Legislature(2017 - 2018)GRUENBERG 120

04/05/2017 01:00 PM JUDICIARY

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02:03:35 PM Start
02:04:06 PM HB79
03:24:59 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
--Delayed to 30 Minutes After Session Adjourns--
+= HB 79 OMNIBUS WORKERS' COMPENSATION TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
              HB 79-OMNIBUS WORKERS' COMPENSATION                                                                           
                                                                                                                                
2:04:06 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN announced  that the only order of  business would be                                                               
HOUSE BILL  NO. 79,  "An Act  relating to  workers' compensation;                                                               
repealing  the second  injury fund  upon satisfaction  of claims;                                                               
relating to  service fees  and civil  penalties for  the workers'                                                               
safety programs  and the workers' compensation  program; relating                                                               
to the liability  of specified officers and  members of specified                                                               
business entities  for payment of workers'  compensation benefits                                                               
and   civil   penalties;   relating  to   civil   penalties   for                                                               
underinsuring  or  failing  to insure  or  provide  security  for                                                               
workers'  compensation  liability; relating  to  preauthorization                                                               
and timely  payment for medical  treatment and  services provided                                                               
to  injured employees;  relating  to  incorporation of  reference                                                               
materials  in  workers'  compensation  regulations;  relating  to                                                               
proceedings  before the  Workers'  Compensation Board;  providing                                                               
for  methods  of  payment  for  workers'  compensation  benefits;                                                               
relating  to the  workers'  compensation  benefits guaranty  fund                                                               
authority  to claim  a  lien;  excluding independent  contractors                                                               
from   workers'    compensation   coverage;    establishing   the                                                               
circumstances   under   which   certain   nonemployee   executive                                                               
corporate  officers and  members of  limited liability  companies                                                               
may  obtain  workers'  compensation  coverage;  relating  to  the                                                               
duties of  injured employees to  report income or  work; relating                                                               
to   misclassification  of   employees  and   deceptive  leasing;                                                               
defining  'employee';  relating   to  the  Workers'  Compensation                                                               
Board's approval of attorney fees  in a settlement agreement; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
CHAIR CLAMAN opened public testimony on HB 79.                                                                                  
                                                                                                                                
2:05:31 PM                                                                                                                    
                                                                                                                                
STEVEN CONSTANTINO, Attorney, advised he  has been in the private                                                               
practice  of law  representing injured  workers for  the last  20                                                               
years.   He  then  commended Governor  Bill Walker,  Commissioner                                                               
Heidi  Drygas,  and Director  Marie  Marx  for their  efforts  in                                                               
modernizing  and streamlining  the Workers'  Compensation Act  in                                                               
its much  needed reform.   There are  several good parts  of this                                                               
bill,  he  commented,  and  Sec.  14  addresses  the  problem  of                                                               
employees  being  left  in  limbo   when  an  employer  does  not                                                               
authorize  medical care  or  controvert the  care.   The  Supreme                                                               
Court's decision  in M-K  Rivers v. Harris,  325 P.3d  510 (2014)                                                             
(cited in  Governor Walker's 01/24/17  transmittal letter)  and a                                                               
later decision in Bockus v.  First Student Services, 384 P.3d 801                                                             
(Alaska 2016), suggest  that, in some circumstances it  may be an                                                               
insurer's duty to  authorize uncontroverted care, but  it was not                                                               
a specific duty and had no  time limits.  This bill clarifies the                                                               
law   by   providing  that   when   a   medical  provider   seeks                                                               
authorization, the  insurer has  60 days  to either  authorize or                                                               
controvert the medical care, and  failure to authorize would be a                                                               
controversion.                                                                                                                  
                                                                                                                                
2:06:52 PM                                                                                                                    
                                                                                                                                
MR. CONSTANTINO  noted concern  that in order  to trigger  the 60                                                               
days, the  provider must submit  a written statement  or estimate                                                               
of  cost within  the  Workers' Compensation  Board's maximum  pay                                                               
schedule.  He represented that  when looking at his medical bills                                                               
from  providers and  what the  insurance  companies pay,  medical                                                               
providers often  have retail charges  well in excess of  what his                                                               
insurer  pays  and  what  would be  payable  under  the  Workers'                                                               
Compensation Act.   Most providers know they  cannot collect more                                                               
fees  than  is  payable  under  the  Workers'  Compensation  Act;                                                               
therefore, the provision of the  estimate of fees is unnecessary,                                                               
he pointed out.                                                                                                                 
                                                                                                                                
MR. CONSTANTINO  referred to Sec.  20 [AS 23.30.155(b),  page 10,                                                               
lines 12-19] which read as follows:                                                                                             
                                                                                                                                
