SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE March 30, 1994 1:41 p.m. MEMBERS PRESENT Senator Steve Rieger, Chairman Senator Bert Sharp, Vice-Chairman Senator Loren Leman Senator Johnny Ellis Senator Judy Salo MEMBERS ABSENT Senator Mike Miller Senator Jim Duncan COMMITTEE CALENDAR SENATE BILL NO. 231 "An Act providing coverage under Medicaid for the services of physician assistants; and reordering the priorities for Medicaid services." SPONSOR SUBSTITUTE FOR SENATE BILL NO. 301 "An Act relating to the calculation of instructional units used in determining state aid for education and increasing elementary and secondary instructional units for certain school districts with 800 or fewer students in average daily membership; and providing for an effective date." SENATE BILL NO. 367 "An Act relating to health care and insurance for health care; to review and approval of health insurance rates and rating factors; relating to certain civil actions against health care providers; to coordination of insurance benefits and to determination and disclosure of fees paid to an insured or health care provider; to the rate of interest on certain judgments and decrees; to excise taxes on cigarettes; amending Alaska Rules of Civil Procedure 26, 27, 68, 79, and 82 and Alaska Rules of Evidence 802, 803, and 804; repealing Alaska Rule of Civil Procedure 72.1; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 231 - No previous action to record. SB 301 - No previous action to record. SB 367 - See Health, Education & Social Services minutes dated 3/28/94. WITNESS REGISTER Senator Taylor Prime Sponsor State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Reviewed SB 301. Duane Guiley, Director School Finance Department of Education 801 W. 10th Street, Suite 200 Juneau, Alaska 99801-1894 POSITION STATEMENT: Reviewed the "hold harmless" provision of SB 301. Gordan Evans Health Insurance Association of America 318 4th Street Juneau, Alaska POSITION STATEMENT: Reviewed amendment to section 7 of SB 367. David Walsh, Director Division of Insurance P.O. Box 110805 Juneau, Alaska 99811 POSITION STATEMENT: Preferred the prior approval of rates. Reviewed the Division of Insurance's fiscal note for SB 367. Rick Urion Alaska Employers' Coalition POSITION STATEMENT: Reviewed SB 367. Reed Stoops AETNA Representative Juneau, Alaska POSITION STATEMENT: Reviewed AETNA's position on SB 367. Dr. Rodman Wilson 800 M, NO 5W Anchorage, Alaska 99501 POSITION STATEMENT: Reviewed SB 367. Bonnie Nelson Alaska Public Interest Research Group 20615 White Bird Road Eagle River, Alaska 99567 POSITION STATEMENT: Reviewed SB 367. Denny DeGross 2348 Leander Circle Anchorage, Alaska 99515 POSITION STATEMENT: Reviewed SB 367. Daryl Nelson 20615 White Birch Eagle River, Alaska 99567 POSITION STATEMENT: Related personal experiences relevant to SB 367. Charles McKee 1508 W 43rd, NO 7 Anchorage, Alaska 99503 POSITION STATEMENT: Offered information. Carol Carrol, Staff Senator Kerttula State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Reviewed SB 231. John Riley Alaska Academy of Physician Assistant 6411 Italy Circle Anchorage, Alaska 99516 POSITION STATEMENT: Reviewed SB 231. Wendy Hladick Physician Assistant Registered Nurse Galena, Alaska POSITION STATEMENT: Reviewed SB 231. ACTION NARRATIVE TAPE 94-24, SIDE A Number 004 CHAIRMAN RIEGER called the Senate Health, Education and Social Services (HESS) Committee to order at 1:41 p.m. He introduced SB 301 (REVISE FOUNDATION FORMULA, SMALL SCHOOLS) as the first order of business before the committee. SENATOR TAYLOR, Prime Sponsor, explained that SB 301 addresses two major concerns: a significant drop in the Sitka school district's enrollment and funding for small single site school districts. He read his sponsor statement. He commented on the continuing battle over the single site issue. SB 301 amends the funding formula for education in Alaska, which seems to be a big issue. He suggested repairing the entire single site issue. He noted the various lists of single site schools who need financial aid, B.A. Weinberg's list should be reviewed. He anticipated an additional decrease of 100 students in the Sitka school district. SENATOR ELLIS asked if Senator Randy Phillips' bill would be before the HESS committee. CHAIRMAN RIEGER noted that Senator Phillips' bill had just been passed out of the Community & Regional Affairs (C&RA) committee, and would be before HESS. CHAIRMAN RIEGER agreed that Sitka's problem was immediate. The reason SB 301 would not be moved today was to allow further consideration of section 2. Number 122 SENATOR ELLIS asked if SB 301 was related to the "hold harmless" provision regarding property