ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 17, 2014
3:19 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Craig Johnson
COMMITTEE CALENDAR
HOUSE BILL NO. 316
"An Act relating to workers' compensation fees for medical
treatment and services; relating to workers' compensation
regulations; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 282
"An Act relating to the rights and obligations of residential
landlords and tenants; and relating to the taking of a permanent
fund dividend for rent and damages owed to a residential
landlord."
- MOVED CSHB 282(L&C) OUT OF COMMITTEE
SENATE BILL NO. 159
"An Act relating to air ambulance service providers, air
ambulance membership agreements, and regulation of air ambulance
service providers and air ambulance membership agreements by the
division of insurance; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 288
"An Act creating the Arctic infrastructure development program
and fund in the Alaska Industrial Development and Export
Authority."
- HEARD & HELD
HOUSE BILL NO. 281
"An Act relating to prescription of drugs by a physician without
a physical examination."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 316
SHORT TITLE: WORKERS' COMPENSATION MEDICAL FEES
SPONSOR(s): LABOR & COMMERCE
02/19/14 (H) READ THE FIRST TIME - REFERRALS
02/19/14 (H) L&C
03/07/14 (H) L&C AT 3:15 PM BARNES 124
03/07/14 (H) Heard & Held
03/07/14 (H) MINUTE(L&C)
03/10/14 (H) L&C AT 3:15 PM BARNES 124
03/10/14 (H) Heard & Held
03/10/14 (H) MINUTE(L&C)
03/14/14 (H) L&C AT 3:15 PM BARNES 124
03/14/14 (H) Scheduled But Not Heard
03/17/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 282
SHORT TITLE: LANDLORD AND TENANT ACT
SPONSOR(s): ISAACSON
01/29/14 (H) READ THE FIRST TIME - REFERRALS
01/29/14 (H) L&C, JUD
02/28/14 (H) L&C AT 3:15 PM BARNES 124
02/28/14 (H) Heard & Held
02/28/14 (H) MINUTE(L&C)
03/14/14 (H) L&C AT 3:15 PM BARNES 124
03/14/14 (H) Heard & Held
03/14/14 (H) MINUTE(L&C)
03/17/14 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 159
SHORT TITLE: AIR AMBULANCE SERVICES
SPONSOR(s): STEDMAN
02/05/14 (S) READ THE FIRST TIME - REFERRALS
02/05/14 (S) L&C
02/18/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/18/14 (S) Heard & Held
02/18/14 (S) MINUTE(L&C)
02/20/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/20/14 (S) Moved SB 159 Out of Committee
02/20/14 (S) MINUTE(L&C)
02/21/14 (S) L&C RPT 3DP
02/21/14 (S) DP: DUNLEAVY, MICCICHE, STEDMAN
02/28/14 (S) TRANSMITTED TO (H)
02/28/14 (S) VERSION: SB 159
03/03/14 (H) READ THE FIRST TIME - REFERRALS
03/03/14 (H) L&C
03/17/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 288
SHORT TITLE: AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND
SPONSOR(s): HERRON
01/29/14 (H) READ THE FIRST TIME - REFERRALS
01/29/14 (H) L&C, FIN
02/28/14 (H) L&C AT 3:15 PM BARNES 124
02/28/14 (H) Heard & Held
02/28/14 (H) MINUTE(L&C)
03/17/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 281
SHORT TITLE: PRESCRIPTION WITHOUT PHYSICAL EXAMINATION
SPONSOR(s): GATTIS
01/27/14 (H) READ THE FIRST TIME - REFERRALS
01/27/14 (H) HSS, L&C
02/13/14 (H) HSS AT 3:00 PM CAPITOL 106
02/13/14 (H) Heard & Held
02/13/14 (H) MINUTE(HSS)
02/27/14 (H) HSS AT 3:00 PM CAPITOL 106
02/27/14 (H) Moved CSHB 281(HSS) Out of Committee
02/27/14 (H) MINUTE(HSS)
02/28/14 (H) HSS RPT CS(HSS) 4DP
02/28/14 (H) DP: SEATON, PRUITT, KELLER, HIGGINS
03/17/14 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
ANNA LATHAM, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 316 on behalf of the sponsor,
House Labor & Commerce Committee, Representative Kurt Olson,
Chair.
SALLIE STEVEK, Human Resources Director
Fairbanks North Star Borough (FNSB)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 316.
REPRESENTATIVE DOUG ISAACSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as prime sponsor of HB 282.
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General
Commercial/Fair Business Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Provided comments and answered questions on
HB 282
SENATOR BERT STEDMAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as prime sponsor of SB 159.
CHRISTIE JAMIESON, Staff
Senator Bert Stedman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor of SB
159.
SHELLY DEERING, Alaska Regional Manager
Airlift Northwest
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 159.
CHRIS MARTEN, Executive Director
Airlift Northwest
Seattle, Washington
POSITION STATEMENT: Testified during the discussion of SB 159.
MARTIN HESTER, Deputy Director
Division of Insurance (DOI)
Department of Commerce, Community, and Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding SB 159.
KARLA HART
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of SB 159.
ED ZASTROW
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of SB 159.
GRAHAM JUDSON, Staff
Representative Bob Herron
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the prime sponsor of
HB 288.
MYRON NANENG, Sr., President
Association Village Council Presidents
Bethel, Alaska
POSITION STATEMENT: Testified in support of HB 288.
MARK R. DAVIS, Deputy Director
Infrastructure Development
Alaska Industrial Development and Export Authority (AIDEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding HB 288.
RON LONG, Assistant City Manager
City of Seward
Seward, Alaska
POSITION STATEMENT: Testified in support of HB 288, Version N.
STEVE TRIMBLE, President
Trimble Strategies
Anchorage, Alaska
POSITION STATEMENT: Testified in support In HB 288.
REPRESENTATIVE LYNN GATTIS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as prime sponsor of HB 281.
REID HARRIS, Staff
Representative Lynn Gattis
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor of HB
281.
HENRY DEPHILLIPS, Doctor
Teladoc
Nashville, Tennessee
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 281.
DON HABEGER, Director
Division of Corporations, Business, & Professional Licensing
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided information on HB 281.
LAURA BROOKS, M.S., Health Care Administrator
Department pf Corrections
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 281.
ROBERT LAWRENCE, Physician
Chief Medical Officer
Inmate Health Care
Department of Corrections (DOC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 281.
ACTION NARRATIVE
3:19:33 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:19 p.m. Representatives
Chenault, Josephson, Herron, Reinbold, Millett, and Olson were
present at the call to order. Representative Saddler arrived as
the meeting was in progress.
HB 316-WORKERS' COMPENSATION MEDICAL FEES
3:19:52 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 316, "An Act relating to workers' compensation
fees for medical treatment and services; relating to workers'
compensation regulations; and providing for an effective date."
[Before the committee was Version O, labeled 28-LS1362\0,
Wallace, 3/10/14, adopted on 3/10/14.]
3:20:30 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, stated that Version O would set the fee schedules
for workers' compensation based on a resource-based relative
value scale, which in turn is based on the Centers for Medicaid
and Medicare services, including a conversion factor set by the
medical services review committee (MSRC). The MSRC would advise
the workers' compensation board to set conversion factors for
the fee schedules.
3:21:27 PM
REPRESENTATIVE REINBOLD made a motion to adopt Amendment 1,
labeled 28-LS1362\O.1, Wallace, 3/10/14, which read:
Page 3, line 12, following the second instance of
"the":
Insert "original"
Page 3, line 15, following the first instance of
"the":
Insert "original manufacturer's"
CHAIR OLSON objected for the purpose of discussion.
3:21:51 PM
MS. LATHAM explained that the Amendment [1] would add language
on page 3, line 12, to insert "original" and on page 3, line 15
to insert "original manufacturer's" with the intent that it
would avoid the higher priced invoice costs for prescriptions or
the mark ups on the original fees.
CHAIR OLSON removed his objection. There being no further
objection, Amendment 1 was adopted.
