Legislators pass bill allowing doctors to negotiate with insurers

PHOTO/Ed Bennett/AJOC
Physicians would be allowed to form groups to negotiate with insurance companies under terms of a controversial bill approved by state lawmakers during a two-day extension to the regular 2002 session.

The measure faced opposition, however, from other health provider groups, retirees and the Knowles administration. The bill is now on the governor’s desk for approval, or veto.

Senate Bill 37, sponsored by Sen. Pete Kelly, R-Fairbanks, would provide a way around federal anti-trust laws for doctors dealing with large insurance companies.

Anti-trust laws are intended to prevent individuals, in this case physicians, from meeting to set monetary or other terms of business, but Kelly argued that the U.S. Supreme Court recognized that the public interest is not served by applying the laws strictly to doctors.

They are at a disadvantage when dealing as individual practitioners with large insurance companies, Kelly said. The high court gave states the authority to provide limited protection from anti-trust laws for physicians, but the terms must be set out in state law, which SB37 accomplishes.

Under the bill, groups of physicians would have to seek approval from the state attorney general to negotiate with insurers, and the state would oversee the negotiations.

A position paper prepared last January by staff of the Federal Trade Commission for Rep. Lisa Murkowski, R-Anchorage, chairwoman of the Labor and Commerce Committee, warned that giving physicians exemption from anti-trust to negotiate monetary terms with insurers would lead to higher health care costs.

However, Bob Lohr, director of the Division of Insurance, told the House Finance Committee that is is extremely difficult to eliminate cost considerations from discussions of things like critical necessity and quality of medical care.

"The Federal Trade Commission has said that it has never seen a negotiation over noncost issues that didn’t really have costs at the heart," Lohr said.

Ed Sinton, a state attorney, said he doubted SB37 would pass muster with the Federal Trade Commission as meeting the terms of the exceptions from anti-trust laws for health care set out by the U.S. Supreme Court.

The court required that the negotiations be done under state supervision and contemplated a form of regulatory proceeding where hearings would be held and witnesses called, Sinton told the Finance Committee.

Senate Bill 37 allows only limited state oversight, he said. Once an agreement in a negotiation is reached, the state is required to approve it under the bill.

The bill was opposed by insurance companies, nurse practitioners and the American Association of Retired Persons.

Nurse practioners want to be excluded from the bill, but they argued that if physicians were allowed anti-trust exemption to negotiate, independent health practitioners like nurse practitioners and physical therapists could be affected and disadvantaged by the outcome of the talks.

The AARP complained that the bill has no mechanism for consumer input.

Lawmakers approve property tax exemptions for redevelopment

A bill extending the period for which muncipalities can grant exemptions from property tax for developers planning to rebuild derelict and rundown buildings was approved by state lawmakers during a two-day extension to the 2002 session.

House Bill 389, sponsored by Rep. Vic Kohring, R-Wasilla, was approved by the Senate after earlier passing the state House. It is now before Gov. Tony Knowles.

The legislation extends existing authority to grant such exemptions, which otherwise would have expired this July. One project the new law will help, if the governor approves it, is a plan to redevelop the derelict MacKay Building in downtown Anchorage.

The project is stalled by financing problems, and an extension of authority for the Municipality of Anchorage to grant the developer an exemption from property tax will help secure financing needed to complete the project, Kohring said.

Insurance pooling legislation dies as Legislature adjourns session

A bill dealing with rising insurance costs for small businesses and nonprofit groups, as well as air carriers, failed to become law on the Legislature’s final day.

Senate Bill 191, which would have allowed the state to form health insurance pools for small employers with two to 50 employees and nonprofit corporations, died when the Legislature adjourned without voting, in a technical procedure, to concur in a minor amendment.

The bill was on the final calendar for approval after passing the House and Senate, but was left as unfinished business when the Legislature was required to adjourn after a two-day extension. The proposal is now dead.

SB191 also included a provision that would have allowed air carriers to form insurance pools.

The bill was important for small businesses, which have seen sharply rising health insurance costs, and for air carriers, which have been severely affected by higher insurance costs.

Updated: 
05/26/2002 - 8:00pm

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