HB 121 - DENTAL CARE INSURANCE Number 1318 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 121, "An Act relating to patients' rights under a health care insurance plan or contract providing coverage for dental care, and prohibiting certain practices by health care insurers relating to dental care." The chairman noted in the meeting's opening statements that the committee would take public testimony on HB 121 at this hearing, discuss a future hearing, but not move the legislation at this time. Chairman Rokeberg invited the bill sponsor forward. Number 1326 REPRESENTATIVE CON BUNDE, Alaska State Legislature, came forward. He noted the short title of HB 121 would be "Dental Patients' Bill of Rights." This legislation is about allowing Alaskans the right to maintain a high level of dental care. It is about allowing Alaskans the options and flexibility in their dental care. It is about continued access to the best care the patients and their dentists think is appropriate. At root, he thinks it is about quality versus quantity. It allows consumers to choose any dentist they wish to see, including specialists. It prohibits insurers from reimbursing a covered person at a different rate because of the person's choice of dentist. It gives covered people the right to receive full information regarding their care options, without fear of adverse actions from insurance companies. It allows patients to take civil action against health care insurers to enforce their rights and requires any dental treatment plan review or utilization review to be conducted by a dentist. While it is a dental patient bill of rights, Representative Bunde commented it is also a small business bill of rights. REPRESENTATIVE BUNDE noted the vast majority of dental practices are small businesses. He indicated Alaska is, and ought to be, somewhat protective of its small businesses. Alaskans should have some concerns about what large out-of-state corporations might do to reduce Alaskan small businesses' opportunity to make productive livings and contributions to Alaskans. Representative Bunde said he is presenting the bill from both the patients' point of view and the rights of small businesses in Alaska. He commented on a common tendency to elevate health care professionals to a pedestal, not recognizing they have basic human needs. He noted one of dentists' needs are to have successful and profitable businesses. With that, Representative Bunde commended HB 121 to the committee. It protects average Alaskans and their rights to quality dental care and it protects the Alaskan small business. Number 1485 REPRESENTATIVE HALCRO asked if there is a problem with the current level of care. REPRESENTATIVE BUNDE replied there is a problem with the quality of care, noting he had indicated the quantity/quality concerns. He mentioned the possibility of problems with quality care if patients' access and amount of time with their dentist is limited, if the bottom line and the impact on large corporations are the only concerns. Representative Bunde indicated this is being looked at as preventative legislation, drawing the analogy to dentistry's common focus on preventative rather than restorative. REPRESENTATIVE HALCRO mentioned the committee's previous hearing of the Mental Health Parity Task Force Report [February 22, 1999] which recommended that the state mandate mental health care. Representative Halcro said the report had statistics showing a current problem existed with people not getting covered and the associated costs, albeit the supporting numbers were from out-of-state. He commented the supporting letters in the bill packet are all from dentists and he questioned if there has been any correspondence or outcry for this to be changed. Number 1568 REPRESENTATIVE BUNDE replied it is more preventative than restorative, as he had said, but he noted Dr. Logan [President, Alaska Dental Society] could give more direct information. Representative Bunde said there is also a patient online to testify. CHAIRMAN ROKEBERG commented on the sponsor's point that the legislation may be the small business bill of rights. The chairman noted the first goal of the Labor and Commerce Committee [House Labor and Commerce Standing Committee] is the protection of small business. He said a 180 degree shift could be made; small business could be negatively impacted by this bill because of an inability to get cheaper health care. The chairman indicated this is not necessarily his belief but he thinks the sponsor will receive that argument. Number 1615 REPRESENTATIVE BUNDE replied it is a matter of quality or quantity. He noted a person could get some very inexpensive dental care if he or she did not want to have access to specialists, spend more than two minutes with the dentists, and have accountants in Milwaukee making decisions about his or her care. Representative Bunde said he thinks the compromise lies in the middle. CHAIRMAN ROKEBERG asked if he knew from discussions with the dental society how many people in the state have dental care, whether ERISA [federal Employee Retirement and Income Security Act], non-ERISA or total. REPRESENTATIVE BUNDE pointed out HB 121 would not cover anyone with an ERISA policy. He indicated he would refer the question to Dr. Logan. CHAIRMAN ROKEBERG announced that for four years the committee has been trying unsuccessfully to find out how many people in Alaska are either insured or non-insured, and what type of insurance they are covered under. The chairman mentioned concerns with specific issues that have negative impacts, and problems with legislation that creates an insurance mandate. He asked, however, if it would be a fair characterization that this is a bill of choice rather than a mandate. Number 1694 REPRESENTATIVE BUNDE agreed. Regarding the chairman's comment about numbers, Representative Bunde noted the numbers are difficult to get from various sources. He stated he believes all businesses have a right to make a profit, indicating he does not wish economic harm to either an insurance company or to a dentist. Most importantly, he doesn't want the patient to be negatively impacted. Using the 'no such thing as a free lunch' analogy, Representative Bunde commented he is not coming before the committee with the idea he is going to create the expectations in Alaskans seeking dental care that there is a free lunch. CHAIRMAN ROKEBERG thanked both the sponsor and his staff member, Patti Swenson, for their presence. The chairman said the committee would next take teleconference testimony from Anchorage. Number 1775 JANET OATES, Director of Government Relations, Providence Health System, testified via teleconference from Anchorage in opposition to HB 121. Ms. Oates spoke from a prepared statement: "Providence expresses concern about HB 121. We certainly understand that dentists are worried about protecting their incomes. But at the same time we urge you to consider the needs of many Alaskan businesses who are doing their best to provide health and dental benefits to their employees. "Contracting for preferred provider relationships has been a significant factor in keeping insurance and health industry rates from spiraling out of control in Alaska. And those of you who've heard us testify in the past know how it works: it's basically a negotiated discount pricing in exchange for patient volume. This bill would eliminate the possibility of that approach in dental coverage. "We've also commented in the past about the issue of choice. And this bill talks about the covered person's choice. But it doesn't address the choice of an employer who offers a dental benefit and may well be covering a significant portion of the