3:22:58 PM
SALLIE STEVEK, Human Resources Director, Fairbanks North Star
Borough (FNSB), stated this is the third time she has testified
in support of HB 316. She appreciated the work addressing the
concerns. As an employer with a self-funded workers'
compensation program, she also appreciated the efforts to reform
an expensive system. Mayor Hopkins spoke in favor of HB 316
last week and the Fairbanks North Star Borough Assembly adopted
a resolution supporting the Workers' Compensation Board
recommendations.
3:24:17 PM
REPRESENTATIVE JOSEPHSON, relative to current law, asked whether
the FNSB knows what rate reduction will be achieved under the
bill using Medicare and the conversion factor.
MS. STEVEK answered no. The FNSB hasn't performed any analysis,
but she believes that the bill will definitely reduce the costs.
She shared the concern of previous testifiers to be certain that
when workers are injured that they are able to get care and this
is why the multiplier and allowing the workers' compensation
board to set rates is a reasonable way to address this.
3:25:58 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 316.
[HB 316 was held over.]
HB 282-LANDLORD AND TENANT ACT
3:26:32 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 282, "An Act relating to the rights and
obligations of residential landlords and tenants; and relating
to the taking of a permanent fund dividend for rent and damages
owed to a residential landlord." [Before the committee was
Version O, labeled 28-LS0930\0, Bullock, 2/22/14 adopted on
2/28/14.]
3:27:01 PM
REPRESENTATIVE DOUG ISAACSON, Alaska State Legislature,
introduced himself.
3:27:45 PM
CHAIR OLSON said that the bill has had several hearings and a
proposed committee substitute for HB 282, Version O, was
adopted. He said the committee had questions about "normal wear
and tear."
3:28:16 PM
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General,
Commercial/Fair Business Section, Civil Division, Department of
Law (DOL), as the assistant attorney general for consumer
protection was asked by the sponsor to address Mr. Block's
concern about "normal wear and tear." He explained that it is a
difficult term to define and the more attempts that are made to
define it, the more problematic it becomes. He compared the
term as being similar to the "reasonable person" standard, which
is the standard used for most torts in Alaska. Although the
term is always used to set a standard of care, it is best left
to the judge and jury to decide its meaning. He said that
"normal wear and tear" is another one of those terms, and the
language in the statute is probably as close as one might get.
He offered to work with Mr. Block to attempt to further refine
the language. He cautioned the committee against trying to
"drill down" on something too detailed since the more detailed
it becomes the bigger the target it becomes in potential
disputes. For example, he asked whether the definition will
include the quality of construction or be related to the number
of people living in the residence. He suggested that if some
things are included it might mean that everything not included
automatically does not fall under "normal wear and tear." In
its current form the bill addresses "normal wear and tear" such
that in reasonable fact finding a judge or jury can consider it
on a case-by-case basis. He suggested that trying to get to
something more specific can definitely be problematic.
3:30:51 PM
REPRESENTATIVE ISAACSON pointed out that the term has been
defined in other states and other states have explored the term,
such as California and New York. He explained that a body of
work can be relied on since courts rely on precedent.
CHAIR OLSON stated that Mr. Sniffen "carries the most weight"
and it is less important what other states have done.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 282.
3:32:35 PM
REPRESENTATIVE REINBOLD moved to report the proposed committee
substitute (CS) for HB 282, Version O, labeled 28-LS0930\O,
Bullock, 2/22/14, as amended, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 282(L&C) was reported from the House Labor &
Commerce Standing Committee.
3:33:06 PM
The committee took an at-ease from 3:33 to 3:36 p.m.
SB 159-AIR AMBULANCE SERVICES
3:36:02 PM
CHAIR OLSON announced that the next order of business would be
SENATE BILL NO. 159, "An Act relating to air ambulance service
providers, air ambulance membership agreements, and regulation
of air ambulance service providers and air ambulance membership
agreements by the division of insurance; and providing for an
effective date."
3:36:08 PM
SENATOR BERT STEDMAN, Alaska State Legislature, as sponsor of SB
159, explained that many rural Alaskans are trying to get
medical services quickly, especially in smaller communities. He
said he has been working with Representative Munoz on this topic
and between them their districts cover most of Southeast Alaska.
3:37:24 PM
CHRISTIE JAMIESON, Staff, Senator Bert Stedman, Alaska State
Legislature, stated that SB 159 would allow all life-saving air
medical transport companies such as Airlift Northwest to provide
air care membership program coverage for air ambulance services.
The purpose of a membership program is to cover all out-of-
pocket expenses that may not be covered by a primary payor. The
cost to transport patients has been estimated to range from $70-
$100 thousand per flight. The air care membership program was
discontinued by the Division of Insurance (DOI), who deemed the
membership program no longer exempt from insurance regulations
due to Airlift Northwest's restructuring. Presently, Airlift
Northwest has been allowed to honor existing memberships, but it
cannot offer any renewals. Airlift Northwest, a Seattle-based
provider of life-saving air medical transport services, has
offered the popular air care membership program to Southeast
Alaska residents since 2009 and approximately 3,000 Southeast
Alaska households are enrolled in the membership program.
MS. JAMIESON related that air medical transportation insurance
is expensive and may not cover all the costs. She stated the
purpose of a membership program is to cover all out-of-pocket
expenses, including deductibles and co-insurance amounts not
covered by the primary payor. Thus, as an "air care" member,
the insurance company would receive the bill. Airlift Northwest
is secondary to all payors and works directly with the insurance
company for claims processing. The "air care" program directly
helps fund Airlift Northwest so it can transport critically ill
or injured patients to hospitals for care not locally available.
She said that SB 159 will exempt air ambulance services from the
state's insurance code, thereby allowing Airlift Northwest to
continue offering the "air care" program to Alaskans.
3:40:03 PM
REPRESENTATIVE SADDLER asked for the approximate cost per
household of the current 3,000 members for the secondary air
transport insurance.
SENATOR STEDMAN answered the cost is approximately $100 per year
and offered his belief that the cost is per household.
3:40:51 PM
REPRESENTATIVE SADDLER asked whether Airlift Northwest is the
only company affected by this bill.
SENATOR STEDMAN answered that was his understanding.
REPRESENTATIVE MILLETT offered her belief that Anchorage offers
similar service.
MS. JAMIESON commented that Apollo [MedFlight] offers service in
Fairbanks.
3:41:49 PM
SHELLY DEERING, Alaska Regional Manager, Airlift Northwest,
testifying in support of SB 159, stated that Airlift Northwest
has offered services in Alaska for 21 years. She commented she
is also a 21-year Alaska resident. She explained that Airlift
Northwest seeks to provide Alaskans the ability to participate
in subscription membership programs for air medical
transportation. Airlift Northwest has successfully transported
patients for 32 years and is currently staffed with 19 nurses
and pilots who live and work in Juneau. Airlift Northwest has
sold air care memberships in Alaska from 2008 until November
2013. Currently, Airlift Northwest has 4,066 members, including
the previously mentioned households, but it was informed in 2013
to discontinue its membership due to restructuring, she said.
3:43:22 PM
MS. DEERING reported that [SB 159] would resolve the
discontinuation allowing any air ambulance provider to offer
this membership program. It would also give appropriate
oversight authority to the Alaska Division of Insurance. She
stated that residents require air medical transportation when a
hospital or first responder has determined they are critically
ill or injured. This is a time filled with urgency, stress, and
anxiety, so not worrying about transport costs is one less thing
families need to worry about. She reported that the cost for
the program is $99 per year per household.
3:44:18 PM
REPRESENTATIVE SADDLER asked for clarification on the business
structure.
MS. DEERING answered that Airlift Northwest is a state tax
exempt entity under the University of Washington (UW) medical
system in Seattle.
REPRESENTATIVE SADDLER asked whether Airlift Northwest operates
elsewhere.
MS. DEERING answered that Airlift Northwest also operates in
Washington. In further response to a question, she said that it
has two fixed-wing aircraft in Alaska and two fixed-wing
aircraft and four helicopter aircraft in Washington; Airlift
Northwest uses Learjet 31-A and Aero Commanders.
