SB 258-DENTAL CARE INSURANCE  2:11:45 PM CHAIR PASKVAN announced SB 258 to be up for consideration. SHARON LONG, staff to Senator Huggins, sponsor of SB 258, said it was at the request of the Alaska Dental Society. It prohibits insurance companies from establishing age limitations on young children receiving dental care. Currently a fear is emerging, as evidenced by 20 other states introducing this legislation, that insurers are moving towards restricting children four years and older from dental care coverage. She said that establishing a minimum age requirement leaves a significant segment of our population already identified as at risk without dental insurance. It does allow a company to set a maximum age for a person to receive coverage for dental care as a dependent child. MS. LONG said that even though this restriction not covering those under four is currently in effect in only one state, Maine, the fear is not unfounded. A non-covered services clause was inserted in provider contracts first in the northeast, and within one short year it had spread south and west to finally include all states - bringing her to the next provision of SB 258: It will prohibit insurance companies from fee capping non- covered services in Alaska. That is the current practice of insurance companies - dictating what a dentist can charge for services the insured does not even cover in a plan. She said that Senator Huggins became aware of trends surrounding coverage restrictions and age limitations elsewhere and introduced this bill in order to start the discussion and get ahead of the issues before they became a problem here. Understanding that insurance can raise complex issues among stakeholders, not the least of which includes federal restraint of trade restrictions and waivers, Senator Huggins asked for some experts to be available for the committee this afternoon. MS. LONG said that Senator Paskvan had raised a question about mutuality of obligations under contract and Dennis Bailey from Legal Services was on line and that Linda Hall, Director, Division of Insurance, was available, as was Pat Shier, Director, Division of Retirement and Benefits. 2:16:20 PM CHAIR PASKVAN announced public testimony. 2:16:32 PM JACK MCRAE, Sr. Vice President, Premera-Blue Cross-Blue Shield of Alaska, said SB 258 raises several major constitutional and public policy issues. It would require health insurers who provide coverage to change their contracts with dentists by modifying basic terms. The key language regarding the proposed change is found on page 2, lines 3 and 4 where it raises constitutional issues as Article 1, Section 15, of the Alaska Constitution states: No law impairing the obligation of contracts and no law making any irrevocable grants of special privilege or immunities shall be passed. Although Alaska courts have interpreted this language to permit passing laws which have changed future contracts, Mr. McRae said, it would appear that these provisions in legislation run contrary to the public policy intent. In addition, Mr. McRae said, language in SB 258 raises a related and serious public policy question of whether it is in the state's interest to pass legislation that basically changes health insurance contracts which benefit one select group of health care providers. As an alternative, he suggested an amendment that would avoid the constitutional problem that SB 258 raises and still respond to the concerns that the dentists have raised. He added that Premera-Blue Cross-Blue Shield of Alaska doesn't have age restrictions in any of their dental contracts in Alaska and haven't for a long period of time. CHAIR PASKVAN asked if they do not have age restrictions within their contracts now, how he could raise an impairment of contract issue. MR. MCRAE answered the issue that is of most concern for them is when they have a contract with, for example, a benefit that pays a maximum of $2500 year for crowns. As their contracts are presently written, once the cap is reached the dentist would still have to give the discounted rate which had been agreed to in the contract to the member. This would move them in the direction of giving the dentist the ability, once a contract limit is reached, to charge whatever he wanted to. Other items outside of the contract, such as teeth whitening, have no restrictions on what can be charged. They would want the provider to still allow the discounted rate to their enrollee once the cap is reached. 2:20:35 PM CHAIR PASKVAN said he didn't understand the argument he was advancing within the impairment of contract context. MR. MCRAE stated that the amendment would say "offers but cannot require a provision in the contract that would allow discounted fees for non-covered services." That would allow for dentists to still give the discounted rate to the Alaskan dental plan enrollee once the cap had been reached. Without that, dentists could charge whatever they want. CHAIR PASKVAN asked if that would be for both covered and non- covered services. MR. MCRAE answered yes, but generally speaking, it would be more in the direction of covered services. Their main concern is that the enrollee could still get the discounted rate once the cap is reached, because that is where most of the expensive dental charges are. CHAIR PASKVAN asked if he recognized the ability of the legislature to adopt public policy that prohibits private parties from going beyond the boundaries established in that public policy. MR. MCRAE answered that he did recognize that. CHAIR PASKVAN asked if the state would or wouldn't be sued for impairment of