cost. When it comes to choosing no dental benefit or a benefit with a certain list of preferred providers, we suspect that many employers - and employees - would go with the latter. This bill interferes with an employer's opportunity to choose and manage affordable benefit package[s] which then in turn reduces access to care for many Alaskans. "Providence isn't in the dental business, but as one of the state's largest employers we know a lot about the cost of providing health and dental benefits to our own employees. And as a health care provider, we know the number of uninsured adults in Alaska remains high, and we would concur with reports we've seen that that number is about 80,000 or more Alaskans. And from both perspectives - as an employer and as a health care provider - we really caution you against taking actions that discourage employers from offering decent health and dental plans. And we humbly suggest that Representative Bunde's bill would have exactly ... an opposite effect from that which he's seeking. In health care, quantity equals experience, and experience equals quality. "Last year we saw the chiropractors carve out their own protection in SB 197. This bill carves out special protection for dentists. This isn't the path to greater health access for Alaskans and we urge you not to pass this bill." Number 1903 CHAIRMAN ROKEBERG asked about the 80,000 figure Ms. Oates used. MS. OATES indicated the figure of 80,000 uninsured adults came out of state and Medicaid figures and percentages of Providence's patients. Providence feels that figure is pretty accurate. CHAIRMAN ROKEBERG confirmed Ms. Oates agreed one of the Alaska's biggest problems is the state's large uninsured population. He asked if Providence is the state's largest employer. MS. OATES indicated she believes they are the second largest private employer after Carr-Gottstein Foods Company/Safeway Incorporated. In response to the chairman's further questions about the benefits Providence provides to its employees, Ms. Oates explained employees can choose from several plans, and they do offer comprehensive dental benefits at three levels. She noted Marci Burton could probably describe those levels better. Ms. Oates said Ms. Burton is in charge of Providence's benefit and coordinated care plans. Number 1975 MARCI BURTON, Regional Director for Managed Care and Physician Integration, Providence Health System, testified next via teleconference from Anchorage. Providence currently offers its employees four plans. One is a coordinated care plan which functions much like a point-of-service plan. Employees can choose to go to a primary care provider and have their care directed by that provider. If the employees go through that provider and use the referrals directed by the provider, care is covered at 80 percent, a larger percentage. However, the employees can also go to any provider of the employees' choice. Benefit coverage still exists but is provided at a lesser rate. Providence's other three plans are straight indemnity plans with varying degrees of deductibles. REPRESENTATIVE BUNDE noted, in regards to the 80,000-plus figure given for Alaskans without health insurance, that many Alaskans may have chosen a self-reliant lifestyle, away from government, which makes them unlikely to be involved in any business that would provide any health coverage. He indicated care must be taken not to deny this reality, and commented he thinks there will always be a large percentage of Alaskans who are not in any insurance pool. Representative Bunde noted this unfortunately causes those who are in the insurance pool to pay more, but this freedom of choice exists. Representative Bunde reiterated that although health care might have a revered status, it is still a business and health care will not exist if practitioners and providers do not stay in business. He indicated small providers in many communities go out of business when large entities begin competing; he doesn't know that encouraging this situation produces better dental care. Number 2080 REPRESENTATIVE HALCRO asked Ms. Oates if Providence's dental care is in the form of a PPO [preferred provider organization]. MS. OATES replied it is not, and she is not aware of any plan in the state that has a preferred provider relationship for dentists. She indicated she understands this legislation is concerned with future possibilities in regards to dentists. CHAIRMAN ROKEBERG asked Ms. Burton to send the committee a copy of Providence's employee dental coverage, thanking both Ms. Oates and Ms. Burton for their participation. Number 2143 WILLIAM FELL, DDS, testified next via teleconference from Anchorage in support of HB 121. He is an Anchorage dentist and belongs to a national board, Alliance for Dental Reimbursement Plans, which is mainly a patients' rights organization. Dr. Fell indicated he has been working on this issue for many years. For years the providers have (indisc.) law that they cannot charge a different fee for patients in an insurance system compared to a non-insurance system. They are mandated to charge the same fee. House Bill 121 mandates the insurance companies to reimburse at the same fee, making a fair playing field. Dr. Fell refuted Ms. Oates' analogy that quantity equals experience and experience equals quality. He noted it certainly does not work that way in dentistry. DR. FELL described that to make a profit under a low fee system, a dentist has to see a lot of patients and spend a very short time to accomplish things. The dentist can either speed up his/her work which often puts the dentist beyond his/her highest quality levels, or delegate some of the procedures to incompletely-trained ancillary personnel. As a result, if the dentist performs this kind of service day in and day out, he/she loses proficiency at the more difficult tasks. Therefore, in dentistry quantity does not always result in experience that allows a dentist to improve his/her quality. His experience is that most practitioners working in these facilities become disgusted with their competency level. DR. FELL indicated this practice may work in an emergency room, but not in dentistry if it is necessary to generate income from every procedure. Time is needed to do it correctly. Dr. Fell noted it would be an unfair situation, and would not be tolerated in the state, if a person receives $1,000 for his/her Permanent Fund Dividend if it is spent at a state store but only $800 if it is spent at COSTCO [COSTCO Wholesale Corporation]. He commented this legislation is just making it a fair relationship for the patient. The patient would be receiving equitable treatment from not only the provider but also from the insurer. Number 2268 REPRESENTATIVE HALCRO asked if Dr. Fell had lost any patients due to this. DR. FELL replied patients usually feel the insurance company represents and protects them, but the reality of the relationship is that it is profit-driven from the insurance company's side. He indicated he thinks an unfair relationship exists and it probably does have adverse effects on dentists' patients. He described that an insurance company practice is to send patients letters telling them the services rendered are above normal and customary fees without any justification in terms of [the fees of] corresponding other dentists in the specific area. This puts the dentists into an adversarial role with their patients - the patients are being told the dentists are somehow untruthful or unjust with regards to the patients' treatment. Dr. Fell indicated this misunderstanding is usually resolved but it still puts a strain on the dentist-patient relationship. He is sure that over 30 years of practice