3:45:16 PM
MS. DEERING stated that the company was founded in 1983 after
Airlift Northwest's medical director, Dr. Michael Copus, was
unable to transport three critically burned children from Sitka.
He had decided that if patients couldn't get to care, it was
possible to bring care to patients and transport them to
facilities.
CHAIR OLSON offered his belief that the helicopters allow them
to pick up medical crews from five hospitals.
MS. DEERING agreed. At the time, Providence Medical Center,
Seattle Children's Hospital, Harborview, University of
Washington, and Virginia Mason Hospital and Medical Center in
Seattle were part of the consortium that started Airlift
Northwest.
REPRESENTATIVE JOSEPHSON asked for clarification between a
medical service and benefit.
MS. DEERING deferred to Chris Marten.
3:46:47 PM
The committee took an at-ease from 3:46 p.m. to 3:50 p.m. due to
audio issues.
3:50:58 PM
REPRESENTATIVE JOSEPHSON understood that part of the reason for
the change was finding that Airlift Northwest was not offering
clients a "medical service" but offered a "benefit."
CHRIS MARTEN, Executive Director, Airlift Northwest, stated that
Airlift Northwest was previously designated a 501(c)(3) non-
profit organization so it operated separately from the
University of Washington system. Since Northwest Airlift is now
part of the university, the company no longer fit any of the
criteria to be a membership program. The Division of Insurance
(DOI) suggested that it become its own insurance program;
however, Airlift Northwest is an air medical service and not an
insurance company. The company provides membership benefits so
clients don't have to pay out-of-pocket expenses; however, he
clarified that Airlift Northwest is not an insurance company.
At that point, the DOI advised Airlift Northwest to cease and
desist, which is when the company sought a statute change so it
could sell memberships again.
3:53:25 PM
REPRESENTATIVE JOSEPHSON asked why the stoppage was ordered.
MARTIN HESTER, Deputy Director, Division of Insurance,
Department of Commerce, Community, and Economic Development
(DCCED), stated that the division enforces AS 21.87.010 and it
came to the its attention that Airlift Northwest had
restructured its air care program. He related that the statute
requires the entity to be a municipality, a non-profit medical
service corporation, or a non-profit association. The division
consulted with Department of Law and determined the company no
longer met the three criteria, and so it did not qualify for the
exemption under the 2008 statute.
3:54:54 PM
KARLA HART said she is an Airlift Northwest member and would
like to continue to be a member. She initially bought a
membership at the suggestion of her primary care nurse who had
observed effects and burden on families whose members were
airlifted, but the families did not have adequate coverage. She
subsequently investigated the membership and found that paying
$99 for a service that is really valuable to the region was a
small price to pay and no more than the cost of a membership to
her public radio station or other non-profit that she supported.
She said many of her family and friends have purchased the
service but have never needed to use it, although she does know
people who have been medevaced. She said some people are still
paying for the medevac a decade later. She said that Airlift
Northwest provides a real financial assurance. She checked into
the private insurance as an acceptable alternative, but found
the policy was underwritten by a for-profit company. She
expressed concern that the insurance companies had an exclusion
in the event a foreseeable need existed for the medevac. The
insurance company couldn't adequately answer whether terminal
cancer, for example, or a heart stent would be considered a
foreseeable need. The Airlift Northwest program doesn't try to
cut the bottom line and disallow members, which is why she cares
about this bill. She expressed concern that delays in passing
SB 159 could cause problems. Since members cannot renew their
memberships, anyone suffering a catastrophe would not have
coverage and it could cost a substantial amount of money. She
urged members to move this quickly. In Washington, universities
are considered municipalities, but not in Alaska, so what's at
issue is really just the spirit of the law, she said.
3:59:11 PM
ED ZASTROW offered his support for SB 159. He said that
sufficient number of medevac transports occur in Ketchikan that
have kept Guardian Air and Northwest Airlift in business. He
expressed surprise at the number of airlifts that land and take
off from Ketchikan.
4:00:26 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on SB 159.
[SB 159 held over.]
4:01:01 PM
The committee took a brief at ease.
HB 288-AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND
4:01:42 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 288, "An Act creating the Arctic infrastructure
development program and fund in the Alaska Industrial
Development and Export Authority."
4:02:14 PM
REPRESENTATIVE REINBOLD moved to adopt the proposed committee
substitute (CS) for HB 288, labeled 28-LS1139\N, Martin,
3/14/14, as the working document [Version N].
CHAIR OLSON objected for the purpose of discussion.
4:02:36 PM
REPRESENTATIVE HERRON, speaking as prime sponsor of HB 288,
stated that the Arctic coastline runs from Canada across the
North Slope, down Western Alaska to Bristol Bay, to the end of
the Aleutian Chain. However, only one deep draft port exists,
Dutch Harbor, within that coastline in the middle of the
Aleutian Islands. He said that with the emerging Arctic, vessel
landings places are limited, whether vessels are being used for
oil response, search and rescue, or resource extraction. This
bill has proposed to develop a funding mechanism similar to the
sustainable energy transmission and supply development fund
(SETS) authored by Representative Millett. He explained that HB
288 would expand AIDEA's [Alaska Industrial Development and
Export Authority] "tool bag" by extending the same authority for
loans, loan guarantees, bonds, bond guarantees currently in
SETS, which allows the state to develop the infrastructure under
its own terms. It will extend AIDEA's ability to ensure project
obligations and loans, defer principal payments and capital
interest, offer financing terms up to 40 years, enter lease
agreements, enter into sales lease back agreements, transfer
agreements, and other agreements. He stated that making
financing available will empower communities and attract a
global pool of investment as an alternative to the traditional
grant model. Currently, an estimated $100 billion in global
capital is "looking for a home in the Arctic." Instead of the
Alaska Permanent Fund Corporation investing in projects in the
Lower 48, private investments want to invest in Alaska and are
recommended by the Arctic Policy Commission. In order to help
provide advancing economic development and a healthy environment
an infrastructure development fund is critical, he said.
4:05:57 PM
GRAHAM JUDSON, Staff, Representative Bob Herron, Alaska State
Legislature, referred to the sectional in members' packets. He
referred to page 1, line 5 through page 2, line 19, Section 1,
AS 44.88.088(a), which establishes that the Alaska Industrial
Development and Export Authority shall adopt a policy for
payment of a dividend from the Arctic Infrastructure Development
Fund (AIDF), AS 44.88.810, to the state each fiscal year. The
dividend may not be less than 25 percent or more than 50 percent
of the net income of the fund. This puts the AIDF in line with
AIDEA's revolving fund and sustainable energy transmission and
supply development fund (SETS).
4:07:00 PM
MR. JUDSON stated that Section 2 defines "net income" for the
purposes of this chapter and the definition now includes the
AIDF. Section 3 defines "unrestricted net income" for the
purposes of this chapter and the definition now includes the
AIDF. He said Sections 4-8, page 3, line 8 thru page 5, line 6,
will make conforming changes to include loans from the Arctic
Infrastructure Development fund (AIDF) to existing statues
regarding interest rates and other requirements for loans from
funds managed by AIDEA. These changes place the same
requirements on the AIDF that currently exist for the revolving
fund and the SETS fund. Section 9, AS 44.88.159(g), adds the
AIDF to the types of programs to pay borrowers of loan
participation the AIDEA may establish. This places the AIDF in
parallel with the existing revolving fund and SETS fund.
4:08:01 PM
MR. JUDSON referred to Section 10 which establishes the Arctic
Infrastructure Development Program and fund. The purpose of
this fund is to provide financing for Arctic infrastructure
development and defines the fund's structure, including direct
appropriations made by the legislature and money or assets
transferred to the fund by AIDEA from any other fund controlled
by AIDEA. These transfers would require a majority vote by the
members of AIDEA, which is essentially an action by its board of
directors on unrestricted loan repayments, interest, other
income earned by the fund, and investment or assets of the fund.
This section allows separate accounts to be established within
the fund and managed by AIDEA and ii establishes the AIDF and
clarifies that it is not part of the revolving fund, he said.