          (b)   The  first   installment  of   compensation,                                                                
     excluding  medical  benefits,  shall be  paid  [BECOMES                                                                
     DUE]  on  or  before  the 21st  [14TH]  day  after  the                                                            
     employer has  knowledge of  the injury  or death.   [ON                                                                    
     THIS  DATE ALL  COMPENSATION THEN  DUE SHALL  BE PAID.]                                                                    
     Subsequent  compensation,  excluding medical  benefits,                                                                
     shall  be paid  in  installments, every  21 [14]  days,                                                                
     except  where  the  board determines  that  payment  in                                                                    
     installments should  be made  monthly or at  some other                                                                    
     period.   Medical benefits shall be  paid in accordance                                                                
     with AS 23.30.095 and 23.30.097.                                                                                       
                                                                                                                                
2:08:51 PM                                                                                                                    
                                                                                                                                
MR. CONSTANTINO  noted that HB  79 changes the  compensation rate                                                               
payment cycle  from 14  days to  21 days, and  that he  heard the                                                               
administration's  reasoning.    However,  he  pointed  out,  this                                                               
presents a significant problem to  injured workers as most people                                                               
live paycheck-to-paycheck.  In the  event a person is on workers'                                                               
compensation,  he advised,  the person  does not  receive a  full                                                               
paycheck,  and  in fact,  receives  20  percent less  than  their                                                               
spendable  weekly wage  at  a  minimum, a  high  wage earner  can                                                               
receive  less  than  one-half of  their  spendable  weekly  wage.                                                               
People have bills to pay and in  the event insurers have a 21 day                                                               
time limit,  they are  certain to  delay until  the 21st  day, he                                                               
remarked.                                                                                                                       
                                                                                                                                
MR.  CONSTANTINO  expressed that  he  has  strong feelings  about                                                               
Secs.  31, 32,  and 33,  [pages 18-19]  in making  it a  criminal                                                               
fraud to  fail to report a  material fact even though  a material                                                               
fact changes  with whatever  benefits are at  stake.   He related                                                               
that making it  a criminal act to fail to  report a material fact                                                               
is void for vagueness and is unconstitutional.                                                                                  
                                                                                                                                
2:09:14 PM                                                                                                                    
                                                                                                                                
MR. CONSTANTINO responded to Representative  Reinbold that he had                                                               
referred  to the  fraud sections,  Secs.  31, 32,  and 33,  which                                                               
makes it  both a crime  and a civil  action to knowingly  fail to                                                               
report  a material  fact.    He then  referred  to  Sec. 33,  and                                                               
advised  that  it  defines  some  material  facts  as  collecting                                                               
workers' compensation  and working "that's obvious,"  but it also                                                               
read that the collection of  disability benefits while working is                                                               
a  material fact.   Disability  benefits, he  opined, alludes  to                                                               
social security  for which insurers  have an offset, but  it also                                                               
could include  private disability insurance which  is not subject                                                               
to any offset.   Finally, he explained, employment  is defined as                                                               
including  employment for  which there  is  no pay,  so in  other                                                               
words, he  questioned whether,  in the  event a  minister noticed                                                               
someone  was out-of-work  and asked  the person  to teach  Sunday                                                               
school, would  the person have to  report that fact, who  do they                                                               
report it to, and when do they report.                                                                                          
                                                                                                                                
2:11:01 PM                                                                                                                    
                                                                                                                                
MR.  CONSTANTINO,   in  response  to   Representative  Reinbold's                                                               
request, advised he was in the  process of putting his remarks in                                                               
writing and would forward it to the committee.                                                                                  
                                                                                                                                
2:11:22 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN advised that his  office would distribute the 4/3/17                                                               
letter from  Joseph Kalamarides and  3/31/17 letter  from Michael                                                               
Jensen concerning  these topics,  specifically Secs. 31,  32, and                                                               
33.    He advised  that  the  two  letters  were written  by  two                                                               
workers'  compensation  attorneys  who work  for  claimants,  and                                                               
addressed the issues Mr. Constantino raised.                                                                                    
                                                                                                                                
2:13:06 PM                                                                                                                    
                                                                                                                                
AVES THOMPSON,  Executive Director, Alaska  Trucking Association,                                                               
read his testimony into the record as follows:                                                                                  
                                                                                                                                
     Mr.  Chairman and  members of  the committee,  I'm Aves                                                                    
     Thompson,  Executive Director  of  the Alaska  Trucking                                                                    
     Association.   The  Alaska  Trucking  Association is  a                                                                    
     statewide  organization representing  the interests  of                                                                    
     our  nearly   200  member  companies  from   Barrow  to                                                                    
     Ketchikan.                                                                                                                 
                                                                                                                                