some patients, who had trusted him previously, have not returned because of a letter from an insurance company. CHAIRMAN ROKEBERG asked, in the way dental coverage is usually written, does the patient usually seek preapproval or does Dr. Fell's office contact the insurer. He noted his cost concern about the bill's current language regarding the utilization review approval in the first instance by a peer-level dentist. Number 2361 DR. FELL responded his office tries to provide that service for each patient who wants it done. As a courtesy and good business policy, his office submits the proposed procedure(s) to the insurer and the insurer sends back an estimate of coverage. He noted sometimes a patient knows his/her coverage for a specific procedure from past experience, so a predetermination is not necessary before treatment. Dr. Fell described his frustration with an out-of-state reviewer in one situation. He had performed a particular procedure and corrected the problem for less than the allowed amount but the insurer refused to pay. Dr. Fell indicated he had performed appropriate care for the patient and the patient was satisfied, but the reviewer said the insurer would not cover the procedure. Dr. Fell said the reviewer refused to reveal whether or not he was actually a dentist and became angry when asked how many years he had been in practice. Dr. Fell indicated review by an experienced dentist is sometimes appropriate; he expressed his amazement the insurer would refuse to pay for something that cost less money and solved the problem. CHAIRMAN ROKEBERG asked, "Correct me if I'm wrong, but you're saying that when you got preapproval, authorization, and (indisc.) estimate - and in this instance, the refusal to pay and you made an inquiry - you talked to a person at the end of the phone ... And so you weren't sure what level of competency they had?" Number 2451 DR. FELL agreed he had spoken by phone; he indicated one has no ability to determine the reviewers' competency levels. In a recent incident a particular carrier had hired an outside dentist as an independent adviser. Dr. Fell noted that relationship was very good: the other dentist was open about his experience, listened to Dr. Fell, and agreed he had performed the correct procedure. However, a number of times they speak with people who may not be dentists or who refuse to reveal it if they are. CHAIRMAN ROKEBERG asked if there is any utilization review done in Alaska rather than somewhere in the Lower 48. Number 2489 DR. FELL replied, "I used to be a Blue Cross representative for a period of time and I think Blue Cross still has -- and some of the other carriers may have up here, but what's the amazing thing that a lot of people don't know is most..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 99-27, SIDE B Number 0001 DR. FELL continued, "... dentists in terms of quality of work or whether it was appropriate work, it really comes down to peer review which is a voluntary organization made up of Alaska dentists. And we solve those problems and do not assess the patient the fee for it. And it's always been that way. And so the real protector -- and on our board, we have a lay person that represents non-dental interests, and it's amazing, many times the lay person (indisc.) partisan to this is the one that tells the reviewing dentist to back off. ... In grade school they ask you to pass your paper to the left, you usually got a tougher grading job from your peers than you did from the instructor." Dr. Fell thinks the dentists belonging to the peer review system are doing their very best to assure quality of care. He indicated the attempt is always made to be fair on both sides and the presence of a lay person assures that it will be a fair judgement. Number 0045 CHAIRMAN ROKEBERG asked Dr. Fell if he has ever been approached to join any kind of a managed care organization, or to provide limited service, or [service] to a limited group of people. DR. FELL replied he has a significant file of all the offers. He always tries to keep an open mind because he has patients who belong to these groups and he is not opposed to the concept of a PPO, HMO [health maintenance organization], et cetera. His main desire is that it be open-ended, which this bill would somewhat ensure: if someone leaves [the plan] he/she will be reimbursed at the same level. Unfortunately, he hasn't found one that reimburses at a rate he could afford for the amount of time the procedures take him. Dr. Fell noted he accepts the lower Medicaid and Veterans Administration set reimbursement levels without question because the patients need the assistance or have served their country; he does that because he thinks it is part of what is right. CHAIRMAN ROKEBERG asked if he knew of panels of dentists working in Alaska. DR. FELL replied there are some organizations with a list of selected dentists that they prefer their employees to use. This fits his definition of preferred provider organizations. ARCO [ARCO Alaska, Incorporated] and the Champus program [for military dependents] have these, and there may be more. Dr. Fell indicated one argument given is that if these organizations do not have control over which providers the patient base use, they will not be able to attract providers. However, as long as these organizations provide the dentist enough to have an economically positive relationship with the patient, they will always get their list of preferred providers. For example, Concordia [United Concordia Companies, Incorporated] initially offered an amount that would not allow dentists' to cover their overhead. No one signed up. Concordia threatened that it would bring its own dentists up, but soon changed its fee schedule just enough so that a few dentists joined. He commented the companies did not have to control people's freedom of choice to get providers. Dr. Fell noted the environment in Alaska is very competitive for dentists. Number 0191 MARIANNE BURKE, Director, Division of Insurance, Department of Commerce and Economic Development, came forward to comment on HB 121. As has been mentioned, HB 121 will not affect federal programs like Champus or self-insured employers covered by ERISA like ARCO. House Bill 121 will also not affect state self-insured plans, any federal plan, or the Indian Health Service (IHS). Noting that, Ms. Burke pointed out there is already legislation in place dealing with a number of the bill's provisions; these bill provision are redundant. No law prohibits choice and the division has the statutory authority to enforce that. No plan can restrict a patient's choice of health care provider, but there may be a difference in reimbursement. No law permits "gag order" or less than full disclosure. The division has statutory authority under AS 21.36 to enforce prohibitions against such unfair trade practices. This law has been in existence for quite a long time. Ms. Burke noted the division has no record of receiving a complaint from any Alaskan about a gag order regarding any type of insurance, not just dental. Number 0293 MS. BURKE agreed that utilization review should be performed by a peer. Someone reviewing proposed treatment for a patient's dental problem should be qualified to make those decisions. Ms. Burke noted there is sufficient statutory authority currently and the division has enforced this. In a market conduct examination on health care providers done by the division about three years previously, the division found the preliminary utilization review was being done by registered nurses (RNs). This was corrected. The division insists on peer-to-peer review. In response to the chairman's question that the Alaska Statutes