value assessments. That "hold harmless" provision would require the state to make up the difference when property value assessments fall below a certain level. The student would not feel the effects of the decrease in property values. He thought that once property values increased the state would continue to pay that increased amount of support. DUANE GUILEY, Department of Education (DOE), informed the committee that the "hold harmless" to which Senator Ellis referred has not been adopted. The "hold harmless" in SB 301 exists in current statutes. He explained that the "hold harmless" in SB 301 refers to when a district has a 10 percent loss in K-12 units, which may be the direct loss of students or the loss of students identified in supplemental education categories. The "hold harmless" in SB 301 is not related to the one referred to by Senator Ellis. He noted that the formula automatically annually adjusts for the differences in assessed property value two years prior; as property values go up in a community, state aid goes down. The basic need stays the same, so the community would make up a greater share when property values are high. SENATOR SALO inquired as to the position of DOE on SB 301. DUANE GUILEY noted support, contingent upon funding, from the State Board of Education to the single site bill in the House. The department nor the board has a position on a change to the "hold harmless." Currently, only the Sitka school district would be effected by this change due to its scheduled 7 percent reduction in K-12 units. Mr. Guiley noted that three other districts would be eligible under the 10 percent: Adak, Aleutian Region, and Southeast Island. SENATOR SHARP asked how many students are in Adak. DUANE GUILEY stated that the projected enrollment for Adak next year is 150 students, which is down from 550 this year. The Navy predicts that there would be no students at Adak by July 1. SENATOR SHARP asked how much funding would Adak receive with 150 students under the 10 percent rule. DUANE GUILEY explained that Adak would receive 75 percent of the revenue they would have received with 550 students. The following year they would receive 50 percent of the revenue for 550 students, the next year they would receive 25 percent of the revenue, and the fourth year they would receive zero. Number 215 SENATOR SHARP asked when that funding would end. DUANE GUILEY said that under current statutes the school district would continue to receive the money after there are no students. SENATOR SHARP inquired as to the number of students of single site school districts. DUANE GUILEY said that he would provide that information for the committee. The "hold harmless" in statute is based on the percentage change in K-12 units, which may come from varying things such as the number of students or the profile of the student body. Mr. Guiley clarified that in Sitka the 5 percent reduction in K-12 units is actually a decrease in students. SENATOR LEMAN expressed the need to consider a maximum trigger which would make the three or four year phase out inappropriate. DUANE GUILEY said he would review that situation. Mr. Guiley noted that there had been discussion of creating a secondary "hold harmless" where the loss is greater than 10 percent and the district would receive less than 75 percent. Mr. Guiley pointed out that contractual obligations are often more that 75 percent of the budget; the timing of the circumstances is very important as to whether the district could absorb the loss and adjust the program. SENATOR SHARP requested the actual case history of Adak. DUANE GUILEY said he would provide that to the committee. SENATOR SALO thought that a maximum would be difficult to arrive at because of the deadline information. She requested that Mr. Guiley suggest other statutory ways that an Adak situation could be handled while giving the department flexibility. Sending money to places without students is absurd. CHAIRMAN RIEGER held SB 301. SENATOR ELLIS commented that he supported the change, but without a comprehensive re-write of the formula his attitude changes. He inquired as to the plan on the overall re-write. CHAIRMAN RIEGER said that as of yet, there was not a plan. Number 290 CHAIRMAN RIEGER introduced SB 367 (HEALTH CARE REFORM COMMITTEES) as the next order of business before the committee. GORDAN EVANS, representing the Health Insurance Agency of America (HIAA), said that he would be speaking to section 7 of SB 367. This section applies to the review and approval of premium rates and rating factors. The proposed amendment would change the mandatory prior approval of rates to a file and use approach. He suggested that the amendment should