     I  testified   before  this  committee  on   March  29,                                                                    
     generally in  support of this bill;  however, with some                                                                    
     concerns  about specific  provisions  of the  paragraph                                                                    
     dealing  with definitions  of independent  contractors,                                                                    
     or  as   we  call   them  in  the   trucking  business,                                                                    
     owner/operators.   We've worked with the  Department of                                                                    
     Labor & Workforce Development  to resolve these issues.                                                                    
     In meetings with Commissioner  Drygas and Director Marx                                                                    
     we came  to agreement  with two  minor changes  in CSHB
     79, specifically  Sec. 28,  [AS 23.30230(a)(11)(H)(ii),                                                                    
     page 17,  lines 1-3] dealing with  business location on                                                                    
     page [17]  on line 1.   We have agreed to  add a phrase                                                                    
     "or  a   business  mailing  address"  after   the  word                                                                    
     "location".   The new language  will read:  "the person                                                                    
     maintains  a business  location or  a business  mailing                                                                    
     address separate  from the  location of  the individual                                                                    
     for whom,  or the  entity for  which, the  services are                                                                    
     performed.                                                                                                                 
                                                                                                                                
2:14:31 PM                                                                                                                    
                                                                                                                                
     In this section, business  location or business mailing                                                                    
     address is given wide latitude  to thought -- to define                                                                    
     a location  or office.   Long  term, the  public cannot                                                                    
     rely on the assurance of  the DLWD [Department of Labor                                                                    
     & Workforce  Development] personnel  that this  will be                                                                    
     broadly  interpreted.    Small and  mobile  contractors                                                                    
     need   certainty  that   they   will   not  be   deemed                                                                    
     misclassified  or put  out of  business simply  because                                                                    
     their  work  does  not  require, or  is  too  small  to                                                                    
     support a separate physical office  or location.  Thus,                                                                    
     the use of either location or mailing address.                                                                             
                                                                                                                                
     Sec.  28, [AS  23.30230(a)(11)(H)(iii), page  17, lines                                                                    
     4-6]  dealing with  advertising or  marketing, starting                                                                    
     on page [17]  line 4, we agreed to add  the phrase "any                                                                    
     kind  of" after  the  word "in"  on line  4.   The  new                                                                    
     language will read: "the person  engages in any kind of                                                                    
     business advertising, solicitation,  or other marketing                                                                    
     efforts reasonably  calculated to obtain  new contracts                                                                    
     to provide similar services."   The intent is that this                                                                    
     paragraph  be interpreted  in its  broadest sense.   In                                                                    
     many situations advertising  may include many different                                                                    
     forms  of  advertising  or marketing.    Some  examples                                                                    
     might be  word of mouth,  in person meetings,  or other                                                                    
     direct   communication    with   potential   customers,                                                                    
     business  card  exchange,   social  media,  posting  of                                                                    
     flyers,  and solicitation  letters.   Thus, the  phrase                                                                    
     "any kind of".                                                                                                             
                                                                                                                                
     We support this bill,  we thank Commissioner Drygas and                                                                    
     Director Marx for their willingness  to work with us to                                                                    
     find a workable solution.   It is our intent to develop                                                                    
     a  set  of  definitions  that, to  the  largest  extent                                                                    
     possible in  the future, can  be used within  the three                                                                    
     divisions     within    the     department,    workers'                                                                    
     compensation,   wage   and   hour,   and   unemployment                                                                    
      insurance.  And, I'll be happy to try to answer any                                                                       
     questions, Mr. Chairman.                                                                                                   
                                                                                                                                
CHAIR CLAMAN noted that his  office worked with the department to                                                               
prepare Amendment 1, addressing those issues.                                                                                   
                                                                                                                                
2:17:12 PM                                                                                                                    
                                                                                                                                
DON  ETHRIDGE,  American  Federation  of Labor  and  Congress  of                                                               
Industrial Organizations  (AFL-CIO), advised he is  testifying on                                                               
behalf  of  the American  Federation  of  Labor and  Congress  of                                                               
Industrial Organizations (AFL-CIO) Alaska,  and it fully supports                                                               
this legislation.   An important aspect  of the bill to  the AFL-                                                               
CIO Alaska is  [Sec. 28, AS 23.30.230(a)(11),  beginning page 15]                                                               
the independent contractor definition  because for over 20 years,                                                               
in  this building,  it  fought  to come  up  with a  longstanding                                                               
definition of independent  contractor that could be  a true test,                                                               
rather  than the  20 point  test.   He related  that the  AFL-CIO                                                               
believes this  bill accomplishes  a well-defined  definition, and                                                               
it is fully supportive  of Sec. 28.  He related  there has been a                                                               
problem  for   years  wherein  someone  was   injured,  had  been                                                               
classified as  an independent  contractor, and  yet it  was later                                                               
determined  they  were  an  employee   and  fell  under  workers'                                                               
compensation.    Many unscrupulous  people  try  to get  by  with                                                               
[classifying a worker as an  independent contractor] because they                                                               
can save  money and  bid lower  jobs.   However, he  pointed out,                                                               
when  a  worker  is  injured  [and  the  worker  is  actually  an                                                               
employee] the employer can lose  their business in a lawsuit, and                                                               
their insurance costs  will skyrocket.  Not only  is the employer                                                               
responsible for  the cost  of the insurance,  but there  are also                                                               
penalties, he advised.                                                                                                          
                                                                                                                              