contain peer review mandates for utilization review, Ms. Burke replied that if the review is not done by a peer, it is an unfair trade practice and the division would enforce it as such. In response to the chairman's request, Ms. Burke agreed to provide the committee with the line of reasoning, statutory reference, supporting case law, and the specific market conduct examination. Ms. Burke continued that HB 121, as written, would require the dentist performing the review to be Alaska-licensed. Nothing currently requires the person reviewing proposed treatment to have state licensure; she is not currently aware of any state requiring this. Number 0414 CHAIRMAN ROKEBERG said he did not believe the legislation mandated that the dentist be in Alaska. He referred the question to Representative Bunde. REPRESENTATIVE BUNDE indicated the legislation just says "dentist". MS. BURKE referred to the last definition in the bill, subsection (e), "(e) In this section, "dentist" means a person licensed in the state to practice dentistry." CHAIRMAN ROKEBERG agreed he sees the point. He noted he does not think that was the intent and the definition could be corrected. REPRESENTATIVE BUNDE indicated there may be reciprocity on licenses; the legislation doesn't specify the dentist must reside in the state. Number 0461 MS. BURKE continued. She thinks the heart of HB 121 is the restriction on an insurer from directly or indirectly reimbursing a covered person at a different rate because of the person's choice of dentist. Ms. Burke agreed with the previous testimony that this is the core of controlling health care cost. For example, the state's mental health plan has a similar provision which helps the state manage and control spiraling health care costs. Ms. Burke indicated health care costs in Alaska are spiraling upwards. There are no HMOs in Alaska. There has been enabling statute since 1990. Although the division occasionally receives calls, Ms. Burke indicated Alaska's geography and limited health care resources deter the formation of HMOs. Only one city has more than two hospitals. Even Anchorage probably does not have an excess of specialists in any particular field. An excess of specialists would be the core necessity for an HMO to be really effective. The division does not know of any PPO for dental services in the insured market although a number ERISA plans do have PPOs. State legislation has no authority over ERISA plans. Ms. Burke described that in a PPO the person paying for the care - the insurer or employer - contracts with a health care provider for the provision of care at a particular price. In exchange, the person receives a higher reimbursement for using the contracted providers. The savings are passed on to the employee or covered patient. No limits are placed on the time the provider can spend with the patient and the patient is not mandated to see a contracted provider. Ms. Burke indicated the provision restricting an insurer from directly or indirectly reimbursing a covered person at a different rate because of the person's choice of dentist would effectively eliminate those arrangements. Number 0627 MS. BURKE indicated denial of coverage, cancellation of health care policy, or other action against a covered person or dentist because rights are asserted, are also unfair trade practices. The division can and does enforce against those practices through its statutory authority. Complaint forms are available through the Internet or by calling the division. She assured the committee that when the division becomes involved the insurance companies listen. The companies do business in Alaska under a certificate of authority issued by the division. Regarding the bill provision concerning civil action, the division is not aware of any current prohibition on this. In many cases involving health care the division has recovered hundreds of thousands of dollars from insurers and has been able to resolve disputes in favor of the consumer. Ms. Burke noted the consumer is not always right but it is the division's job to protect the consumer - to help even the playing field. Number 0718 CHAIRMAN ROKEBERG commented that utilization review by Outside companies on a contractual basis has been one of the biggest forms of health complaints in the state for a number of years. He questioned whether enforcing unfair trade practices theories against these utilization review people is a new practice. MS. BURKE responded that it has been around a long time and the division routinely uses this. Ms. Burke indicates there is a real misunderstanding about UCRs [usual-customary-reasonable]. This is not saying that some health care provider is charging too much. Many insurance contracts offer reimbursement at a percentage of what is the "usual and customary" [charge for the service]. By regulations, the "usual and customary" must be based on a population large enough to have some validity. "Usual and customary" must be based on Alaska data to the extent possible, but Ms. Burke indicated Outside data may also be used if Alaska data is insufficient. The division often receives complaints about "usual and customary." Ms. Burke noted in a complaint the division first examines the consumer's policy to see what it provides. She added, "If it's only 80 percent of usually and customary, then it is profitable under the terms of that policy." Ms. Burke indicated she thinks consumers may not always understand, and the booklets provided to them, especially by self-insureds, are not always very clear on that matter. Number 0829 CHAIRMAN ROKEBERG questioned if the ERISA umbrella could be pierced for enforcement using the unfair trade practice theory. MS. BURKE replied she really wishes she could, but ERISA has been in existence since 1974 and has been tested by every state in one way or another. It has gone all the way to the Supreme Court and has consistently been upheld. She clarified for the chairman that the unfair trade practices she has been speaking of are in Chapter 36 of the insurance statutes, Title 21 [AS 21.36], and are specific to insurance. REPRESENTATIVE HALCRO noted Ms. Burke had commented that the division has received no complaints about any patients having any choice issues. MS. BURKE clarified that the division has not received any complaints about insurance companies refusing to cover because someone went to a dentist of his/her choice. She noted the reimbursement level may be different. In response to Representative Halcro's question about where he would go if he is caught in a situation HB 121 is trying to prevent, Ms. Burke replied this is the division's statutory responsibility; this has been upheld by the supreme court. The division has authority over insured plans, but not ERISA, state or federal plans. The division routinely receives and handles complaints on any number of different subjects; Ms. Burke stated she is very proud of the division's record of successful and timely resolution. In response to the chairman's query about letters he has sent, Ms. Burke noted she thinks they have an appointment. Number 1006 GORDON EVANS, Lobbyist for Health Insurance Association of America (HIAA), came forward to testify in opposition to HB 121. He noted HIAA is a national association of commercial health insurance companies that provides health insurance for approximately 55 million Americans. About 260 companies are involved, but not all are licensed in Alaska. Mr. Evans spoke from a prepared statement: "HIAA strongly opposes House Bill 121, and with all due respect to my friend, the sponsor of the bill, we feel that HB 121 is really anti-consumer legislation. If you'd let me dissect the bill paragraph