have additional language applying to AS 21.86 and 21.87. He informed the committee that the National Association of Insurance Commissioners' statistics show that eight states, including Alaska, do not make any provisions for filing or approval of health insurance premiums or rates. Nine states, mostly in the east and the south, require prior approval as this bill would. The file and use system is used in thirty-two states. Only one state requires use and file system. He said that the proposed amendment would place Alaska in with the majority of states requiring the file and use system. He pointed out that this amendment was approved in the House in the Governor's health care legislation. He stated that Commissioner Usera had indicated that the change they were seeking would still require filing of rates. This would decrease costs related to rate review, allow collection of data in an aggregate form, and place the review in the Division of Insurance. SENATOR LEMAN asked if nine states have prior approval. GORDAN EVANS said yes. CHAIRMAN RIEGER inquired as to the other portion of Mr. Evan's suggestion regarding what the Division of Insurance does. GORDAN EVANS clarified that a rate or rating factor must be filed with the director and a rate not yet filed cannot be used. The division is not given the ability to disapprove a rate. He reiterated the need to add similar language to AS 21.86 and 21.87. Number 372 DAVID WALSH, Director of the Division of Insurance, stated that for many years the division has wanted rate authority for health rates. In theory, he preferred prior approval. He acknowledged that prior approval could have problems if a regulatory authority does not do its job, a company could wait anywhere from 30 days up to 180 days. He said that such long waiting does not happen in Alaska. Consumers would best be protected with a prior approval statute. He thought that the amendment would be better than nothing; however, the Division of Insurance prefers prior approval. CHAIRMAN RIEGER asked what the difference was between prior approval and file and use with a deemer clause. DAVID WALSH said that they were similar. From a management perspective, prior approval is less likely to let something slip through; the division must make an affirmative decision. Mr. Walsh reiterated that the timeliness issue should not be a problem in Alaska. Prior approval provides quicker scrutiny. RICK URION, Alaska Employer's Coalition, stated that the Alaska Employer's Coalition is a group of Alaska employers who provide health insurance for their employees, both union and non-union. He indicated that the increasing cost of health care could be contributed to high tech medicine and increased utilization. He questioned the need to develop an entirely new system since most people are being served by the current health care system. He supported any reforms making health care more efficient, easier to obtain, and less costly. Increased governmental control would not produce any of those. He opposed the single payer system, employer mandates, and a community rating system. He supported: (1) allowing employers to put together their own health care plans, which are successful in serving many Alaskans; (2) expanding access to cover high risk individuals such as those with pre-existing conditions; (3) eliminating the waiting period; (4) pooling and subsidizing systems for those unable to afford coverage; (5) requiring health care providers to list their fees; and (6) malpractice reforms allowing health care providers to work in an atmosphere that does not necessitate wasteful, defensive medicine or expensive legal fees. Mr. Urion appreciated the efforts to address some of the problems. He liked the proposed method of obtaining data in SB 367. He said that they have a problem with section 11 on page 13 regarding the required provisions of the coordination of benefits. He opposed double dipping and did not see such language here, but 100 percent coverage is mandated under two policies. He preferred the option of allowing maximum coverage of the dominant policy. He did not oppose 100 percent coverage, but he did not want that to be mandated. He approved of the health care advisory committee and expressed the desire to participate in that committee; however, the direction of the committee is limited. He implied that the committee was heading in the direction of a single payer system due to the large pool with mandatory participation, community rating, and employer mandates. He expressed the need to take care of those who are not covered with little effect on those who are covered. Number 453 CHAIRMAN RIEGER noted that SB 201 did have a limit of 100 