2:19:17 PM                                                                                                                    
                                                                                                                                
TINA  KING, Alpine  Surgery  Center, advised  that  she has  been                                                               
involved  in  billing,  coding, and  the  management  of  surgery                                                               
centers for  25 plus years.   She then  referred to [Sec.  15. AS                                                               
23.30.098(a)(15-16),  page   9,  lines  13-16],  which   read  as                                                               
follows:                                                                                                                        
                                                                                                                                
          (15) Hospital Outpatient Prospective Payment                                                                      
      System, produced by the federal Centers for Medicare                                                                  
     and Medicaid Services; or                                                                                              
            (16) Ambulatory Surgical Center Payment                                                                         
      System, produced by the federal Centers for Medicare                                                                  
     and Medicaid Services.                                                                                                 
                                                                                                                                
MS. KING requested  that lines 13-16 be removed from  HB 79.  She                                                               
then  explained  that it  becomes  confusing  when attempting  to                                                               
apply a  payment system  designed for  folks over  the age  of 65                                                               
years, to  a younger population.   The payment  system (technical                                                               
difficulties)  there is  some intention  to  co-mingle those  two                                                               
systems which would make things  far more confusing for, not only                                                               
the providers, but payers in the state to interpret.                                                                            
                                                                                                                                
2:21:03 PM                                                                                                                    
                                                                                                                                
ERNIE  EADS advised  that he  submitted written  comments to  the                                                               
committee, and  that he  supports HB  79 as "it  is one  of those                                                               
things that does get done"                                                                                                      
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  asked  Mr. Eads  to  explain  his                                                               
support of the legislation.                                                                                                     
                                                                                                                                
MR.  EADS responded  that  "I've  been beat  to  death and  back,                                                               
actually  right on  my last  leg  as far  as wanting  to stay  in                                                               
business," and it  had been almost eight years since  he bought a                                                               
timber  (indisc.).   Although,  he explained,  he's  been a  high                                                               
bidder  and  has bid  on  many  timber sales,  but  he  is not  a                                                               
competitive  bidder due  to his  higher wages  and higher  costs.                                                               
This bill  appears to give  workers' compensation some  teeth, he                                                               
described, and "I'm  hoping that they can get funded  to do their                                                               
job."                                                                                                                           
                                                                                                                                
2:22:28 PM                                                                                                                    
                                                                                                                                
ELLIOTT  DENNIS,  Attorney,  advised he  has  practiced  workers'                                                               
compensation law and  personal injury law for over 40  years.  He                                                               
related that it could not be  emphasized enough that delay is the                                                               
enemy  of an  injured  worker  because an  injured  worker is  no                                                               
longer earning  money, they are  in pain,  not able to  pay their                                                               
bills,  not able  to  take care  of life,  and  they are  scared.                                                               
There are  many good things in  this bill from the  standpoint of                                                               
clarification but, he stressed, anything  adding more time to the                                                               
process  and  causing a  delay  to  an injured  worker  receiving                                                               
compensation   is  not   appropriate.     He   referred  to   Mr.                                                               
Constantino's testimony regarding the change  from 14 to 21 days,                                                               
and noted  it is harmful to  real life people and  their families                                                               
and that  it does not appear  to be necessary.   He stressed that                                                               
with respect to  Sec. 14, [AS 23.30.097(d)]  allowing an employer                                                               
or insurer 60 days to  either authorize or controvert a procedure                                                               
is far  too much time.   For example, after an  injured worker is                                                               
referred  to a  specialist by  their treating  physician, it  can                                                               
take over six  to eight weeks to get into  see the specialist who                                                               
then determines whether the injured  worker requires surgery.  In                                                               
the  event  the  specialist  determines   the  person  does  need                                                               
surgery, the practitioner then makes  a statement to the insurer,                                                               
and  if the  insurer had  60 more  days that  would be  "120 days                                                               
before  the procedure  was  just approved"  and  that's not  even                                                               
getting  into the  surgery schedule,  he pointed  out.   The time                                                               
period should be  trimmed down as there is not  a real reason for                                                               
it,  he  stressed, other  than  convenience  toward the  insurers                                                               
while being harmful to injured workers.                                                                                         
                                                                                                                                