by paragraph in a speedy way I'll try -- actually Director Burke did much of this already. "... Sections (a)(1) and (c)(1) are so closely intertwined that I'll discuss them together. Under Section (a)(1), a health care insurance plan could not include a provision prohibiting a person from obtaining dental care services from dentist of the person's choice, including a specialist. As you're probably aware, managed care plans attract providers by guaranteeing access to a specified pool of enrollees, and most health plans now offer the option of ... going out of the plan's provider network if the enrollee is willing to pay a surcharge to make up for the added cost. And that's as it should be, since out-of-network providers haven't offered these enrollees the volume discount that others get." Number 1083 "... Proposed section (c)(1) which requires the same rate of reimbursement regardless of choice of dentist would make it very difficult for PPOs to negotiate discounts with dentists in their network in return for a guarantee that the network dentist receive a certain volume of business. And these volume discounts are now one of the primary ways that costs of care are kept down, even more so than management of care. "... This provision would make it difficult, if not impossible, for health plans to allow enrollees to benefit from these negotiated discounts and so consumers ultimately will be the losers. "HIAA has no problem with section (a)(2) which regards information on treatment options. We believe a person should be told which treatment options are in his or her best interest. In recent years there's been a lot of talk that people should be told ... what the care should be for their conditions, and HIAA tells me they're at a loss to understand why this is coming up because they don't know that it's not being done. ..." Number 1148 "With regard to section[s] (b) and (e) of the bill on page 2, HIAA believes it's both unnecessary and unwise to require that all utilization review decisions be conducted by a dentist licensed in this state, and we interpret [it] the same way .... It's unlikely that most health plans can have a dentist licensed in Alaska review all dental care utilization review decisions. Many of these national plans have licensed dentists and other licensed health care professionals perform the review, but can't possibly have them all licensed in all states. "And finally, Mr. Chairman, HIAA has problems with section (c)(2) which would prohibit an insurer from denying coverage, canceling a plan, or otherwise taking action against either the insured or a dentist for asserting a right described in the legislation, and also with section (d) which would allow an insured to file suit against the insurer to enforce the insured's rights under the legislation. ... We believe the Division of Insurance already has existing authority regarding unfair trade practices which covers both circumstances, and that's just what Director Burke just told you. ... [As] a side comment, allowing private causes of action, or pointing out that they may sue this when it's already their right, could only serve to possibly further clog up an oversaturated court system, and I say that as a lawyer, that too many lawsuits have been filed already." Number 1253 REPRESENTATIVE BRICE asked if Mr. Evans knew how many insurers in the state provide dental coverage. MR. EVANS replied he did not. CHAIRMAN ROKEBERG asked Mr. Evans how many companies he represents. MR. EVANS replied he represents the association. In response and in response to the chairman's further question about how many of the association's members do business in Alaska, Mr. Evans said he believes there are 267 companies [in the association] and most of them are licensed to do business in Alaska but do not do business here. He commented that Aetna [Aetna U.S. Healthcare] is once again a member of the association. Because Aetna has the state employees, the company would naturally have a lot of policies. CHAIRMAN ROKEBERG indicated that Aetna, however, is the third-party administrator of the state's self-insured plan. Number 1328 REPRESENTATIVE HALCRO asked how those companies headquartered in the Lower 48 would be able to abide by subsection (b) - if the dentist doing the review had to be "registered" [licensed] in Alaska. Subsection (b) reads: (b) A health care insurance plan or contract that provides coverage for dental services that allows the health care insurer to review a treatment plan or conduct a utilization review must contain a provision that a treatment plan review or utilization review relating to dental care for a covered person receiving treatment in this state must be conducted by a dentist. MR. EVANS replied claims are usually sent to the company claim office. REPRESENTATIVE HALCRO questioned whether there was any local review going on. MR. EVANS replied generally not. He indicated some companies might, but it just depends. Most of the insurance companies contract with utilization review companies for this service, and most of the utilization review companies are located in the Lower 48. CHAIRMAN ROKEBERG questioned if the companies HIAA represents who do business in Alaska are in conformance with the peer treatment plan review and utilization review Ms. Burke indicated the Division of Insurance enforces under AS 21.36. MR. EVANS replied that is his understanding. CHAIRMAN ROKEBERG questioned how that worked, asking if a person telephoning speaks to the health care professional in that specific field. Number 1436 MR. EVANS said he could not answer completely. The general practice is to get a peer - someone in that particular field. However, he indicated he thinks there are probably times when the reviewer may not be an exact peer. CHAIRMAN ROKEBERG commented the biggest complaint seems to be nurses making medical decisions. He expressed his concern, though, that it is a waste of talent and manpower to have a fully-trained person performing utilization review on the telephone for something that is really an economic decision and approval matter. He thinks it would be better if problems were appealed to a peer review, but he noted he was unsure of the situation. The chairman asked Mr. Evans if it would be his position that the peer review standard is currently in place. MR. EVANS answered in the affirmative. CHAIRMAN ROKEBERG questioned whether enactment of HB 121 would prohibit the establishment of a point-of-service style plan, or any other kind of a managed care, restricted use panel. MR. EVANS agreed that would be his interpretation. He indicated he believes dentists' prices probably vary now. If the insurance company is going to pay 80 percent of whatever the bill is, some dentists will receive more than others. Number 1664 GUY BELL, Director, Division of Retirement and Benefits, Department of Administration, came forward. The division administers the state health plans for active state employees and for retired public employees. The division has just over 11,000 active state employees in the division's active plan, plus their dependents; and approximately 19,700 retired public employees and teachers, and their dependents. The retiree dental plan is self-paid by the retiree. About 13,000 retirees have opted for the dental-vision-audio (DVA) plan for themselves and their dependents. Being self-insured, the state is not legally subject to the provisions of AS 21. However, for public policy reasons the state has followed the requirements of Title 21. Mr. Bell noted the legislature sets the policy and the state feels obligated to follow that policy whether or not the legal obligation exists. The state has no preferred provider