CS FOR HOUSE BILL NO. 314(FIN) "An Act relating to fees and charges for medical treatment or services, civil damages, and penalties as they relate to workers' compensation; and providing for an effective date." CONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, SPONSOR, explained that the bill relates to medical treatment, service fees, and penalties as they relate to Workers' Compensation. Last year, the bill moved through the legislature to extend the current fee schedule cap another year and to add a CPI modifier to the schedule. The current cap will expire on December 31, 2010. The extension was done to give the Medical Services Review Committee a little more time to meet and plan a new schedule. Currently, the fee schedule lacks up-to-date medical codes. At the conclusion of the Medical Services Review Committee's meeting, a recommendation to revise the fee schedule was made. Mr. Jackson explained that Section 1 outlines the basis of the new schedule, which will include services such as emergency transportation, medical supplies, and injections. Sections 2 and 3 clarify the criminal and civil prosecution and penalties for Workers' Compensation fraud. 10:16:34 AM Senator Thomas voiced concerns about the Workers' Compensation system as it pertains to fraud. He thought the focus was on the injured worker. Mr. Jackson deferred to others to address criminal law concerns. SUE MCLEAN, DIRECTOR, CRIMINAL DIVISION, DEPARTMENT OF LAW, clarified that HB 314 is not an expansion into criminal law, but rather a clarification of criminal law. She referred to page 3, line 1, "is civilly liable to a person adversely affected by the conduct, is guilty of theft by deception". She stated that the proposed change separates the civil liability, which is now in Section C, from the criminal liability. It simply says that a person may be prosecuted under AS 11. It specifically addresses Senator Thomas's question. Broadening the statute ensures that fraudulent conduct by other than the employee is dealt with. 10:21:15 AM Senator Thomas was still concerned about prosecuting for fraud under Workers' Compensation. Ms. McLean spoke of the difficulty of prosecuting when the statute provides otherwise. Senator Thomas asked if this was the simplest way to approach the issue. Ms. McLean did not know of any other statute that addressed the issue. 10:24:14 AM Senator Olson inquired if medical providers are affected by the expansion in the bill. Mr. Jackson said there had been a number of contacts from the medical community, which is why subsection (D) of Section 1 includes suggestions from the medical community. It is not the intention of the bill to limit services to injured workers. Senator Olson asked if the medical community is satisfied with the bill. Mr. Jackson said they were. Co-Chair Hoffman noted a fiscal note for $75,000 in Workers' Safety Account Funds to cover the cost of producing a Workers' Compensation medical fee schedule from the Department of Labor and Workforce Development and a zero fiscal note from the Department of Law. LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, spoke in support of the bill, but voiced concern about the medical fee schedule that expires on December 31, 2010. She referred to charts in the bill packet that show that medical expenses and premiums in Alaska are significantly higher in the Workers' Compensation arena. She maintained that the fee schedule will not solve the problem, but would help. She responded to Senator Olson's question about the involvement of the medical community, who now are in agreement with the fee schedule. She testified in support of the bill. 10:28:29 AM DON ETHERIDGE, ALASKA STATE AFL/CIO, spoke in support of the legislation. He stated that his concerns about fraud issues and medical coverage have been assuaged. FRED BROWN, EXECUTIVE DIRECTOR, HEALTH CARE COST MANAGEMENT CORPORATION OF ALASKA, reported that he was a Workers' Compensation hearing officer for 25 years. He voiced a concern similar to Senator Thomas's, when a case is reaching a settlement and the insurance company is put in a position of using the criminal code to use leverage to drive down the value of the settlement. The consequence is a reduction in the value of the claim, but also a reduction to the health trust funds. In the settlement phase there is often a desire by the parties to waive future medical benefits, and in that case the health benefit funds are put in a position of picking up costs. Mr. Brown concluded with a suggestion to simplify the system by omitting Section 2 (b) in HB 314. HB 314 was heard and HELD in Committee for further consideration. 10:34:28 AM