4:08:54 PM
MR. JUDSON referred to page 6, lines 17-19, of Section 10, which
clarifies that the fund will be used for Arctic infrastructure
development. He referred to page 6, lines 20 thru page 7, line
14 of section 10, which establishes the powers and duties of the
AIDEA regarding the AIDF. This section mirrors the powers and
duties of the revolving fund and the SETS fund. It also allows
AIDEA to use the AIDF to finance Arctic infrastructure
development, ensure project obligations, guarantee loans or
bonds, establish reserves, and acquire real or personal property
by purchase, transfer, or foreclosure. He said it allows AIDEA
to defer principal payments or capitalize interest on Arctic
infrastructure development, enter into lease agreements, sales-
lease-back agreements, build-operate-transfer and operate-
transfer agreements or similar financing agreements and to enter
into agreements with government entities for the transfer and
control of infrastructure, rights-of-way, facilities, and
studies, allows contract services, allows the fund to borrow
money or issue bonds, and directs AIDEA to establish regulations
to implement the fund.
4:10:07 PM
REPRESENTATIVE HERRON explained that this section is "a must
have" for the other body, since it's important for AIDEA to have
the authority, but if it goes beyond the limitations outlined,
it must come back to the legislature for approval.
4:10:34 PM
MR. JUDSON continued with Section 10, page 7, lines 15 thru page
8, line 1, which establishes the limitations on financing in the
AIDF. It provides that legislative authority would be needed to
go beyond the limitations set forth in this section. The AIDEA
may not use the AIDF to make a loan for more than one-third of
the capital cost of the development; a loan guarantee if the
amount of the guarantee exceeds $20 million, or financing for
more than 40 years. Notwithstanding (a) of this Section 10,
legislative approval, AIDEA can use the fund as security for a
bond guarantee and AIDEA may provide financing, loans, or bond
guarantees for the development and support of fisheries in the
Arctic provided the amount of any financing, loan, or bond
guarantee is no less than $7 million.
MR. JUDSON said it limits financing, loans, or bond guarantees
for fishing vessels, quota shares or individual fishing quotas
to those used within a federally managed fishery.
4:12:12 PM
REPRESENTATIVE MILLETT asked why add the fishing vessels, quota
shares, or individual fishing quotas to those used within a
federally managed fishery since a revolving loan fund for vessel
enhancement exists, although she did not recall anything that
would help fishermen purchase individual quotas or shares of
individual fishing units.
REPRESENTATIVE HERRON responded that this language was suggested
by a legislator in the ther body. He suggested that
conversations were held with AIDEA. He said that Mr. Judson was
"shadowing" the Senate version of the bill.
4:13:23 PM
MR. JUDSON said this language would allow AIDEA to finance loans
with the goal to increase ownership of fishing vessels and quota
shares in Alaska.
REPRESENTATIVE REINBOLD expressed her concern. She said she has
a bit of a "hardship" with that provision.
REPRESENTATIVE MILLETT clarified her concern. She said she was
a commercial fisherman for 25 years and has used every fishing
opportunity, grant, and low interest loan for fisheries. She
questioned the need for another program and was uncomfortable
with the potential amount of the loan. She said that she has
never seen one for the purchase of quota shares or individual
quotas and characterized it as being able to stack the deck.
CHAIR OLSON pointed out that concerns can be brought to the
sponsor since he planned to hold the bill over.
4:15:30 PM
MR. JUDSON referred to page 8, to Section 11, which defines
"Arctic" in a geographical boundary similar to the boundary set
forth in the Arctic Region Policy Act (ARPA), north of the
Arctic Circle, north and west of the boundary formed by the
Porcupine, Yukon, and Kuskokwim rivers, and all contiguous seas
including the Arctic Ocean, the Beaufort, Bering and Chukchi
Seas, and the Aleutian chain. Finally, the language on page 8,
lines 7-19, defines "Arctic Infrastructure development."
REPRESENTATIVE HERRON suggested that it may be helpful to hear
others testify.
4:16:49 PM
REPRESENTATIVE JOSEPHSON referred to Section 11, paragraph (19),
and asked how expansive "Arctic Infrastructure development" is.
He asked if the Anchorage port could be seen as something that
furthers or supports the development of an Arctic facility.
MR. JUDSON answered yes; he did not believe there were any
limitations to what supports the Arctic.
REPRESENTATIVE HERRON commented that the City of Seward has
provided a letter of support since they have been and continue
to place themselves as a service port for all vessels in Alaska.
He said that all items that support development of the Arctic
should be included.
4:18:05 PM
REPRESENTATIVE JOSEPHSON asked for the definition of facility in
that same paragraph.
MR. JUDSON answered that was a change from the original bill,
and the use of facility was to reduce the list. He said it is
somewhat open.
4:18:57 PM
REPRESENTATIVE JOSEPHSON asked what type of project or facility
that might be "spawned." He asked if it would it be a harbor in
Point Hope or Point Lay or something in the Interior.
REPRESENTATIVE HERRON answered that is the key and what will be
needed first, whether that would be a safe refuge or harbor, or
harbors and ports to support oil response. He said obviously,
most of the funds will be private sector so identifying which
port or resource makes the most sense. He said it is not a
race, but what makes sense and what is important to Alaska. He
likened it as being similar to the port authority legislation,
elsewhere in the legislature, that is a holistic plan. And this
language tries to balance this for the good of Alaska rather
than it being the community who has the strongest leverage.
REPRESENTATIVE SADDLER referred to page 8, line 19, to the
language "used in support of a fishery in the Arctic" which
could be Port of Anchorage as broad as possible or if it will be
at least 50 percent aimed at a fishery in the Arctic.
REPRESENTATIVE HERRON deferred to Mr. Mark Davis, Alaska
Industrial Development and Export Authority.
4:21:23 PM
REPRESENTATIVE JOSEPHSON referred to a map in members' packets
and asked how the feature was achieved.
REPRESENTATIVE HERRON related that Congress defined the Arctic
region, but the Bering Sea is the key to the Arctic since warm
water goes in and cold water goes out. He characterized the
Bering Sea as Western Alaska and the Aleutian's garden, just
like the Beaufort and Chukchi Sea is their garden. The reason
for the boundaries is that in the 1950s, President Eisenhower
had the idea that the northern part of Alaska couldn't pay for
itself but the southern part of the Railbelt and the Tongass
forest could. Thus the PYK line, named after the Porcupine,
Yukon, and Kuskokwim rivers was a result of Senator Butrovich
and Mr. Atwood objecting to a territory above the PYK line.
Ultimately, the Congress defined the Arctic within those
boundaries, which [was the basis for Section 10 of the Alaska
Statehood Act, which U.S. Senator Ted Stevens wrote].
4:24:17 PM
MYRON NANENG, Sr., President, Association Village Council
Presidents, stated that the association represents 56 villages
on the Yukon Kuskokwim Delta. He said he is testifying in
support of HB 288 because it is considered an economic
opportunity for the region, which is economically depressed. He
thanked Representative Herron for the bill. He hoped the
committee would support it since it will make a difference for
the youth in the region.
4:25:26 PM
REPRESENTATIVE MILLETT referred to page 8, lines 15-17, and the
reason for the language. She wondered why they would be giving
loans for fishing vessels and fishing quotas. She said she
didn't object to the construction or rehabilitation or expansion
of a plant or facility; however, she expressed concern about
financing a fishing vessel that would fish in the Bering Sea or
the Arctic. She noted other loan programs exist and the reason
for such a "high mark" for the Arctic.
4:26:58 PM
MARK R. DAVIS, Deputy Director, Infrastructure Development,
Alaska Industrial Development and Export Authority (AIDEA),
Department of Commerce, Community & Economic Development
(DCCED), referred to page 7, which contains the concept that
none of the loans can be less than $7 million. He said that
AIDEA did not want to interfere with the existing programs, but
in particular, for quotas, there isn't any program to provide
for financing. He hoped that AIDEA would be poised to work with
the banking community to provide for a quota and repatriate, if
possible, back to the State of Alaska.
