SB 100 DISCRIMINATION UNDER GROUP HEALTH INS. SENATOR KELLY announced SB 100 to be up for consideration and noted there was a proposed committee substitute. He said there were three sections to this bill and started with the physician's assistants. JACK HEESCH, Alaska Academy of Physician's Assistants, said he thought this bill would prevent discrimination by group health insurers among physician's assistants (PA). This means if a person is licensed by the State of Alaska as a state licensed practitioner and is covered under group policy, then all people with similar licenses must be paid for services. He believed the bill did not mandate or require coverage of physician's assistant services; it merely says that if an insurer covers PA service, then they must cover all PA's without discriminating among them. MR. HEESCH said the fiscal affects of this bill are $0. He also pointed out that this bill did not have adverse comment when it was introduced last year, nor has it this year. This specific statute was amended in 1992 to provide for psychologists and psychological associates and again, in 1994, to include certified direct entry midwifes - both without adverse comment. NICK COTI, East Care Acupuncture Clinic, supported SB 100. He said his wife is an acupuncturist and a medical doctor and received her training in China. He said he has recently completed one and half years of graduate study in China and he found that macro economic information supports how effective acupuncture is, not only as a mode of treatment, but as a means of containing costs. Life expectancy, health care, and some other things are better in China than in Washington, D.C., one study concluded. The World Bank has conducted studies on the nature of the Chinese currency and its value in the economy, in general. It was found that there was a very reliable correlation between life expectancy and per capita income. At that time, China had a per capita income of $250 and a life expectancy of 70 years. One would predict, with a per capita income of $250, a life expectancy of something like 50 years. A life expectancy of 70 years is more consistent with an advanced industrialized economy. One of the reasons for this is that they have a fully integrated western and Chinese medical system. The use of both is encouraged interchangeably. Current insurance laws make it difficult for people to get acupuncture, because they have to pay fully out of their pocket to do so. TAPE 95-12, SIDE B MR. COTI asked the committee to consider very seriously the importance of taking discrimination against acupuncturists. He also pointed out that many acupuncturists are receiving either directly or indirectly support from insurance companies through other people who bill for them which is not a very good practice. SENATOR KELLY said they would go on to the third section of the proposed committee substitute. DON KOCH, Division of Insurance, commented that there has been a litany of providers added to this section of law over the years. He explained that his department's position on section 1 is that if the provider is performing a service that is covered under a group insurance health policy, and that service is within the scope of his occupational license and practice, then the insurance company should not be able to discriminate against that person. This does not mandate to the insurer that they provide a specific kind of coverage that is particular to one practitioner. It does say that if whatever you do provide coverage for can be provided by multiple kinds of practitioners, then you have to treat them equally. MR. REINWAND, Blue Cross, asked if this means you can't have preferred provider arrangement with different fee schedules within a group like doctors and hospitals. MR. KOCH replied that at this time, he believed there does not exist authorization for preferred provider arrangements in statute - with the exception that, in the case of hospital medical service corporations (for example Blue Cross and Blue Shield), they are directly the provider who through contracts with practitioners provide a service. So you can have, in effect, a different level of coverage for the entity with whom the Blue Cross, Blue Shield, Hospital Service Corporation, is in contract with versus the piece in their policy that provides for indemnification for other kinds of services that they're not under contract with a provider for. SENATOR SALO asked when he talked about "not discriminating" did he mean between providers within the same category or between a variety of providers like acupuncturist, medical doctors, etc. MR. KOCH replied that it was between all the different providers. He explained that typically a hospital medical service corporation will enter into contracts with hospitals and, generally, with medical doctors. They may have arrangements in some cases where they go to other practices as well. In that case, you're going to have a level of care that can be stated in the policy that may be greater than the level of care you would provide on an indemnification basis. He said they may limit coverage to the care provider who was "first in line" to give treatment. Number 501 SENATOR DUNCAN asked if Mr. Heesch agreed with Mr. Koch's testimony. MR. HEESCH answered that he didn't. SENATOR DUNCAN restated that Mr. Heesch's understanding of adding physician's assistants meant you have to treat all physician's assistants the same. What Mr. Koch's understanding of the unfair discrimination is that if you have a headache, you should be able to go to anyone who is licensed to practice in the state who could cure that headache. MR. KOCH replied that was correct. SENATOR DUNCAN asked if the list of providers is necessary to be included in the bill. MR. KOCH replied that he would take out the list of providers and put in some generic language that says, "if the practitioner is operating within the scope of his license, and the event that is triggering his care is within the scope of his practice." SENATOR DUNCAN asked if that had been suggested in the past, because there is the problem of continuously adding to the list and then there are providers who aren't being recognized by the insurance industry, although they are certified and licensed. MR. KOCH answered no, their deputy director, Thelma Walker, recently asked the same thing. SENATOR DUNCAN said just adding "physician assistant" wasn't solving the problem the physician assistants were concerned with. MR. KOCH agreed and said there was one more issue which is, in some cases, some of the items have been added to the list, but the scope of practice is not particularly clear. SENATOR KELLY announced an at ease at 2:35 - 2:43. RACHEL YATES, Alaska