2:25:59 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN  asked whether he typically  represents the employer                                                               
or the employee when involved in workers' compensation cases.                                                                   
                                                                                                                                
MR.  DENNIS answered  that, typically  these days,  he represents                                                               
injured workers.   For many years he  practiced insurance defense                                                               
law  representing  insurance companies  in  tort  cases, and  for                                                               
several years has  practiced some defense work  for employers, so                                                               
he  has seen  this  issue from  both sides  of  the equation,  he                                                               
remarked.                                                                                                                       
                                                                                                                                
2:26:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   referred   to  [Sec.   15,   AS                                                               
23.30.098] and asked  his perspective as to the  inclusion of the                                                               
various medical  entities' documents and the  potential to effect                                                               
medical reimbursement rates.                                                                                                    
                                                                                                                                
MR.  DENNIS replied  that  he  does not  know  enough about  that                                                               
aspect to offer any guidance.                                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX commented that  she was opposing counsel to                                                               
Mr. Dennis in a case about 35 years ago, and said hello.                                                                        
                                                                                                                                
MR.   DENNIS  responded   that  he   still  recalls   sitting  in                                                               
Representative  LeDoux's  office in  Kodiak  and  opined that  he                                                               
represented the defense at that time.                                                                                           
                                                                                                                                
2:28:27 PM                                                                                                                    
                                                                                                                                
COLBY SMITH,  Attorney, Griffin &  Smith, advised he is  with the                                                               
law firm of  Griffin & Smith, is not testifying  on behalf of any                                                               
of  his  clients,  and  that  for   the  last  15  years  he  has                                                               
exclusively  represented  employers  with  workers'  compensation                                                               
issues.    He described  the  bill  as courageous  and  commended                                                               
everyone's efforts with so much being  in this bill.  He referred                                                               
to Sec.  17 [AS 23.30.110(c), page  9, lines 25-28] and  noted it                                                               
changes  the current  statutory  allowance  for non-attorneys  to                                                               
handle  workers'   compensation  issues.     Speaking   from  his                                                               
perspective,  he has  seen non-attorneys  put injured  workers in                                                               
the  position  of  no  remedy because  a  non-attorney  missed  a                                                               
statutory deadline, for example, they  have no recourse to handle                                                               
that issue, or are given bad advice.                                                                                            
                                                                                                                                
2:29:48 PM                                                                                                                    
                                                                                                                                
MR. SMITH  pointed to an  unintended consequence of this  bill as                                                               
currently written, [Sec.  17. AS 23.30.110(d), page  9, lines 26-                                                               
28] and suggested an amendment that would read as follows:                                                                      
                                                                                                                                
          (d)  At  the  hearing,   each  party  may  present                                                                    
     evidence with  respect to  the claim  and may  be self-                                                                    
     represented, or  supervised by  an attorney  license to                                                                
     practice law in this state,                                                                                            
                                                                                                                                
MR.   SMITH  explained   that  the   suggested  amendment   would                                                               
essentially  allow a  paralegal  to  attend various  proceedings,                                                               
which they do currently, and  allows that paralegals would not be                                                               
practicing the  unauthorized practice of law,  and this provision                                                               
is  still  effectuating  and accomplishing  the  bill's  intended                                                               
goal.   He then referred to  Sec. 31, [AS 23.30.250(b)],  and the                                                               
previously testified  concerns, and  suggested an  amendment, and                                                               
then said,  "a person  ... if  an amendment  says an  employee in                                                               
dealing with  the fraud aspect of  this, I think it  will solve a                                                               
large number  of the concerns  that were coming in."   Basically,                                                               
he  noted, since  2010  and once  again in  2013  there were  two                                                               
Alaska Supreme Court cases where the  issue of fraud made its way                                                               
all the way to the Supreme  Court.  In 2010, Shehata v. Salvation                                                             
Army, 225 P.3d  1106 (Alaska 2010), dealt with  an injured worker                                                             
being paid  by the employer,  who constantly called  the adjuster                                                               
advising he  could not  work because  he was  completely disabled                                                               
and he  needed his  checks.  Surveillance  was performed  and the                                                               
person was  filmed making a phone  call to the adjuster  and then                                                               
walked into their place of  employment.  The employer pursued the                                                               
former statute  of fraud because  the person collected  time loss                                                               
benefits and was working.                                                                                                       
                                                                                                                                