4:27:31 PM
REPRESENTATIVE MILLETT asked if Alaskan companies could benefit.
MR. DAVIS answered yes; He thought the private public
partnerships (P3) realm that AIDEA works in represents a lot of
capital. He envisioned a concerted business plan that may
involve the restructuring of a fishing company, but he did not
think it would happen very often.
4:28:11 PM
CHAIR OLSON asked whether this would apply to vessels documented
outside Alaska but fishing in northern waters.
MR. DAVIS answered that it would, which is why AIDEA would
likely want to have the collateral for the loan now plus the
quota shares restricted to uses in the Alaska fisheries; thus,
it would tie the two together.
CHAIR OLSON asked whether those fishermen have access to other
programs and may compete against Alaskans.
MR. DAVIS said he doesn't think so, but the loan is set at a $7
million minimum since AIDEA did not want to interfere with
existing programs the state has for fisheries.
4:29:12 PM
REPRESENTATIVE MILLETT related her understanding this could help
out-of-state large companies purchase quotas.
MR. DAVIS pointed out that the loans would have to be consistent
with AIDEA's other statutes, which require AIDEA to alleviate
unemployment in the state and be concerned with programs in the
state. Thus, AIDEA would need a nexus to Alaska in order to
make loan.
4:29:49 PM
REPRESENTATIVE MILLETT asked whether AIDEA follows the loan and
tracks the number of Alaskans employed by the vessel during the
course of the loan.
MR. DAVIS answered yes; that with the current loan participation
program, which lends to real estate, AIDEA does precisely that,
as well as tracking in the SETS fund.
4:30:19 PM
REPRESENTATIVE MILLETT related a scenario in which a company
purchases a quota and shares. She asked whether they could in
turn the loan to someone else.
MR. DAVIS answered that AIDEA usually does not permit the
transfer of any AIDEA loan without written permission with
termination consistent with their statutes. He said that
typically AIDEA includes a clause that any transfer without
permission would accelerate the loan and it would immediately be
due in full with interest.
4:31:08 PM
REPRESENTATIVE CHENAULT related a scenario in which funds could
be used for port expansion at Seward. It would allow Seward to
expand its port and bring back fishing vessels that currently
are docked in Seattle and Washington areas. It would bring
boats back to Alaska and Alaskans would work on the boats. He
asked whether that is correct.
MR. DAVIS answered yes; AIDEA has been in contact with various
ports, including the Port of Seward. He said that AIDEA is very
interested in wanting to create more jobs in the local port and
the fishing fleet is very labor intensive.
4:32:18 PM
REPRESENTATIVE SADDLER wondered if a company from the Lower 48
could obtain an AIDEA loan from the AIDF and generate work for
Alaskans, but not necessarily owned by Alaskans.
MR. DAVIS answered yes; AIDEA can make loans to companies
domiciled outside Alaska, but the economic impact would need to
be in the state in order for them to make the loan, which is
also under AIDEA's current statutes.
4:33:01 PM
REPRESENTATIVE SADDLER asked how he anticipated the loan funds
to be used and whether it is for large infrastructure, likely to
be more for quotas.
MR. DAVIS offered his view, which is that this would be used for
large infrastructure. He reminded members he is the director of
infrastructure for AIDEA. He has been working on large projects
for roads to resources (R2R). He thought this would primarily
be used for ports. It does have the quota portion, but he
envisioned this would be used for infrastructure for ports, such
as the Port of Seward to try to keep vessels in our waters and
jobs in Alaska.
4:33:53 PM
REPRESENTATIVE REINBOLD expressed her concern on page 7, lines
27-31; and on page 8, lines 15-19. She offered her support for
infrastructure in the Arctic, but not for fishing vessels given
the tight budget.
MR. DAVIS answered that traditionally how the industries work in
the Arctic for the Bering Sea fleet is that the lending goes to
the ship which serves as collateral for the quota. He said the
AIDEA tries to track the current commercial practice in the
fleet. He related the goal is to tie the vessel to the Alaska
based loan and the vessel would be kept in Alaska waters in the
off season, but would fish in Alaska's waters during the season.
REPRESENTATIVE REINBOLD reiterated she supports large
infrastructure, but she found this to be "a real stretch."
4:35:30 PM
REPRESENTATIVE HERRON responded that he wants this
infrastructure to be solid assets and not apply to fishing. He
related his understanding that Seward plans to expand, and other
ports typically used by the fishing fleet will provide the
nexus. He asked if this is the nexus Mr. Davis envisions.
MR. DAVIS answered that is correct. For example, he related
that AIDEA is an owner of the Ketchikan Alaska Shipyard and
recently that shipyard built the only vessel in the fleet that
is kept in Alaska. He stated that AIDEA would like more vessels
to be built, maintained, and kept in Alaska in the off season,
which would generate more income for the state from the fishing
fleet. He offered his belief that most of the fleet exits the
state at the end of the season.
4:36:49 PM
REPRESENTATIVE SADDLER said in the last couple of years that
AIDEA's mission, funding levels, and loan capacity has expanded.
He asked whether there are any limits to AIDEA's growth,
mission, and magnitude.
MR. DAVIS pointed out that he worked with the legislature on the
SETS fund and this bill tracks the SET funds. Thus, the idea
for expansion is that AIDEA would have specialized funds and as
with the Interior Energy project, the legislature could provide
AIDEA with additional bonding or funds to be used for those
purposes. In fact, that's the reason there isn't any funding
associated with it. He said he considers it a joint venture
between AIDEA and the legislature to decide how to deploy the
state's resources.
4:38:00 PM
REPRESENTATIVE SADDLER asked whether AIDEA supports the bill.
MR. DAVIS answered that AIDEA supports the bill so long as it
contains the provision in subsection (d) that AIDEA can't make
the loans for less than $7 million. He referred to page 7,
lines 16-17, which states that AIDEA "may not" use the
infrastructure fund, but on line 27, it reads, "may not provide"
which creates a double negative. Thus, AIDEA would propose a
slight change in the language, but he supports AIDEA not making
loans in the federally-managed fishery below $7 million. He
stated that AIDEA would like to preserve other programs already
in existence.
4:38:57 PM
REPRESENTATIVE JOSEPHSON referred to page 7, lines 24-26, to
subsection (c) and asked for the intent of this language.
MR. DAVIS answered that subsection (c) only becomes effective if
there were funds in the fund; however, until it is funded then
nothing in the Arctic infrastructure development fund could be
used for security as a bond. Again, as with the Interior Energy
project, this new fund would be used in conjunction with a
decision by the legislature to fund it.
4:39:51 PM
REPRESENTATIVE JOSEPHSON asked who AIDEA envisions would be an
investor. He related a scenario in which Alaska developed a
port at the deepest water location in the Arctic, in which loans
are made not to exceed one-third for that project. He asked
whether the entity would be a company like Crowley Maritime.
MR. DAVIS answered that AIDEA would be looking at large
infrastructure funds, perhaps pension funds that invest in
infrastructure. For example, a potential partner in the
Interior energy project is a pension fund that invests in
infrastructure. He believed that other infrastructure funds
would also be interested assuming the port would generate the
revenue to pay off the debt.
4:41:02 PM
REPRESENTATIVE JOSEPHSON asked for further clarification. He
asked whether investors would use their pension dollars.
MR. DAVIS answered that in the Interior energy project, which is
a proposed trucking operation with an LNG plant on the North
Slope to truck to Fairbanks. The potential partner approved by
AIDEA on January 14 is a pension fund that invests in
infrastructure.
REPRESENTATIVE JOSEPHSON was unsure that is how he would spend
his pension dollars.