contract. MR. MCRAE responded, "No, I don't believe we would sue the legislature for impairment of contract, Mr. Chairman." CHAIR PASKVAN commented, "I was just wondering why it was raised then." 2:22:55 PM DAVID LOGAN, DDS, Alaska Dental Society, said he is a Juneau dentist. He said that SB 258 seeks to correct a couple of things that are negatively impacting consumers. It sets fee limits on services that dental insurance plans do not pay a benefit for and it prohibits setting minimum age requirements for dependents to receive dental benefits. The protection for consumers by prohibiting an age restriction is obvious he said, and Alaska still leads the nation in baby bottle tooth decay. They are also interested in preserving the progress that has been made in conjunction with the dental board over the last few years insuring that medical providers can receive reimbursement for dental benefits for delivering dental services during well baby checks for applying fluoride. Frequently children are seen at that age by medical providers but have yet to see dental providers. Unfortunately for young children who have severe cavities at those ages, rehabilitation can cost a lot as well as be difficult. Sometimes the ability of the parents to receive coverage under dental managed care plans can be a deciding factor in the decision to seek care or not. MR. LOGAN explained that the act of setting the fees on non- covered services is a fairly recent change and started a couple of years ago, sweeping quickly across the nation. One state, Rhode Island, prohibits it, and that is one of the initial states that started the practice. The net effect on the remaining states has been for dentists to reexamine their participation in these plans both for a service that they're not providing the benefit for and the economic impact on their practices. The effect is that dentists drop out of these plans and then consumers have fewer providers to choose from. Many are being forced to leave their dental home if they want to receive full, costly or even partial use of their dental benefits. He said the overall affect is reduced access, and this impact would sadly be borne disproportionately in rural communities with fewer providers to choose from. He said the basic question of fairness needs to be asked. If the insurance companies are interested in helping dental consumers receive dental care and lowering overall dental costs, the dentists' preference would be that the insurance companies provide the benefit; then at least they are in it together. MR. LOGAN said his concern has been that as the insurance companies are taking this approach, they are requiring dentists to make a sacrifice that is at no cost to themselves, but they enjoy the benefit of marketing the savings. He said dentists are sensitive to the cost of health care, but they are also unfortunately unable to deal with insurance companies on a level playing field as they are exempt from anti-trust laws while dentists are not. The best a small trade group of dentists can do is approach these matters legislatively, because they don't have the ability to negotiate with the insurers. CHAIR PASKVAN said he was trying to figure out if a policy provided a covered service for teeth cleaning once a year and someone wanted it a second time because they were very health conscious, what the dentists' ability would be to charge a different rate for the second teeth cleaning as compared to the charge that might have been allowed under the first cleaning. MR. LOGAN replied that some fee differential would likely be involved. Under managed care plans, the dentist submits a fee schedule to the dental insurance company and he agrees to charge a lesser amount for services that are covered by the insurance company, but on services that aren't covered he agrees to abide by their normal fee schedule. 2:29:13 PM CHAIR PASKVAN asked what a person would be charged for his second teeth cleaning if the first one was insured and set at $80 ($50 paid by insurance and $30 paid by the insured), but the second one wasn't covered. MR. LOGAN answered the dentist would probably charge his normal fee of $100. CHAIR PASKVAN asked if he perceived the national movement was trying to restrict him in charging his office rate for non covered services. MR. LOGAN answered that was his understanding. 2:31:59 PM CHRIS HENRY, Alaska Dental Society, said he is an orthodontist in Fairbanks, Alaska. He explained that one of the concerns is about the fairness of the plan and likened a dental practice to a hotel business that signed up for a program to reduce their hotel rates so that tourists would come in, but they also provide meals. They are hoping to bring more patrons into their hotel. Then they find out that plan they signed up for limited them on what they could charge for the meal that was not part of the plan. He said dental practices need to be profitable enough to support staff and provide for their benefits such as medical insurance and retirement plans. He said it goes back to what it takes to run a small business whether it is dentistry or any other kind of medicine. 2:35:34 PM LINDA HALL, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), said she was available to answer questions on SB 258. CHAIR PASKVAN "suspended" public testimony. MS. LONG remarked that the bill's sponsor did not view the amendment favorably and urged finding common ground with regard to the contracts. 2:36:58 PM SB 258 was heard and held. 2:37:27 PM CHAIR PASKVAN announced an at ease. 2:41:29 PM CHAIR PASKVAN called the meeting back to order at 2:41.