 percent of the population would cover the true costs of the service being provided. REPRESENTATIVE FEIGE reminded the committee that HB 219 doesn't mandate anything; rather it just allows such a subscription fee to be charged. Each community will be different in terms of the basic limitations on cost. He informed the committee that it costs about $6,000 per year to run his local fire department, which he characterized "as very bare bones." He noted that in the past his fire department has received capital grants from the legislature in the amount of about $250,000 and those funds have been used to purchase equipment. He further noted that his fire department is heated mainly with waste oil heaters, which doesn't cost anything. He stated that the cost will be dependent upon how much each community will be willing to pay and how many in the community pay. Generally, about 35 folks in his community sign up [and pay] for service, which when combined with other funding sources covers his fire department's basic cost of providing the service. 9:16:28 AM CHAIR MUNOZ then asked whether those who don't pay the subscription fee receive service. REPRESENTATIVE FEIGE acknowledged that there is the desire to take care of as many people as possible. However, the reality is that money is necessary to pay the insurance and the money has to come from somewhere. In his community, the policy is that the fire department will respond to every wild land fire, but will only respond to structure fires of subscribers. From a legal perspective when the fire department responds to a structure fire of a nonsubscriber and doesn't respond to a subsequent nonsubscriber, the fire department is open to a lawsuit. Therefore, the fire department has to commit to those who subscribe to the service and no one else. 9:18:05 AM REPRESENTATIVE CISSNA related her understanding that doing due diligence in terms of safety would hold water in court. 9:20:04 AM LINDA HALL, Director, Division of Insurance, Department of Commerce, Community & Economic Development, noted that the committee packet should include a letter from the Division of Insurance that relates the division's belief, after legal research, that these subscription programs would fall under the definition of insurance, as statute is currently written. She clarified that she's really speaking to the fire department portion of the legislation, and opined that this is strictly a policy call of the legislature. She noted that other things are exempted from the broad definition of insurance. To offer insurance [a fire department] can either become an insurance company, which is an expensive and impractical route, or find an insurance company that's willing to provide a backstop. The latter has been utilized in the state with medical transports. She explained that the membership group still has to be licensed to sell the product, which is a fairly inexpensive process. Although the aforementioned isn't difficult, there may be some difficulty finding the backstop. As HB 219 proposes, the subscription program can be exempted from the title requiring insurance. She then expressed concern with subsection (f) located on page 1, line 6 regarding "ambulance and emergency services". The division's title, AS 21.87.010, already provides almost the identical language and considers the transportation for medical services to be part of health insurance, and thus is covered in the definition of health insurance. She pointed out that AS 21.87.010(5) says: "(5) ambulance or emergency medical services provided by a municipality, nonprofit medical service corporation, or nonprofit association if the person providing the services is certified under AS 18.08.082." The reference to AS 18.08.082 is part of the health and social services' statutes that require the individual providing the emergency medical services to obtain a certificate that is granted upon [completion] of training. The language in subsection (f) of Section 1 of HB 219 is very open and doesn't require any certification, and therefore would allow any nonprofit or municipality to start an ambulance service. The regulations under health and social services already cover this type of circumstance. Ms. Hall informed the committee that she has been involved in the medical transport area in the fire department service charges. There is one membership program that has an insurance backdrop and another that would qualify as a nonprofit and have been exempted under the aforementioned statute. Therefore, she opined that the ability to provide these services as a membership program is available for the nonprofits and thus she expressed her preference to not enact subsection (f) of HB 219 because it seems to be covered in the division's title and has worked. The actual exclusion of air ambulance services, which HB 219 proposes, was proposed about five years ago. At the time she said she supported the legislation while the House Health and Social Services Standing Committee didn't want those services exempted from the Division of Insurance's title. In closing, Ms. Hall urged the committee to consider that HB 219 would allow services that don't meet any criteria. 9:27:44 AM REPRESENTATIVE AUSTERMAN asked if HB 219 is broad enough to include the air ambulance service for which [one can subscribe]. MR. HALL answered that the legislation is broad enough that it would take away any of the Division of Insurance's oversight of that type of an entity. REPRESENTATIVE AUSTERMAN said that is of concern. 9:28:44 AM REPRESENTATIVE CISSNA asked whether the sponsor would be willing to specify a size of community in the legislation. 9:30:47 AM REPRESENTATIVE GARDNER surmised then that the division doesn't have much concern with the subscription service, but does have concern about the ambulance carrier portion of the legislation. MS. HALL replied yes. 9:31:18 AM REPRESENTATIVE GARDNER asked whether the sponsor would oppose language that would allow a fire department to require subscription service for communities where property owners are already paying property taxes to help support the fire department. She indicated the need to make sure the aforementioned isn't possible. 9:32:10 AM SEBASTIAN SAARLOOS, Member, City Council, City of Delta Junction, related support for HB 219. He also related that when the City of Delta Junction had a subscription service the City of Delta Junction fire department and the rural Deltana volunteer fire department would respond to all calls, no matter whether it was the property of a subscriber or nonsubscriber. Since the Division of Insurance deemed the subscription plan would be regulated as insurance, it was ended and the donations from the community have decreased significantly. 9:33:37 AM CHAIR MUNOZ reviewed the points raised today for the sponsor to consider. 9:34:20 AM MR. PASCHALL returned to the Division of Insurance's concern regarding certification of ambulance services. He related that after pointing out that statute does not require an ambulance service to be certified in the state, Legislative Legal Services agreed that there is only a provision for being certified in order to collect insurance. He also noted that in Alaska there is no requirement to have an emergency medical technician (EMT) in the ambulance. 9:35:29 AM REPRESENTATIVE GARDNER surmised then that an ambulance service without certification can't obtain insurance for the transport from that service. MR. PASCHALL replied yes. 9:36:09 AM MR. PASCHALL then returned to the type of organization and informed the committee that the air service businesses are typically for profit. The sponsor doesn't intend for HB 219 to apply to for-profit businesses and doesn't believe that it's written to apply to a for-profit business. The goal was to primarily target smaller communities. In response to Representative Cissna's comment regarding the size of the community, such a provision could be inserted. With regard to Representative Gardner's concerns about fire departments that obtain funding from property taxes also charging a subscription fee, Mr. Paschall related that currently almost all EMS services charge, even if they receive tax funding. Fire departments are also going to that model, particularly when there are multiple calls [to the same location] for fire alarms. He recalled that the City of Fairbanks charges for [fire and EMS services] called to a motor vehicle accident. 9:37:54 AM CHAIR MUNOZ announced that the committee will continue to work on HB 219, and thus HB 219 was held over.