4:41:32 PM
RON LONG, Assistant City Manager, City of Seward, testified in
support of HB 288, Version N. He heard Seward mentioned several
times today, but in all fairness, this bill could apply equally
to several other ports around the state and represents an effort
to build the infrastructure to support development in the
Arctic. He indicated that this effort will take place in terms
of staging from somewhere outside the region described in
Section 11 until sufficient infrastructure can support it. He
said he did not want to see the entry level position be located
in Tacoma or Bellingham, but to be in Alaska. He said he
supports the language in the last part of Section 11. He
referred to the fisheries and offered his belief that AIDEA has
sufficient expertise to ensure that the economic impacts accrue
to Alaska, whether it is through a tiered entry system that
makes eligibility to Alaskan Corporations first, then to outside
entities if sufficient funds exist. He emphasized his hope that
the economic impact will accrue to Alaskans whether it is to the
local economy or the state treasury. Although those approaches
may be different ways of measuring success, "we're all Alaskans
and we can all benefit from it.
4:43:36 PM
STEVE TRIMBLE, President, Trimble Strategies, stated he is
testifying today in support of HB 288, a bill that would create
an Arctic infrastructure development fund within AIDEA. He read
from a prepared statement, as follows [original punctuation
provided]:
The Arctic is the future of Alaska, and we must invest
in infrastructure now if we are to have a place of
meaning in the future of the global arctic frontier.
Industry has responded to the call of public
investment through the SETS fund and the time is now
to further additional public-ÂÂprivate investments
within Alaska. The era of "easy money" is approaching
its end in our state and the age of "smart money" is
now upon us.
Enabling AIDEA through the creation of the Arctic
Infrastructure Program/ Fund and the additional tools
that CS Version N for HB 288 provides is an investment
in "smart money" for the future of Alaska. I
appreciate your consideration in hearing my testimony
today in support of HB 288.
[HB 288 was held over.]
4:45:19 PM
The committee took a brief at-ease.
HB 281-PRESCRIPTION WITHOUT PHYSICAL EXAMINATION
4:46:25 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 281, "An Act relating to prescription of drugs by
a physician without a physical examination." [Before the
committee was CSHB 281(HSS).]
4:46:32 PM
REPRESENTATIVE LYNN GATTIS, as sponsor, stated that HB 281 would
clarify in statute that physicians may not be sanctioned for
dispensing or administering prescription medications without a
physical exam of the patient. This practice is called
"telemedicine" and is medical care delivered by primary care
physicians, licensed within Alaska. Anyone needing medical care
would be a candidate for this system. She highlighted some
benefits of telemedicine for working mothers with sick kids,
rural homesteaders, or employees who cannot afford to take time
off from work. Under HB 281, patients could obtain over the
phone or online consultations in which physicians can diagnose
their ailments and provide prescriptions but stipulates that
physicians cannot prescribe controlled substances. Some
benefits of telemedicine include convenience for the patient and
affordability, with an average cost of $40 for a consultation
fee rather than an emergency room visit that could cost $1,000
or more. In fact, 25 percent of the emergency room visits are
for non-emergency care, she said.
4:48:05 PM
REPRESENTATIVE GATTIS related a scenario in which she personally
waited at the emergency room for hours to obtain after hour
care. She said her physician shared his knowledge of electronic
applications for use on a smart phone and was excited to hear
about her telemedicine bill. She offered her belief that it is
time for telemedicine. She summarized that this bill comes down
to cost and access. This bill does not replace the primary care
provider (PCP) relationship; however, in requesting consultation
a patient enters into a doctor/patient relationship. If a
patient does not have a PCP, he/she may designate a telemedicine
provider as such. She highlighted some issues previously
discussed in other committees including patient privacy.
4:49:06 PM
REPRESENTATIVE GATTIS said the health insurance portability and
accountability act (HIPPA) privacy laws apply to telemedicine
providers the same as with "brick and mortar" offices.
Telemedicine already exists and is being conducted in the state
by the Alaska Native Tribal Health Consortium (ANTHC) and the
Veterans Administration. Additionally, companies such as Home
Depot and Costco use telemedicine as part of their employee
plans. This reinforces that telemedicine is needed and is being
used. Typically, the usual conditions treated include acute
respiratory illness, skin problems, abdominal pain, back, and
joint problems. These practices can favorably impact access to
care in both rural and urban settings. In fact, with 20 percent
of Alaska's population residing in rural areas, it is imperative
that access to routine care be as quick and economical as
possible. She has held conversations in her district and many
of her constituents already support telemedicine.
4:51:07 PM
REPRESENTATIVE SADDLER said he did not see telemedicine
specifically listed in the bill.
REPRESENTATIVE GATTIS suggested that telemedicine will
specifically be clarified in an amendment.
REPRESENTATIVE SADDLER said that his wife works in public health
and has been working in telemedicine for 12 years or longer.
REPRESENTATIVE HERRON appreciated the sponsor bringing this up.
He offered a belated thank you to the late U.S. Senator Ted
Stevens, Alaska, who had raved about telemedicine in the tribal
setting, including the benefits to mental health, dental health,
and therapists. Furthermore, a pilot program in a different
bill will try telemedicine between the medical examiner and
regional hubs. He touted telemedicine by video as a means to
provide services less expensively. He said a telemedicine
connection between patient and doctor is much less expensive
than using the emergency room.
CHAIR OLSON answered that the Kotzebue program has been a
national model and has been on the cutting edge for years.
4:53:51 PM
REPRESENTATIVE MILLETT asked whether nurse practitioners will be
able to use telemedicine.
REPRESENTATIVE GATTIS answered no; that she followed the same
guidelines as if patients walked into their doctor's offices.
She explained that if a nurse practitioner works under a doctor,
it would work the same way under the telemedicine model. She
characterized it as being a connection between the patient and
his/her provider.
REPRESENTATIVE MILLETT questioned this since she is recipient of
ANTHC and understands that nurse practitioners work under
physicians and can prescribe antibiotics.
REPRESENTATIVE GATTIS answered that the federal exemption is a
little different than this model.
4:54:51 PM
REPRESENTATIVE JOSEPHSON asked for clarification on how this
would work. He envisioned someone picks up the telephone to
obtain care. He asked whether telemedicine is a business.
REPRESENTATIVE GATTIS agreed telemedicine is a business, noting
that doctor's offices are also businesses. She related a
scenario to illustrate that mothers would not need to take kids
to the doctor's office and wait, but would simply phone the
doctor and provide specific details, such as the temperature and
any allergies. The doctor would assess the information provided,
perhaps including reviewing a telephonically submitted photo and
make a diagnosis or ask the patient to come in if the doctor
believes the patient may need specialist.
4:56:49 PM
REPRESENTATIVE JOSEPHSON asked whether this would be an
enterprise in which a brick and mortar practitioner breaks away
or if this is a "doc in the box" by phone only.
4:57:11 PM
REID HARRIS, Staff, Representative Lynn Gattis, Alaska State
Legislature, in response to Representative Josephson, explained
that the bill will allow doctors already licensed in Alaska with
a "brick and mortar" business to engage in telemedicine.
However, there are some large national corporations that employ
doctors within the state, without any outsourcing. Thus, the
bill would allow these corporations to operate in the same way
other doctors do. For example, a primary care physician could
set up telemedicine with per charge fees or a doctor could
contact "Teladoc" or some other telemedicine corporation and ask
the it to run the doctor's telemedicine portion of the business.
4:58:12 PM
REPRESENTATIVE JOSEPHSON recalled previous testimony before
another committee that some medicine could be prescribed for
back pain. He asked for clarification on how to avoid
prescription abuse with telemedicine, noting in his law practice
he encountered such cases. He suggested perhaps prescription
contracts were necessary. He asked how to avoid patients
calling five telemedicine practices in a day to fraudulently
obtain drugs.
REPRESENTATIVE GATTIS answered that this bill does not address
chronic back pain, and telemedicine is limited to minor issues.
She deferred to Dr. DePhillips, Teladoc, to answer more fully.
CHAIR OLSON listed testifiers who have signed up for questions,
including telemedicine doctors and department staff from the
Department of Commerce, Community & Economic Development.
REPRESENTATIVE GATTIS related that a number of people have shown
an interest in the bill. She offered her belief that the
practice of telemedicine needs to be clarified.