percent so as to eliminate someone profiting from having two claims. He did not believe it would be good policy to have total reimbursement for any claim in excess of 80 percent. He was open regarding the coordination of benefits. RICK URION said if an employer is buying those policies, then they could say that nothing would cover more than the dominant policy no matter how you split it between the two policies. SENATOR SHARP explained that he maintained two policies from a previous employer due to a pre-existing condition. With the premiums he paid, he expected 100 percent paid on his claims. He believed that if the individual pays one of the premiums, then receiving 100 percent would be acceptable. RICK URION agreed. Mr. Urion said that if someone else pays the premium, then there is a problem. SENATOR SALO did not understand why there would be a problem when they are receiving two premiums. RICK URION clarified that the insurance companies are getting the premiums. SENATOR SALO felt that if an individual pays two premiums, then it would seem to be appropriate to have more coverage than the dominant policy. RICK URION said that he would assume that the premium would be less if the coverage does not exceed the dominant policy. SENATOR LEMAN concluded that it would be better to allow the employer the option to choose the 100 percent coverage and pay the additional amount or the employer could choose the dominant policy which could result in cost savings. SENATOR SALO asked if under the current state health insurance, an individual can choose not to take the health insurance. She noted her personal experience when she was appointed to the House; she was told that she had to take the state's health insurance. SENATOR SHARP said that he had been told the same. SENATOR SALO suggested that should be changed. Number 502 CHAIRMAN RIEGER inquired as to Mr. Urion's comment regarding the nature of the committee. RICK URION explained that on page 19, line 23 creates a mandatory system for everyone and page 4, line 20 refers to community rating. Mr. Urion also pointed out that page 20, line 27 specifies that the premium payment would be paid by a payroll deduction, employer contribution, or a combination of both which seems to indicate an employer mandate. CHAIRMAN RIEGER stated that SB 367 attempts to reveal a representation of mandatory participation, but not mandating participation. This would provide information that would allow better informed decisions. Chairman Rieger addressed single rating. He pointed out the exception to single rating on page 20, lines 10 and 11. This allows rates to vary dependent upon individual responsibility. He agreed that it could be administered through the payroll system if one was employed; however, the bill does not specify that the employer or the employee would pay. Chairman Rieger concluded that SB 367 attempts to set some guidelines while not writing the health care bill. RICK URION said that he did not oppose revealing what may occur, but it had made him nervous. SENATOR LEMAN inquired as to where the support for subsidies would come. RICK URION explained that support for subsidies should come from a broad base community. Mr. Urion opposed an employer mandate. DAVID WALSH stated that Commissioner Usera had informed him that the administration had not taken a position on SB 367. He noted that the Division of Insurance's fiscal note was not complete. There are other components such as the committee, the public involvement process and others that are being done in the fiscal note for DHSS. He explained that many of the numbers in SB 367 were taken from portions of SB 367 which mirror portions of previous bills. He pointed out that the capital expenditure figure represents a direct transfer of the contracted out services for the functions contained in this fiscal note. The Division of Insurance's portion is reasonable, accurate, and reflects the functions SB 367 places in the Division of Insurance. He felt that the coordination of benefits was an important goal. He related an example regarding double dipping. TAPE 94-24, SIDE B Mr. Walsh commented that SB 367 and SB 201 would provide all the legal tools necessary to solve the problem of double dipping. Number 584 CHAIRMAN RIEGER asked if there was something in SB 201 that was not present in SB 367. DAVID WALSH said no. SENATOR ELLIS inquired of the missing portions of the fiscal note of the administration besides the Governor's office submission. DAVID WALSH indicated that a data collection portion of the fiscal note was being worked on by DHSS. SENATOR ELLIS clarified that two portions of the fiscal note are coming. CHAIRMAN RIEGER noted that