CHAIR CLAMAN  advised Mr. Smith  to please start wrapping  up his                                                               
testimony,  and noted  there is  an amendment  dealing with  that                                                               
topic and the Shehata case is on the list for discussion.                                                                     
                                                                                                                                
MR.  SMITH   noted  that  he   knows  Shehata  well   because  he                                                             
represented the Salvation Army.   Essentially, he advised, it was                                                               
determined that it was not fraud  up until the telephone call, so                                                               
even  though   he  worked  and  received   workers'  compensation                                                               
benefits,  no  fraud had  been  committed.    The other  case  is                                                               
Cummings  v.  ASRC, 295  P.3d  916  (Alaska  2013), which  was  a                                                             
similar case where  someone was working and the  person said they                                                               
were  volunteering even  though they  were signing  checks saying                                                               
they were not  accepting any income.  He opined  that the attempt                                                               
of this statute  is to broaden the fraud statute  to enclose that                                                               
because in both cases the  Supreme Court indicated that unless it                                                               
was legislatively changed, these  actions would not be considered                                                               
fraud.                                                                                                                          
                                                                                                                                
2:33:38 PM                                                                                                                    
                                                                                                                                
BRONSON FRYE, Painters  Union, advised he is  a representative of                                                               
the Painters Union, and a  lifelong Alaskan and painter by trade.                                                               
On  behalf of  the  International Union  of  Painters and  Allied                                                               
Trades  endorsed HB  79, due  specifically to  the definition  of                                                               
independent sub-contractor  and misclassification.   He described                                                               
it  as relevant  in the  Alaska construction  industry because  a                                                               
business  model  had  taken  root  whereby  certain  unscrupulous                                                               
construction employers  required, as  a condition  of employment,                                                               
that their  workers obtain business  licenses and perform  as "so                                                               
called    independent   sub-contractors    or   owner/operators."                                                               
Oftentimes up to 13 individual  so called independent contractors                                                               
perform one  task, such as  drywall finishing on one  building on                                                               
one  job,  he  explained.    This is  such  a  detriment  to  the                                                               
construction industry,  he described, due to  the bidding process                                                               
employers  use to  be  awarded contracts.    When a  construction                                                               
contractor sits  down to  bid a  job they  calculate the  cost of                                                               
materials, overhead,  the time it  takes to look at  prints, work                                                               
up the  numbers, and process  the percentage they put  into their                                                               
pockets at the end, which are  all fixed costs that are about the                                                               
same for every  employer, he explained.  The labor  costs are the                                                               
only real variable in the equation  and the person with low labor                                                               
costs oftentimes has the low bid and  is awarded the job.  In the                                                               
event  an  employer  chooses  to  misclassify  their  workers  as                                                               
independent sub-contractors  rather than  employees, they  are no                                                               
longer  required   to  pay  workers'  compensation   premiums  or                                                               
associated  payroll  taxes.    Construction  work  is  inherently                                                               
dangerous and  workers' compensation  is expensive  and up  to 30                                                               
percent  of labor  costs can  be cut  by simply  miss-classifying                                                               
employees  as   independent  contractors,  thereby,   giving  the                                                               
employer  a  substantial advantage  over  the  competition.   The                                                               
reality  is  a  fairness  in  contracting  issue  because  honest                                                               
employers are  forced to either adopt  this unscrupulous business                                                               
model   themselves,  or   simply  be   forced  out   of  business                                                               
completely.  He  expressed that employers who  lawfully profit by                                                               
classifying  their   workers  as   employees  cannot   get  their                                                               
contracts  for  work  through the  construction  bidding  process                                                               
because they  are competing against dishonest  employers who game                                                               
the system by misclassifying their  workers in order to cut labor                                                               
costs.   He  stressed that  HB 79  will rectify  this problem  by                                                               
creating  a  clear definition  of  an  independent contractor  so                                                               
there  is  no ambiguity  in  the  law  and everyone  bidding  the                                                               
project will be doing so in a fair and equitable manner.                                                                        
                                                                                                                                