5:00:32 PM
HENRY DePHILLIPS, Physician, Teladoc, answered that no Drug
Enforcement Administration (DEA) controlled substances are
allowed to be prescribed under the bill. Most telemedicine
companies that provide services in all 50 states, including
Teladoc, prohibit prescribing any DEA controlled substances
including narcotics and benzodiazepines. In fact, most
telemedicine drugs prescribed for primary care health tend to be
for sinusitis, bronchitis, and urinary tract infections and are
medicines that tend to be generic such as amoxicillin or cough
suppressants, which are not prone to abuse. Although Teladoc
occasionally receives requests for narcotics, once these people
find they are not successful in obtaining the drugs, Teladoc
typically will not hear from these people again
5:02:00 PM
REPRESENTATIVE JOSEPHSON referred to a memo he saw two months
ago with respect to an earlier version in the Senate for SB 80,
in which the state medical board opposed the bill since it tends
to redefine the practice of medicine, which has at its core the
physical examination of patients.
DR. DePHILLIPS provided history that he thought would best
answer this. In the 1990s, Internet scams occurred and people
could obtain prescriptions online without any doctors being
involved. The result was that all the state medical boards
enacted a "prior in-person requirement" which drove most of the
Internet businesses out of business. However, 15 years later,
patients can be safely connected with a physician, which is what
telemedicine is all about. Several medical boards have been
resistent to telemedicine for two reasons. First, the medical
boards, including the Alaska State Medical Board, have been
concerned about patient care going to physicians who reside
outside of their state. He understood that concern; however, he
advised that his company's business model calls for physicians
to be located in Alaska. These doctors are residents, who are
licensed in Alaska to provide care for Alaskans. That has been
Teladoc's business model, thus, the bill addresses that concern.
DR. DEPHILLIPS related the second concern, which is that the
medical boards have expressed concern about patient safety since
the boards believe that not seeing the patient in person
represents an unsafe encounter. He also understood this
concern. However, he said he is a board-certified family
physician who has practiced medicine for ten years prior to
moving to the telemedicine industry. The data does not support
the concern. He said, "At least in our company's experience.
We're now coming up this quarter on one-half of one million
telehealth consults around the 50 states." Furthermore, Teladoc
covers the liability insurance for all 50 states of network
physicians and has never had a liability claim. He concluded
that if you put good guard rails around the program, it will
work. He outlined the elements needed for telemedicine,
including using safe prescribing habits, using established
clinical practice guidelines, having a strong quality assurance
program, and treating common uncomplicated medical problems. He
related that his company has all of this, which he suspected
other telemedicine companies also have, too.
5:05:02 PM
DR. DEPHILLIPS said he is testifying today because the Alaska
State Medical Board has been reaching out and censuring doctors
who work for telemedicine companies who prescribe medications
without a prior in-person visit. He stated that Teladoc
initially attempted to work with the Alaska State Medical Board,
but the board would not "budge" on that issue; hence, Teladoc
has turned to a legislative solution. Both Representative
Gattis and Senator Dyson, as sponsors, strongly believe that
telehealth will benefit Alaskans. He noted clear documentation
that telemedicine will increase access, especially to those who
do not currently have a primary-care physician relationship.
The RAND Corporation, a non-profit organization, conducted a
study independent of Teladoc that has helped to demonstrate that
aspect. Certainly, it is very clear that medical costs are
reduced by telemedicine since one of the frequent alternatives
to a telemedicine consult is a visit to the emergency room. He
offered that as telehealth consults go up for employees,
emergency room costs for inappropriate emergency room visits
actually are reduced over time.
5:06:12 PM
REPRESENTATIVE REINBOLD asked where Teladoc is located.
DR. DEPHILLIPS said that he works out of Nashville, Tennessee,
and his company operates nationwide, with more than half the
company serving remote areas. In response to a question, he
answered that he was aware that telemedicine occurs in Alaska
through the Indian Health Service, [an agency within the U.S.
Department of Health and Human Services, responsible for
providing federal health services to American Indians and Alaska
Natives] and the U.S. Department of Veterans Affairs (VA).
5:06:44 PM
REPRESENTATIVE REINBOLD said it is hard to argue with
telemedicine due to the benefits and some significant cost
savings and people can see the benefits. However, she has
worked in the health care industry for nearly two decades. She
said, "This is really alarming to me - this bill. Telemedicine
cannot replace a patient/doctor interaction."
REPRESENTATIVE REINBOLD noted that she did not see anything in
members' packets from the [Alaska State] Medical Association,
the Dental Association, or the Board of Pharmacy. The State
Medical Board opposes the bill. She emphasized a need to hear
from insurance companies. She expressed concern about the
risks, about malpractice aspects since so much care occurs in
telemedicine without any physical assessment of patients.
5:08:17 PM
DR. DEPHILLIPS said the Alaska [State] Medical Association
discussed telemedicine with his organization. He related his
understanding that ASMA is in agreement with the terms of the
bill. His company markets telemedicine as an option only when
it isn't possible for patients to reach their own primary care
physician timely. He emphasized this as being a very important
part of the Teladoc's business model. He assured members that
his company isn't interested in being the primary care physician
(PCP). In addition, Teladoc has many health insurance company
clients, including Aetna, who offers telemedicine coverage in
many other states that have clear regulatory language to allow
it. In terms of patient safety experience, the data is clear.
Teladoc provides the liability insurance for several hundred
doctors that provide telemedicine and his company falls in the
lowest-tier of their premium profile. In the 12-year history of
Teladoc, the company has not had any liability claims.
Secondly, while the industry has perhaps had more consults, his
company has provided nearly 500,000 consults to date. Teladoc
uses evidence-based clinical practice guidelines and provides a
copy of the consult to the patient's own primary care physician
or to the patient's health insurance company so the insurance
company care managers can reach out and "hook them up" with a
primary care physician. The data is pretty compelling that
telemedicine seems to be safe when it is deployed with good
"boundaries and guardrails." Thus, it seems to really be
additive to the medical system, he said.
5:10:45 PM
REPRESENTATIVE GATTIS said that this clarifies in some ways what
is already happening. In fact, some doctors want legislative
sanction to clarify some existing practices. She related that
she worked with the Alaska State Medical Board in crafting this
bill. She pointed out HB 281 considered language suggested by
the State Medical Board and employs current technology,
including cell phone and application uses; however, HB 281 does
not include dentistry. She felt Dr. DePhillips did a good job
explaining telemedicine. The bill will clarify what some
practices currently provide, relating the federal government
already exempts telemedicine for the VA and [IHS]. This bill
will bring that type of service to rest of Alaska.
5:12:11 PM
REPRESENTATIVE MILLETT offered to explain how telemedicine has
worked in Alaska for Alaska Natives. For example, a person can
go to the clinic in King Cove and see a health aide who can
provide a prescription that saves lives. She said the
telemedicine program within the Alaska Native Tribal Health
Consortium (ANTHC) has a broader scope in terms of telemedicine,
including using streaming video and electronically sending
information back and forth. These practices help keep sick kids
healthy since a disincentive exists for those without insurance
due to cost of doctor visits. One advantage of telemedicine is
that [Alaskans] don't end up paying health care costs for minor
issues treated in the emergency room. Instead, these Alaskans
can call a telemedicine doctor to treat ailments, such as strep
throat. Of course, telemedicine can't be used to treat patients
with broken legs, broken ribs, or heart attacks, but it will
treat many types of minor medical complaints. She asked whether
this bill is modeled after IHS and VA, which provide medicine in
an established way.
CHAIR OLSON asked whether that was Dr. DePhillip's health model
for Teladoc.
DR. DEPHILLIPS answered that Representative Millett is exactly
correct. Currently, physicians are residents and licensed in
Alaska, taking care of Alaskans under the two aforementioned
federal programs. The State Medical Board in Alaska does not
want to allow this practice so some doctors are seeking a
legislative solution. He stated that the reality is that HB 281
allows the same Alaska resident licensed physicians to take care
of the rest of the citizens in Alaska, who are not in a federal
health program in the same way that the federal health programs
provide service. This bill represents "a little bit of a catch
up" so all Alaskans can benefit, he said. He has been working
in the health care industry for over 30 years and in his
experience, if a problem arises, "heads roll" in the health care
industry since medicine is high profile, high visibility, and
medical liability is a huge issue. No doctor or company wants
to be involved with [malpractice], patient safety must come
first, and there is pretty good data to demonstrate that
[telemedicine] can be done safely.