there was also a fiscal note from the Department of Revenue. SENATOR ELLIS asked Mr. Walsh to explain the $100,000 cost for legal representation regarding the federal waiver process. DAVID WALSH stated that there would be a number of stages and waivers no matter the type of health reform that takes effect. Mr. Walsh said that he had heard two different federal views on the waiver issue: one view is that the waivers would be automatic, while another view is that it would be similar to the Medicare supplement regulations with federal mandates. The $100,000 amount is an estimate and a very speculative amount since the waiver process has not been decided. SENATOR ELLIS asked which portion of SB 367 requires the federal waivers. DAVID WALSH explained that anything that the state does would require a series of federal waivers depending upon the position at the federal level. There would also be a federal oversight role which would review each time the state adds a new service or changes the program in order to assure fulfillment of the federal requirements. He reiterated that without any federal guidelines, the process and its cost are only guesses. SENATOR LEMAN inquired as to Mr. Walsh's reaction to removing the option of an employer to provide up to the maximum of the dominant plan. DAVID WALSH stated that it would be a policy call that the legislature and the Governor should decide how far the mandates go and if there should be exceptions. Personally, Mr. Walsh said that there must be strong triggers within the system in order to assure participation. He expressed concern "that the more wiggle room there is in terms of participation, the greater the opportunity for mischief." CHAIRMAN RIEGER asked for a clarification on the data collection portion of the fiscal note regarding DHSS. DAVID WALSH said that he had been incorrect, it was not data collection. Number 520 REED STOOPS, AETNA representative, concurred with Mr. Evans' testimony on rate regulations in section 7; he also preferred the file and use system over the prior approval system. He pointed out that a prior approval system would create problems: there are no time limits on the rate approval, the Norman & Roberts study illustrates that prior approval in other states resulted in less competition of insurers, and rate regulations for insurers is not effective in decreasing health costs because most money received through premiums goes back to providers. SB 367 does not address regulating provider rates. He indicated that they support the adopted House version. Mr. Stoops stated that pages 19 and 20 appear to charge the advisory committee with pricing a pool on the assumption that all Alaskans would be in the same pool. Perhaps, that is only for the purpose of pricing, but they prefer that the advisory committee be charged with reviewing those now insured for pricing. He suggested that subsection (d), paragraph (1) on page 19 be clarified. If the intention of that section is to put everyone in a single pool, then they recommend that the pool be limited. Mr. Stoops appreciated the committee allowing written testimony by Mr. Steve LeBrun on SB 201 be submitted at this hearing. He expressed concern with the provision of SB 201 which would change the coordination of benefits, therefore, requiring that a 100 percent claim be paid when two policies cover the same claim. He agreed that an employer should have the option to choose the 100 percent plan or the less restrictive model. The 100 percent option is clearly more expensive. He suggested a comparison by the Division of Insurance regarding the current regulations to the new regulations provided under SB 201; this would provide a better idea of the reasoning behind the suggested changes to the system. SENATOR ELLIS asked if rate approval in other states had ever lead to withdrawal of AETNA. REED STOOPS said that he would provide that information at the next hearing. SENATOR LEMAN asked what would be the general difference in cost between a 100 percent coverage policy or a dominant policy coverage if section 11 was adopted. STEVE LEBRUN thought that it would not have a significant impact. Perhaps, a couple percent of the total health care. Mr. LeBrun noted that when an employer pays benefits, any lesser payments made on a secondary plan would be reflected in their claim experience resulting in adjusted rates. A plan requiring contributions would provide information to the individual so that they would know if the additional coverage was worth the contribution. CHAIRMAN RIEGER asked if a couple percent would be around $5 to $10. STEVE LEBRUN agreed with that estimate. An average family premium with $500 would be around the $10 or $20 range. SENATOR LEMAN asked if an employee would be allowed to pay the additional cost for the added coverage if the coordination of benefits was not mandated. STEVE LEBRUN said that it would create administrative complexity to offer those dual options. Mr. LeBrun felt that it should be done on an "either or" basis at the employer policy level. CHAIRMAN RIEGER informed the committee that staff was inquiring of the Division of Insurance's explanation of the difference between statutory provisions in SB 367 and current regulations. He encouraged the committee to think about the policy issues. He noted the presence of amendments to SB 367. Number 390 SENATOR LEMAN offered the first amendment. AMENDMENT 1  Page 19, line 26: Delete "prematernal" Insert "prenatal" Page 19, line 29: Delete "prematernal" Insert "prenatal" Page 19, line 30: Delete "prematernal" Insert "prenatal" SENATOR LEMAN moved Amendment 1. SENATOR ELLIS objected. SENATOR ELLIS inquired as to the intentions or implications of the change. SENATOR LEMAN said that he had never seen the term "prematernal" nor had others in the medical profession, no one could explain that term. After discussing it with Chairman Rieger, they agreed that it was meant to mean "prenatal" which resulted in the change. CHAIRMAN RIEGER agreed that the intention was to use the term "prenatal." SENATOR ELLIS requested that the drafter be asked why the term "prematernal" was used instead of "prenatal." SENATOR LEMAN withdrew Amendment 1 with the consent of the committee. He offered Amendment 2 following the offering of Amendment 1. AMENDMENT 2  Page 19, after line 27: Insert a new paragraph to read" "(3) health care services that may not be covered include elective abortions;" DR. RODMAN WILSON stated that overall SB 367 is a great improvement over the Administration's bills, SB 270 or HB 414. SB 367 needs some improvements. He noted that he had sent the committee a list of suggestions to SB 367. He discussed aspects of SB 367 which he felt were commendable. He recommended reviewing the price listing of providers; hospitals are not covered. He suggested that the provider be required to submit their prices to the Department of Commerce and Economic Development which could act as a restraint on the providers. He commended the section on health care data collection as well as the cigarette tax. He requested that the committee review the advisory committee. The advisory committee seems weak and its functions are not well worded. He suggested that a subcommittee could do those functions. Number 297 BONNIE NELSON, Alaska Public Interest Research Group (AKPIRG), said that SB 367 was an incremental step forward which clearly specifies what would be studied. The definitions of the benefits package is one of the most important items as well as single pooling. She supported mandatory participation and community rating which should be the most cost effective while providing the best quality and equality of health care. The majority of people would pay less as well as the employers. She expressed the importance of eliminating the pre-existing conditions clause which SB 367 addresses. She indicated opposition to experience ratings and the Tort Reform portions of the bill. She blamed the high liability insurance rates on outside insurance companies; therefore, reform that reviews that issue should be looked over. SENATOR ELLIS asked if Ms. Nelson had a comment on the make-up of the advisory committee in the office of the Governor contained in SB 367. BONNIE NELSON stated that AKPIRG was opposed to having provider expert control. The make-up of the advisory committee should be of reasonable and intelligent people such as architects and accountants. Health care providers and malpractice attorneys would not be neutral, they would have a conflict of interest. Ms. Nelson did not oppose a retired industry worker, a retired nurse or physician, who would not have a monetary gain. Ms. Nelson supported rate approval within the Division of Insurance, but she expressed the need for more public involvement in that process. Rate approval of health care providers in hospitals is also necessary. Ms. Nelson felt that there would be greater individual choice with more government regulations rather than outside insurance industries. AKPIRG supports neutral negotiations between providers and consumers and policy-makers. DENNY DEGROSS agreed with Dr. Wilson that SB 367 is a step forward from the Governor's bill. He expressed concerns with SB 367: organizations would not be able to respond in a timely manner, and the location of the data gathering and manipulation functions. He discussed the resulting problems when