Association of Marriage and Family Therapists, said they are licensed clinical professionals and provide a comparable service to psychological associates and clinical social workers. She asked to be added to the list in the bill. CHARLIE MILLER, Alaska Regional Hospital, supported SB 100. Alaska Regional Hospital has a very well defined scope of service. They are well established, highly regulated, certified, and licensed facilities. They are primary providers of health care in the state and requested to be added to the list of providers. MR. MILLER noted there was a question about them being an institution rather than an individual, but he did not think this was significant. SENATOR SALO said it looked like listing hospitals would start a whole other list, because there are nursing homes, clinics, etc. MR. MILLER said that usually a clinic is included with a physician's billing. SENATOR SALO said that wasn't necessarily the case, because many clinics offer surgical services where they do bill separately. SENATOR SALO said some insurance companies prefer using Providence in Anchorage and asked if that would be prohibited. MR. MILLER said a lot of programs are regulated by federal law. There are no provisions for preferred provider agreements in the indemnity insurance, as Mr. Koch said, in AS 21.36.090. The ones that are allowed are in AS 21.87. MR. KOCH added that AS 21.36.090 does apply to both an insurance company and a medical service corporation. The reason is because there is a reference in 21.87 back to 21.36. saying it picks it up. In addition, there is language that talks about "group disability policy" and "group service for an indemnity type contract." "Group service" is the language that should be used to pick up the contract that a hospital medical service corporation uses; and the term "policy" used for the contract and insurance companies issues. Both are covered by the language in AS 21.36.090. SENATOR DUNCAN asked if he was saying that nowhere in statute is there a provision for preferred provider networks in this state for insurers, for example, Aetna. MR. KOCH agreed, but said Blue Cross and Blue Shield could, because they are a medical service corporation. The way they could be viewed as a preferred provider is that those that they enter into a contract with to provide services may be recompensed under their contract at a different level than those they don't have a contract with, but have the ability to be picked up as an indemnifier. SENATOR DUNCAN commented, then, that under the way our statutes are presently written, and with the movement towards managed care networks in the country, Alaska is really in a very weak position to have managed care. MR. KOCH said that was absolutely correct and if this is what they want, he has a copy of a model bill that may address that issue. SENATOR KELLY asked how this affects the arrangement that Aetna has with Providence Hospital. MR. KOCH said he contends that Aetna could enter into those kinds of arrangements with self insurers, because the insurance code provides no impediment to a self insurer. SENATOR DUNCAN asked if they were sure there were no PPO's in this state that are in violation of the law right now. MR. KOCH replied that no, they are not. If there are PPO's written by insurers of this state, they may well be in violation of the statutes. REED STOOPS, Aetna, said that Aetna does have PPO agreements, and have had them for years in Alaska. They believe the statute permits those agreements. The Division of Insurance has approved policies with those provisions and there has never been any attempt to prohibit Aetna from doing it. MR. STOOPS said there are other statutes in other states that have litigated this question before and courts have determined that unfair discrimination does not mean that one cannot have a PPO agreement. What he thought the issue really was, was an attempt by Alaska Regional Hospital to clearly prohibit a PPO agreement. He thought PPO agreements were in the public interest; they are common practice in the rest of the country and provide lower cost insurance for Aetna's clients. Number 334 SENATOR DUNCAN asked if the Municipality of Anchorage is self- insured. MR. STOOPS said they are not self insured. SENATOR DUNCAN asked who their contracts are with. MR. STOOPS replied that they have a PPO with Providence, although not for all clients. They also have a PPO agreement with some doctors and dentists in Anchorage. SENATOR DUNCAN wanted to ask the Division of Insurance to respond to the testimony that they have been approving contracts that they think are in violation of the law. Number 284 MR. KOCH responded that they have written to Aetna and told them that these arrangements are not legal; some have been disapproved. If any have been approved, it has happened inadvertently. He said Mr. Stoops is correct that they presented some arguments that place somethings into question. They haven't gone to court to contest it, because there were discussions going on about it in the legislature. MR. STOOPS said there was no doubt that this particular amendment will strengthen the case. He said he would like to have someone from Aetna testify about which customers are included under PPO arrangements now. JERRY REINWAND, Blue Cross, said he thought there were a couple of issues here: what the existing law says, what the legislature thought it said, and what the division says it says. He thought he heard the division say that the section in existing law is really a mandate. If you are on the list, you're mandated to cover that scope of practice. He suggested getting the division's interpretation of what the existing law is. MR. REINWAND said he would like to know what this amendment does to Blue Cross and other providers and does it mean they have to void their existing PPO arrangement with Providence's other providers. Third, he wanted to know the public policy on this and if this is the right direction to go. The whole trend is toward managed care to try to bring costs down and this appears to be going in the other direction. SENATOR DUNCAN said the real question on managed care is are we really reducing costs or increasing costs by adding layers of bureaucracy. MR. REINWAND said there is a question of discrimination within a group and, then, whether it applies to Blue Cross or not is another public policy question. If it's discrimination between groups, does that apply to services. If a physician provides a service, and an acupuncturist provides the same service and they get a bill from both, do they say no to one and pay the other. SENATOR SALO said she wanted to know what the affect would be of going to the generic language rather than the specific list.