5:15:39 PM
DON HABEGER, Director, Division of Corporations, Business, and
Professional Licensing (DCBPL), Department of Commerce,
Community, & Economic Development, stated that he is the
director of DCBPL until March 29, 2014. He introduced Sara
Chambers, the Operations Manager for DCBPL.
5:16:32 PM
CHAIR OLSON referred to page 1, line 10, of HB 281 to "physician
is located in this state" and asked whether it needs to be
"licensed" physician.
MR. HABEGER answered that the aforementioned language is
inserted in the medical chapter surrounded by a large body of
qualification licensing language. In further response to a
question, agreed that at first glance he believes that a
licensed physician is covered.
5:17:32 PM
REPRESENTATIVE SADDLER said he did not see "telemedicine"
explicitly mentioned. He did not see how making a little change
in the sanction's section of law does all the things that have
been represented for telemedicine. He asked whether this is the
only thing in the way of widespread practice of telemedicine.
MR. HABEGER offered to put it in context of what the [Alaska
State Medical] board currently does and the approach it takes.
He said the board would argue it currently offers telemedicine;
however, the board also strongly believes that the patient-to-
patient contact is very important. Within the IHS model, a
physician is on one end of the line and a health aide is at the
other. The difference is that the health aide is knowledgeable
about medicine and can observe the patient from a medical
perspective. Under the bill if a health aide is not present,
the board cannot sanction a licensee to prescribe drugs.
5:19:07 PM
REPRESENTATIVE SADDLER asked whether other large sections of law
envision telemedicine. He reiterated that he is surprised the
"one little fix" would make such a big change in the practice of
medicine in Alaska.
MR. HABEGER explained that within the context of licensure, the
qualifications and the medical examination process for licensure
is quite extensive. He said that the [Alaska] State Medical
board oversees licensure and the agency just does the
processing. He said HB 281 provides a prohibition against
bringing sanction [against a doctor] for a telemedicine contact.
He reiterated that telemedicine contacts already exist and this
change in law simply means that a health aide isn't required to
be present at one end. He did not envision a huge expansion
under the bill.
REPRESENTATIVE SADDLER commented that it might just be that he
is missing something.
5:20:33 PM
REPRESENTATIVE JOSEPHSON said he is curious that this practice
already exists. He related a scenario in which a physician in
Anchorage prescribes drugs, in which the process would be that
the patient calls and describes the symptoms and obtains a
prescription. He related that in his own experience, as a
patient, that he has never called a doctor unknown to him to
obtain a prescription. He asked whether that type of activity
is currently occurring in Alaska.
MR. HABEGER said he would withdraw the term "already existing"
although telephonic diagnosis does exist. He emphasized that
the key is that the board allows a health aid or other
practitioner [to prescribe medicine without the patient or
physician being present]. In response to a question, he agreed
that currently, any health care professional, such as a
certified nurse aide (CNA), who has some training [consults with
the physician telephonically about the patient and prescribes
medicine to treat the patient.]
5:22:05 PM
REPRESENTATIVE JOSEPHSON asked what he thinks of the State
Medical Board's position that "we don't like this" when the
Alaska State Medical Association says it is okay.
MR. HABEGER referred to earlier comments on the State Medical
Board's objection to SB 80. He said the original version of
that bill included licensure of out-of-state doctors. When the
board met they were soundly against that version. He recalled
that the companion bill [SB 80] was later amended. He was not
sure [of the board's position on the amended version of SB 80.]
5:23:07 PM
REPRESENTATIVE JOSEPHSON referred to an email of January 28,
2014, from Deborah Stovern, Executive Director, State Medical
Board, that also indicates that the board was concerned about
the lack of contact [by the physician]. He recalled
Representative Millett's reference to strep throat, noting that
it would require a culture to diagnose strep throat. He further
recalled when he lived in Kalskag that he had met with a [health
care] aide in a cabin who performed a strep culture, presumably
calling a doctor in Bethel [to consult]. He characterized it as
being "bookends" or a "virtual" contact. He asked how this bill
would allow for a culture.
MR. HABEGER said he can't answer that.
REPRESENTATIVE MILLETT offered her belief that it could happen
via an application for an iPhone.
5:24:55 PM
ROBERT LAWRENCE, Physician, Chief Medical Officer, Inmate Health
Care, Department of Corrections (DOC), stated that prior to his
state work he served the Norton Sound Health Corporation as a
family physician and subsequently became the owner and cofounder
of a small medical company that used and tested the technology
that is before the committee today.
LAURA BROOKS, M.S., Health Care Administrator, Department of
Corrections, thanked the committee and the sponsor for working
with the DOC. She indicated some wording [in the bill] could
potentially impact the way the DOC practices every day.
5:25:27 PM
MS. BROOKS explained that the DOC was one of the first agencies
to start using telemedicine in order to provide improved medical
services to inmates in rural areas. She explained that in 1998
the DOC's psychiatrists began using telemedicine. This practice
has allowed the DOC to reduce costs since the psychiatrists had
previously been traveling to remote areas several times per
month. Now these doctors can provide medical care to inmates
via telemedicine, which is more efficient and cost effective.
MS. BROOKS expressed concern on the wording related to
controlled substances, which may adversely impact the department
in two areas. First, currently a psychiatrist might prescribe a
controlled substance for new arrests, who currently take
medication, or experience a mental health crisis. Currently,
this is done via the telemedicine system, which allows the
department to provide safe and immediate interventions for
mental health crises. Secondly, the DOC is a 24-hour provider.
In addition to telepsychiatry, the department has physicians,
nurse practitioners, and physician's assistants who are on call
telephonically for all DOC medical clinics and facilities,
including half-way houses and community jails. Prescribing
controlled substances is common for DOC providers, in
particular, for those who experience withdrawal symptoms. She
indicated that some intoxicated people are arrested after hours
and the department doesn't have any providers on site. She
estimated 3,000 prescriptions per year for detox protocols for
controlled substances are made by telephone by these providers.
Since telemedicine has improved the department's ability to
provide services to the DOC's clientele, the department has
concerns about how that section of HB 281 would impact them.
5:28:10 PM
DR. LAWRENCE outlined two different forms of telemedicine.
Telemedicine has long been offered in Alaska, initially as a
provider-to-provider communication. For example, if a physician
needed a consultant, the physician might use a telemedicine
consult to obtain an answer. This bill seems to relate to the
second form of telemedicine, which is a direct patient-to-
provider consultation. He clarified that the department engages
in the first type of telemedicine. He related a scenario to
illustrate how telephonic communications have been used in rural
areas, such as in Nome to treat someone who was arrested but
began experiencing alcohol withdrawal, which could lead to a
deadly condition of delirium tremens (DTs). In those instances
the treatment is to prescribe a benzodiazepine that can prevent
seizures or else the inmate must be taken to the emergency room.
Thus, an unintentional consequence of HB 281 will prevent him
from prescribing a controlled substance using telemedicine since
he could be sanctioned by the board. He said the language needs
to be clarified to address the current practices.
CHAIR OLSON indicated Dr. Lawrence is working with the sponsor
and his office to address those issues.
5:30:06 PM
REPRESENTATIVE MILLETT asked whether the DOC could be exempted
from the bill.
DR. LAWRENCE answered that would be one viable option.
5:30:23 PM
REPRESENTATIVE MILLETT asked whether any other state agencies
perform similar functions.
DR. LAWRENCE answered that in Alaska other organizations have
the same model, for example, ANTHC is the other group that uses
the same model and often experiences the same scenarios although
the patient population may be different.
CHAIR OLSON offered to keep the public testimony open.
[HB 281 was held over.]
5:31:27 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:31 p.m.