Environmental Health was taken out of DHSS. He was concerned with moving the data portion of the bill out of DHSS, the state's primary protection for public health. Most industrial countries have a better ratio of dollars spent in their health system to health status than does the U.S. He indicated that the U.S., unlike those countries, separates medicine and public health. He suggested more emphasis on public health in SB 367. Number 119 DARYL NELSON related his own personal experience with these issues. He did not believe that insurance companies should make choices for him regarding the care he received. He expressed concern with the Tort Reform statements of this bill. A large amount of parents with children who are effected, did not or will not know about the law. He did not believe that Tort Reform would help the majority of the people with health care. CHARLES MCKEE noted that he was presenting information given to him by a security officer in the United States Airforce. He said that the information referred to line 25 on page 10, line 21 on page 8, line 17 on page 10, and page 18. TAPE 94-25, SIDE A CHARLES MCKEE said that the committee was not aware of the crimes of counterfeiting, forgery, and accepting claims as well as actuaries making appropriations to doctors and the medical community. Number 036 CHAIRMAN RIEGER closed the public hearing on SB 367 after inquiring of others desiring to testify. He informed the committee that the definition of "prematernal" was more open ended, going back prior to motherhood. "Prenatal" generally deals with the period from conception to delivery. He said that the drafter explained that "prematernal" was used due to its presence in earlier drafts. Chairman Rieger stated that "prenatal" was the intention in the wording of the bill. SENATOR LEMAN moved to adopt Amendment 1. Hearing no objection, Amendment 1 was adopted. Senator Leman said that he would offer Amendment 2 at the next hearing of SB 367. CHAIRMAN RIEGER noted the presence of two more amendments in the committee's packets and suggested that there may be other amendments. He held SB 367 until Wednesday, April 6, 1994. Number 068 CHAIRMAN RIEGER introduced SB 231 (PAY PHYSICIAN ASSTS UNDER MEDICAID) as the last order of business before the committee. CAROL CARROL, Staff to Senator Kerttula, explained that SB 231 would add physician assistants to the optional services reimbursed under Medicaid. She discussed the current problems regarding billing and physician assistants. Medicaid requires that the physician must see each patient billed under their number at least once. SB 231 would allow physician assistants to bill Medicaid for services they provided to patients in their local areas. She noted the presence of a fiscal note from DHSS. CHAIRMAN RIEGER said that he intended to have SB 231 at the same time as a bill regarding Medicaid in Senate Finance where the fiscal note could be addressed. He said that he would hear testimony on the fiscal note if anyone wished to testify. SENATOR SALO stated that the fiscal note seemed inflated and would be best handled in Senate Finance. SENATOR SHARP inquired as to the numbering of the list on page 2 of SB 231. CAROL CARROL explained that as funds run short, numbers 1- 4 would be removed. From numbers 5 and up, the groups become a higher priority when removing money from Medicaid. CHAIRMAN RIEGER agreed with Senator Sharp that there seemed to be a drafting error in the numbering. Number 140 SENATOR LEMAN stated that the situation which brought this problem to Senator Kerttula's attention had been resolved due to designating the entity as a rural health clinic. He asked if adoption of SB 231 would create disparities in billing for Medicaid services and other billings by physician assistants who have to use the collaborating doctor's number for all other billings. CAROL CARROL clarified that a physician assistant in a physician's office on location bills under the physician's number. SB 231 addresses a physician assistant collaborating with a physician at a remote location where the physician does not see every Medicaid patient. The physician assistant cannot bill Medicaid for those services because the collaborating physician does not see the patient at a remote site. She concluded that SB 231 deals with physician assistants at remote sites, but it would allow a physician assistant to set up their own site with a collaborating physician and see patients. She said that most physician assistants currently, are located in a physician's office in their location. JOHN RILEY, Alaska Academy of Physician Assistants, reiterated that the primary purpose of SB 231 was to allow reimbursement of