arrangements with dentists and no immediate plans to do so; a state employee or retiree can go to the dentist of his/her choice. There are different plans with different levels of coverage available, especially in the Select Benefits component. Given that the state follows the legislature's mandates, this legislation would foreclose the future offering, as a way to control costs, of a point-of-service type option to active employees or retirees. Mr. Bell confirmed to the chairman that the retirees pay premiums for the dental-vision-audio plan. He explained that the PERS [Public Employees' Retirement System] and TRS [Teachers' Retirement System] medical systems provide medical plans. Depending on a person's tier, the medical premium is paid in full or part by the public employees' or teachers' retirement funds. The DVA plan is separate and is entirely self-paid by the retirees who have opted in. Number 1870 CHAIRMAN ROKEBERG commented there is now somewhat of a managed care arrangement on the vision (indisc.) certain restrictions, asking if that is correct. MR. BELL responded that a person enrolling in the Select Benefits plan has two options: a full-service plan or a managed care plan. In response to the chairman's question about a differentiation in benefit, Mr. Bell answered that, yes, there is a small differentiation in benefit. There is also about a $4 dollar difference in premium per employee per month. CHAIRMAN ROKEBERG indicated, then, the division would prefer to keep the option open for some future type of managed care involving dental coverage. MR. BELL agreed. Number 1973 DAVID LOGAN, DDS, President, Alaska Dental Society (ADS), came forward to testify in support of HB 121. He noted he is a dentist in Juneau. The idea behind HB 121 is to preserve basic patient rights. Ms. Burke's testimony was that there is no current provision allowing anyone to restrict freedom of choice, but there was no mention that freedom of choice is guaranteed. Dr. Logan stated he thinks the point is strong enough that it bears some repeating, and perhaps some redundancy in legislation. He noted the reasons for prohibiting gag clauses seem to be self-evident. Regarding whether licensed dentists should review claims, Dr. Logan indicated Ms. Burke testified the Division of Insurance's policy is that it should be done under a peer system, where a dentist reviews claims. Dr. Logan stated Mr. Evans, representing the overwhelming majority of insurance plans within the state, said they don't think it should happen. Dr. Logan indicated he feels something is being withheld, noting, "If they think the dentists shouldn't be reviewing the claims, and she says that's the requirement, I think that also bears some redundancy in legislation." Number 2079 DR. LOGAN stated HB 121 asks that patients not be discriminated against by their insurance companies for financial considerations. This is the most misunderstood part of HB 121 by far. The dentist is going to see the same reimbursement regardless of the passage of HB 121; it would not change the amount a dentist receives. The patient is the one who suffers under the current system. When patients see dentists outside of the panel they have a copayment to meet. When patients see participating dentists there is no copayment. House Bill 121 would not change this at all. Because of the copayments, there will still be overwhelming financial considerations for patients to continue seeing dentists involved in the managed care plans. This will continue to ensure the viability of PPOs and HMOs in this state. Dentists will still have the same incentives to be members of these plans: a directed source of patients in exchange for a discounted fee structure. House Bill 121 will not change this relationship in any way. The majority of patients will continue to see participating dentists to avoid copayments and dentists will participate to insure that steady influx of patients. This bill seeks to address the small number of patients who see a dentist outside of managed care plans. The nonparticipating dentist fares no better or no worse under HB 121. Number 2207 DR. LOGAN continued that everyone is only too aware of the high costs of all parts of health care coverage including dentistry. House Bill 121 is not an attempt to short-circuit the managed care process. It is simply to ensure that patients covered by insurance plans are treated fairly. Even though the financial provisions of this legislation will affect only a small number of patients, these patients' rights are no less important. Under the current system, patients who see dentists outside of managed care panels receive a double financial penalty. The patients have copayments to meet for their treatment, which is fair and why there is an incentive to stay with the plan. However, the patients are also forced to pay the penalty costs between what is paid to plan dentists and what is paid to nonparticipating dentists. This is the unfair part. Dr. Logan reiterated that the dentist is paid the same regardless of the passage of HB 121. He noted there are two possibilities for how HB 121 would affect insurance companies: if the insurance company has planned on all patients seeing participating dentists then the company will see no revenue difference whatsoever. However, if the insurance company has counted on reimbursing some patients at a lesser rate because the patients went outside the plan, the insurance company will see a revenue difference. Dr. Logan stated, "If this is the case, they are no longer seeking to control costs but to punish patients for seeking care from a nonparticipating dentist, and they are pocketing the profit to be made in that situation." Number 2382 REPRESENTATIVE HALCRO asked if any of the Alaska Dental Society members are in PPOs. DR. LOGAN answered in the affirmative, noting he did not have any numbers. REPRESENTATIVE HALCRO asked if the Alaska Dental Society members in PPOs are in support of the society's stance on the legislation. DR. LOGAN replied he would not say they had 100 percent support because they had not polled to that, but they had not talked to any dentists who did not support this. REPRESENTATIVE HALCRO noted part of the concern seems to be the access to quality care and choice issues. Representative Halcro mentioned the Alaska Bar Association as a governing body for attorneys and indicated he wondered if there is a similar group for dentists in the state. He thought Dr. Fell had mentioned a board of peers or peer review. Number 2469 DR. LOGAN replied that is a voluntary group. It can be initiated either by the dentist or the patient. The Board of Dental Examiners is the regulatory body overlooking the state's dentists. REPRESENTATIVE HALCRO asked if he would go to the Board of Dental Examiners if he, as a patient, had a question or complaint about shoddy workmanship. DR. LOGAN replied, "Or..