2:37:23 PM                                                                                                                    
                                                                                                                                
CHRIS   NETTLES,  President,   GeoTek  Alaska,   advised  he   is                                                               
testifying on  behalf of the  National Federation  of Independent                                                               
Businesses  (NFIB)  and  as  president  of  his  company,  GeoTek                                                               
Alaska.    He  explained  that  his  company  mostly  engages  in                                                               
drilling for  environmental geotechnical projects  statewide, and                                                               
has  also worked  for  the State  of  Alaska.   On  the basis  of                                                               
geophysical   consulting,   he   referred   to   [Sec.   28.   AS                                                               
23.30.230(a)(11),  beginning page  15,  beginning  line 29],  the                                                               
definition  between a  contractor  and an  employee, and  offered                                                               
concern about  unintended consequences because these  are "pretty                                                               
specific  definitions."    The NFIB  could  "probably  live  with                                                               
this," he opined,  if subparagraph (H) was removed,  having to do                                                               
with setting up a business and  its due diligence because it does                                                               
not  necessarily define  whether a  person is  an employee  or an                                                               
[independent]  contractor.    Down  the road,  he  speculated,  a                                                               
regulator  could   get  "pretty   tough"  with  someone   in  the                                                               
consulting business  who doesn't have  their own tools  and such,                                                               
and commented that these definitions  appear to be written toward                                                               
the construction  business to  specifically define  employee from                                                               
an  [independent] contractor,  as well  as the  business of  real                                                               
estate.    The real  estate  business  located  in [Sec.  28.  AS                                                               
23.30.230(a)(10),  page 15,  lines 23-28]  receives an  exclusion                                                               
from  this  and   a  realtor  is  automatically   defined  as  an                                                               
independent contractor.   In the  event realtors can meet  all of                                                               
the definitions of paragraph (11),  he asked why realtors need an                                                               
exclusion.   Also, he  opined, that  when making  these specifics                                                               
for  the  construction  industry,  there are  problems  with  the                                                               
language  on  the  consulting  side.    He  then  provided  brief                                                               
background  information regarding  a snowcap  skiing business  he                                                               
owned in Hatcher  Pass, and expressed that he is  not in favor of                                                               
the bill as currently written,  and noted that compromises can be                                                               
reached.                                                                                                                        
                                                                                                                                
2:41:31 PM                                                                                                                    
                                                                                                                                
KEVIN  BARRY, Administrator/CEO,  Alaska  Surgery Center,  Alaska                                                               
Spine Center,  advised that adopting  the federal  guidelines for                                                               
Medicare  and  applying  them to  medical  services  for  injured                                                               
workers will create confusion for  both the medical providers and                                                               
insurers  as  Medicare  patients  and  injured  workers  are  two                                                               
different  and  distinct types  of  patients.   The  billing  and                                                               
coding  procedures   within  the  federal   reference  guidelines                                                               
conflict  with   commercial  insurance  processes   for  workers'                                                               
compensation.   As  a medical  practitioner,  he offered  concern                                                               
about the future  ability of injured workers to  receive the care                                                               
they need if these federal  reference guidelines are adopted into                                                               
law without a more meaningful  opportunity to discuss the impacts                                                               
with a both  a legislator and the administration.   He asked that                                                               
the  committee  remove  the  two  medical  reference  guides  for                                                               
Hospital  Outpatient   Prospective  Payment  System   (OPPS)  and                                                               
Ambulatory Surgery  Center Payment System  from HB 79.   He noted                                                               
his  understanding  that  Representative Kopp  has  an  amendment                                                               
regarding  this issue  and  asked the  committee  to support  the                                                               
amendment.                                                                                                                      
                                                                                                                                
2:43:11 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN listed the people available to answer questions.                                                                   
                                                                                                                                
CHAIR   CLAMAN  closed   public   testimony  on   HB  79,   after                                                               
ascertaining no one further wished to testify.                                                                                  
                                                                                                                                
2:44:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FANSLER  moved to  adopt Amendment 1,  labeled 30-                                                               
GH1789\O.4, which read as follows:                                                                                              
                                                                                                                                
     Page 17, line 1, following "location":                                                                                 
          Insert ", or a business mailing address,"                                                                         
                                                                                                                                
     Page 17, line 4, following "in":                                                                                       
          Insert "any kind of"                                                                                              
                                                                                                                                
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   objected    for   purposes   of                                                               
discussion.                                                                                                                     
                                                                                                                                
2:44:57 PM                                                                                                                    
                                                                                                                                
MARIE   MARX,  Director,   Division  of   Workers'  Compensation,                                                               
Department   of  Labor   &  Workforce   Development  (DLWD),   in                                                               
addressing  concerns   from  the  Alaska   Trucking  Association,                                                               
explained that  Amendment 1 clarifies that  the business location                                                               
would include a business mailing  address to support the evidence                                                               
of a  separate business location,  and clarifies  the advertising                                                               
requirement provision that  it is any type  of advertising within                                                               
[Sec.  28. AS  23.30.230(a)(11)(H)(iii)].   She  referred to  her                                                               
past testimony and said there  was concern that the provision may                                                               
be  interpreted  narrowly,  and Amendment  1  confirms  that  the                                                               
advertising prong is interpreted broadly.                                                                                       
                                                                                                                                
2:46:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked whether  that would  include someone                                                               
orally  holding themselves  out  as someone  who does  something,                                                               
such as at a rotary meeting.                                                                                                    
                                                                                                                                