physician assistants working in remote sites. He noted that previously, physician assistants billed through their collaborating physician's Medicaid number or through a clinic's Medicaid number, in certain designated rural health clinics. He acknowledged that there are some physician assistants in remote areas who do bill under their physician's number although the physician is not on site, which DHSS says is not allowable. In communities where a physician assistant is the only health care provider, this issue would be a clear barrier to care for Medicaid recipients. He informed the committee of an October 1993 study that found that about half of the physician assistants are located in rural areas outside of Anchorage, Fairbanks, and Juneau. Mr. Riley stated that the fiscal note seems higher than it should be. The fiscal note would be more accurate if it represented a parallel number to the fees generated for Medicaid by currently practicing nurses practitioners. This is a $200,000 cost to the state. He assumed that the reimbursement rate for physician assistants would be similar to that of nurse practitioners, 80 percent. That would result in a decreased billing rate to Medicaid which would lead to cost shifting. Number 249 WENDY HLADICK, Physician Assistant and Registered Nurse in Galena, said that she was speaking for the rural areas of Galena, Telkeetna, Healey, McGrath, Pelican, Skagway, and Seward. She informed the committee that non-physician providers, physician assistants and nurse practitioners, are able to diagnosis and treat 80 percent of their patient's problems. She stated that non- physician providers are less expensive to train than physicians and have a proven track record comparable to physicians. SB 231 would remove some of the inequalities in practice between nurse practitioners and physician assistants. She did not believe that current regulations adequately or fairly reimburse physician assistants. SB 231 would help educate insurance companies of physician assistants. Physician assistants offer affordable, quality health care. She said that passage of SB 231 would recognize physician assistants as health care providers worthy of reimbursement just as nurse practitioners, and recognize the need for uniform percentile reimbursement by all insurance carriers for physician assistants. SENATOR ELLIS moved to adopt Senator Kerttula's amendment which adds physician assistants to the list of non-discriminatory groups. AMENDMENT  Page 1, line 1, after " Act ": Insert " relating to physician assistants " Page 1, line 4, after " Section 1. ": Insert new material to read: "AS 21,36.090(d) is amended to read: (d) Except to the extent necessary to comply with AS 21.42.365 and AS 21.56, a person may not practice or permit unfair discrimination against a person who provides a service covered under a group disability policy that extends coverage on an expense incurred basis, or under a group service or indemnity type contract issued by a nonprofit corporation, if the service is within the scope of the provider's occupational license. In this subsection, "provider" means a state licensed physician, physician assistant,  dentist, osteopath, optometrist, chiropractor, nurse midwife, advanced nurse practitioner, naturopath, physical therapist, occupational therapist, psychologist, psychological associate, [OR] licensed clinical social worker, or certified direct-entry midwife. *Sec. 2. AS 23,30.265(24) is amended to read: (24) "physician" includes doctors of medicine, surgeons, physician assistants,  chiropractors, osteopaths, dentists, and optometrists; *Sec. 3. " CHAIRMAN RIEGER objected. He explained that there was a similar bill, Family & Marital Therapist, in the Labor & Commerce committee which had not moved. He preferred that this amendment be offered in Finance in order to have Senator Kerttula, the prime sponsor, as well as Senator Kelly, the chairman of Labor & Commerce, would be present to discuss their views. Chairman Rieger stated that he tended to support the amendment. SENATOR SALO believed that the amendment did not move out of Labor & Commerce because another amendment was offered adding acupuncturists. That seemed to complicate the issue. CHAIRMAN RIEGER removed his objection. CAROL CARROL stated that this allows physician assistants to be covered under workman's compensation for any services they fund or under third party payers insurance companies. Hearing no objection, the amendment was adopted. SENATOR ELLIS moved SB 231 out of committee with individual recommendations. Hearing no objections, it was so ordered. There being no further business before the committee, the meeting was adjourned at 3:36 p.m.