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] [Tape log notes indicate Representative Halcro asked a further short question about 'any complaints' during the tape change.] TAPE 99-28, SIDE A Number 0001 DR. LOGAN continued, "... I would say most of the complaints, rather than be directed toward the dental society, are heard by individual dentists .... As a general rule, when we receive complaints at the dental society we encourage them to seek remediation through the board. We're not equipped to deal with their problems with insurance companies - that's not what the dental society is there to function for. We would refer either, if it's a quality issue, to the dental board, or if it's a problem with the insurance company, to the insurance commission." Number 0049 REPRESENTATIVE HALCRO apologized for not making himself clear. He noted he is trying to ascertain if there is a problem out there with quality care. Representative Halcro added, "So, I'm sorry, didn't mean in general the society, I meant if I am a patient, I have a concern about an individual dentist, I would go to the Board of ... Dental Examiners. What has the history been the last couple of years with regards to complaints regarding quality care?" DR. LOGAN responded that would be information from the dental board. Not all of that is public record; the only time that becomes public record is when there is action taken against a dentist. CHAIRMAN ROKEBERG confirmed the teleconference connection had been restored and noted there had been a miscommunication [the connection was mistakenly switched off at the end of Dr. Logan's formal testimony]. However, the chairman is not sure if more testimony would be taken at this hearing due to time constraints. Chairman Rokeberg asked Dr. Logan if peer-to-peer review is actually working as a practical matter. The chairman noted from the testimony heard that the state believes there should be peer-to-peer review. Number 0207 DR. LOGAN replied the current system certainly leaves a lot to be desired. No matter how it is mandated in the law, how it actually happens is a different matter, for a variety of reasons. There is quite a delay between when a claim is submitted and when it finally comes out of a review process. CHAIRMAN ROKEBERG commented the legislation would revolutionize the way utilization review is done in the state by requiring review by an in-state dentist. He asked how that would happen and who would bear those costs. DR. LOGAN answered he does not think that was necessarily the intention of the bill. The Alaska Dental Society supports having a licensed dentist, wherever the dentist is licensed, review the claims. CHAIRMAN ROKEBERG confirmed the Alaska Dental Society was not fixed on having an Alaska dentist. DR. LOGAN noted they certainly would not object to having a licensed dentist in the state do the claims, but their concern is that somebody review the claims who has some dental knowledge and who is also held accountable. Having an actively-licensed dentist ensures both of those things. Dr. Logan indicated having a dentist who was not actively licensed would not ensure accountability. Number 0319 CHAIRMAN ROKEBERG questioned that when one initially telephones for authorization on a procedure, it is almost like an accounting problem. DR. LOGAN replied there is no telephone authorization for dental procedures. He explained that typically a pretreatment authorization would be submitted with whatever documentation the dentist has to support his/her determination that the treatment is necessary. This goes through a review process and usually somewhere between four to eight weeks later the dentist receives a response. Dr. Logan indicated this process has remained the same during his time in practice. In response to the chairman's comment about the insurance companies Dr. Logan is used to working with, Dr. Logan replied he does not think there is a huge difference across the board. Overall, he thinks most insurance companies fall into the four to eight week category. CHAIRMAN ROKEBERG stated, then, because of the slow process of dental preapproval, the panel could very well have a licensed dentist. He asked what the normal appeal procedure is if there is a dispute about whether or not the insurer will authorize or about the level of reimbursement. Number 0423 DR. LOGAN answered it is a very good question. Essentially, the dentist resubmits the claim which undergoes a review process at the insurance company. Using the 'fox guarding the henhouse analogy,' Dr. Logan noted the insurance companies are reviewing their own work so the dentists have no idea what takes place or how it is arrived at. CHAIRMAN ROKEBERG asked if they were speaking more of elective-type treatment, noting the patient would be seriously in pain or injured if he/she had to wait that long for treatment. DR. LOGAN said, "Let's say that it's non-pain, non-pain related ... as a general rule, but it still covers basic restorative treatment in some instances." CHAIRMAN ROKEBERG asked Dr. Logan to provide a copy of his testimony to the committee aide, noting he points out a significant concern of the chairman's. Chairman Rokeberg commented Dr. Logan's testimony indicates that HB 121, as it is drafted, will not prohibit existing-type panels in the insured area if those panels do exist. It will also not prohibit the market entry of a point-of-service or managed care type panel. He asked if that is correct. Number 0534 DR. LOGAN answered in the affirmative. Other states which have passed similar legislation have not seen really any change in the managed care market. They have not seen anyone drop out; in some instances they have seen other insurance companies move into the market. There haven't been any repercussions in terms of changes within the fee structure for managed care plans or in terms of managed care plans leaving the market. CHAIRMAN ROKEBERG expressed his concern. His reading of the bill indicates it would prohibit the entry of some type of managed care plan into the marketplace, particularly if there is a differential in the reimbursement on the copayment - to make the distinction between the choice in a point-of-service provision. DR. LOGAN asked for clarification. Number 0622 CHAIRMAN ROKEBERG noted subsection (c)(2) on page 2 seems to run counter to Providence Health Systems' plan, for example, which is basically structured like a point-of-service plan. If a person want to choose his/her own dentist, he/she pays a higher premium or, in the converse, he/she receives a lower reimbursement. The chairman noted there has to be some kind of distinction or differential. He expressed some confusion regarding parts of Dr. Logan's testimony and questioned, "Why wouldn't you allow that if you got reimbursed at the same rate by the insured? Is that the point you're making?" Subsection (c)(2) reads: (c) A health care insurer may not ... (2) deny coverage, cancel a health care insurance plan or contract, or otherwise take action against a covered person or a dentist because the person has asserted a right described in this section. DR. LOGAN answered in the negative, commenting he thinks they are running in two separate issues. To his understanding, HB 121 would allow a company to offer several plans within their insurance group, and, as part of those plans, there would probably be different rates. Typically they choose that as part of a panel of medical, dental, vision services, et cetera. However, what is being asked is that, as part of that subsection of the plan, if the patient chooses to go outside that panel, the patient be reimbursed at the same rate. If the patient would get "X" dollars to use at Dentist 1, then the patient would get "X" dollars to use at Dentist 2. However, with Dentist 2 who is outside the plan, the patient would have a copayment to meet. Number 0796 CHAIRMAN ROKEBERG commented that is his major concern. He thinks they should encourage menu selections. Giving more choices is one way to drive down health care costs. The chairman confirmed that is something Dr. Logan would basically agree with. DR. LOGAN said their position is they endorse any policy that provides dental benefits that still allows for freedom of choice of the dentist. They are just asking for equality within those policies. CHAIRMAN ROKEBERG noted he agrees with that philosophically. However, he indicated he also does not want to discourage the establishment of options which may drive down the costs but still allow the employee-insured to make that selection of dentists. He commented on the current situation of an employer choosing to select an in-panel group of dentists as the only coverage offered. This legislation disallows that - the pure HMO managed care model is being prohibited by this. The chairman asked if that would be correct. Number 0889 DR. LOGAN indicated the legislation would essentially prohibit closed panels. He reiterated he thinks HB 121 says that the patient should be reimbursed the same regardless of the choice of dentist. Dr. Logan reiterated again that the patient going outside of a managed care plan would still have copayments to meet and that would be the patient's incentive to stay within that plan. Dr. Logan confirmed to the chairman that a patient going outside a closed panel would have to pay 100 percent. If a patient goes outside of a regular PPO panel, the patient would have copayments to meet and currently receives an additional financial penalty. Assuming that the average treatment is $100, a plan dentist would usually offer a discount in the $70 range. The patient going to that plan dentist would have no copayments and the dentist would receive $70. If the patient goes outside the plan, the patient typically would receive about $35 in reimbursement and have to pay the additional $65 to the nonparticipating dentist, who does receive his $100. CHAIRMAN ROKEBERG asked if it wasn't common for insurance companies to reimburse the health care provider for the first instance... DR. LOGAN said through an assignment of benefits. He commented, however, as they have gone round and round with the "insurance commission" trying to resolve some issues, the "insurance commission" is very careful to point out that the insurance policies are the patients' and the dentists have no standing with those policies. It is only as a matter of courtesy that there is an assignment of benefits. In response to the chairman's comments, Dr. Logan confirmed that most health care providers file the request for reimbursement as a courtesy, accept it in lieu of payment, and go back for the unpaid portion. CHAIRMAN ROKEBERG expressed concern that that might create some problems unless it is clarified. Number 1038 REPRESENTATIVE HALCRO discussed the employer's role in providing health care coverage to employees. He noted the ultimate fear of government involvement in health care is that there will somehow be additional costs and those costs will have to be borne by the provider of the policy, the employer. Representative Halcro indicated the arguments they have heard is that this is cost-neutral, mentioning a specific telephone conversation he has had with Dr. Fell. He thinks all would agree the goal is to provide more coverage for more employees, but they need to protect the employer. Representative Halcro asked if it there would be any problems with provisions exempting an employer if the employer could show a certain percentage increase in the cost of maintaining a policy due to this change. DR. LOGAN indicated he would not philosophically be opposed to such provisions, but how that increase is arrived at would have to be spelled out so that a company couldn't simply come up with unjustified overhead figures to show an increase in cost. Dr. Logan noted the Alaska Dental Society's goal is simply a revenue policy that protects patient rights. Number 1178 CHAIRMAN ROKEBERG referred to Dr. Fell's mention of Concordia questioning if it is a managed care organization. DR. LOGAN answered in the affirmative, commenting United Concordia took over for Champus on the military contract. In response to the chairman's question about Fairbanks, Dr. Logan noted Concordia operates statewide - any place with military or United States Coast Guard (USCG) dependents. He indicated military and USCG active personnel are treated by active-duty dentists. In response to the chairman's further question about Concordia being a closed panel, Dr. Logan noted it is an open panel, a PPO, with pretty substantial penalties for going outside the plan. He believe the penalties are in the 60 percent range. CHAIRMAN ROKEBERG asked if Concordia paid the covered person or paid the provider. DR. LOGAN replied it is typically an assignment of benefits, but it could function in either form. CHAIRMAN ROKEBERG stated, then, it would Dr. Logan's testimony and opinion that HB 121, as currently written, would prohibit closed panels - classic HMO-type organizations. Number 1257 DR. LOGAN answered, "That would be my reading of prohibiting freedom of choice, yes." CHAIRMAN ROKEBERG questioned that it would not prohibit PPOs or POSs [point-of-service organizations, "PSOs" stated on tape]. DR. LOGAN replied he did not personally see anything within the legislation that would change how they function in the state. CHAIRMAN ROKEBERG indicated the importance of ensuring and clarifying that point. The chairman added he thinks Representative Halcro raised an interesting point. One of the committee's goals is to make sure affordable quality health care and insurance is available to everyone in the state. He indicated there should be some kind of protection if costs increase because of the prohibition on closed panels. The chairman thanked Dr. Logan for his testimony and recognized that Mr. Evans wished to make a comment. Number 1340 MR. EVANS stated he wanted to clear the record regarding something Dr. Logan indicated. Mr. Evans did not think he said, and certainly did not mean to imply, that HIAA does not agree dental health utilization review should be performed by a peer. He noted in certain other areas it is a physician-on-physician review and the specialties may not be the same. However, Mr. Evans indicated the Division of Insurance requires dental review by a dentist and HIAA does not oppose this. Number 1378 REPRESENTATIVE BUNDE, in summary, stated the chairman himself had said he would not go to the cheapest provider. Representative Bunde noted HB 121 is in the committee because it is a labor and commerce issue. In spite of the altruistic conception of health care, this is also a business. Representative Bunde indicated if health care isn't a business, Providence wouldn't be facing a nurses' strike or wouldn't use cost-shifting to cover expenses in other areas. Representative Bunde gave the example of a patient being charged $1 for an aspirin. If health care isn't a business, insurance companies wouldn't insure at the highest rate for the lowest risk and, in some cases, delay payment on a claim because the companies profit on the "float." He exhorted the committee to not forget they are also talking about small businesses. Representative Bunde indicated the concern expressed by Representative Halcro about employers buying insurance. However, he noted the purchase of an unusable or non-employee-friendly product will not expand health care coverage and is not helping employees. Representative Bunde commented on the Lower 48 HMO horror stories, commenting that preventing them in Alaska is a laudable goal, not a detriment to business. He indicated the Division of Insurance had testified it is already doing some of the things mentioned in HB 121; he described the legislation as a protective measure, using the 'belt and suspenders analogy.' Representative Bunde noted he felt none the testimony he heard from Ms. Burke would speak against the bill. He asked the committee to keep in mind that this a business and not to be too emotionally swayed because this concerns medical care. CHAIRMAN ROKEBERG noted he does not necessarily share the views that Alaska shouldn't have HMOs if they could provide good quality, lower cost care. [HB 121 WAS HELD OVER]