MS. MARX  responded that "any  kind of"  is fairly broad  and the                                                               
Alaska  Workers'  Compensation  Board,  the  entity  tasked  with                                                               
weighing  and  evaluating  facts,  would   look  at  all  of  the                                                               
evidence.   Evidence  of  oral comments  is  something the  board                                                               
would review to  determine whether it was sufficient,  it's up to                                                               
the board to determine so she  was hesitant to answer.  Although,                                                               
she  said the  Alaska  Workers' Compensation  Board can  consider                                                               
hearsay if  it is collaborated  by other evidence, and  that type                                                               
of evidence  is something  the board  would review  and interpret                                                               
when looking at any type of advertising.                                                                                        
                                                                                                                                
2:47:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   withdrew   his   objection   to                                                               
Amendment 1.                                                                                                                    
                                                                                                                                
2:47:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN objected.                                                                                                
                                                                                                                                
CHAIR  CLAMAN   advised  Representative  Eastman   that  upcoming                                                               
Amendment 5,  offered by  Representative Reinbold  would actually                                                               
remove  these subparagraphs  and  in the  event  Amendment 5  was                                                               
adopted, this would become a non-issue.                                                                                         
                                                                                                                                
REPRESENTATIVE  EASTMAN argued  that  this does  not resolve  his                                                               
concern as the committee is  creating broad definitions to offset                                                               
the fact  that it is adding  to laws and regulations,  and making                                                               
previously legal issues illegal.                                                                                                
                                                                                                                                
2:48:23 PM                                                                                                                    
                                                                                                                                
A  roll  call vote  was  taken.   Representatives  Kopp,  Kreiss-                                                               
Tomkins, LeDoux, Fansler,  Claman voted in favor  of the adoption                                                               
of  Amendment  1.    Representative  Eastman  voted  against  it.                                                               
Therefore, Amendment 1 was adopted by a vote of 5-1.                                                                            
                                                                                                                                
2:49:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX moved to adopt Amendment 2, labeled 30-                                                                   
GH1789\O.2, which read as follows:                                                                                              
                                                                                                                                
     Page 10, line 14:                                                                                                          
          Delete "21st [14TH]"                                                                                              
          Insert "14th"                                                                                                         
                                                                                                                                
     Page 10, line 17:                                                                                                          
          Delete "21 [14]"                                                                                                  
          Insert "14"                                                                                                           
                                                                                                                                
     Page 10, line 18, following "period.":                                                                                     
          Insert "If an installment of compensation due                                                                     
      under this subsection is not paid within 14 days, a                                                                   
       grace period will not be allowed and an additional                                                                   
     amount will become due under (e) of this section."                                                                     
                                                                                                                                
REPRESENTATIVE FANSLER objected for purposes of discussion.                                                                     
                                                                                                                                
2:49:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  explained that Amendment 2  eliminates the                                                               
grace  period for  insurers, discussed  at  the 3/31/17  hearing,                                                               
which  the  Division  of Workers'  Compensation  has  given  with                                                               
respect to  workers' compensation  payments that are  supposed to                                                               
be paid within  14 days.  The grace period  allows the insurer to                                                               
make  payments to  the injured  worker  within 21  days, and  she                                                               
opined that  the division  was trying  to put  into law  the fact                                                               
that insurers  actually pay within  21 days, including  the grace                                                               
period.  She  explained that Amendment 2 requires a  hard 14 days                                                               
for workers' compensation payment and  if the insurer doesn't pay                                                               
within 14 days, the penalties go into play.                                                                                     
                                                                                                                                
2:50:24 PM                                                                                                                    
                                                                                                                                
MS.  MARX referred  to Amendment  2,  and explained  that it  was                                                               
changed from 14  days, with a 7  day grace period, to  21 days to                                                               
"call a  spade a spade."   For efficiency purposes,  the division                                                               
thought  to just  call  it 21  days,  and it  did  not intend  to                                                               
shorten that timeframe  from 21 days to 14 days.   Therefore, she                                                               
related, the department is neutral on that issue.                                                                               
                                                                                                                                
2:51:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN asked whether  Amendment 2 would install a                                                               
penalty    for   compensation    determined   to    be   eligible                                                               
retroactively.   He  clarified  his question  and  asked that  if                                                               
there was  a determination that  hadn't yet been made  on whether                                                               
or not compensation  was appropriate, and [then  later] upon that                                                               
eligibility determination  whether penalties would be  applied to                                                               
that compensation.                                                                                                              
                                                                                                                                
MS. MARX  said she  was unclear  what Representative  Eastman was                                                               
asking, and explained that Amendment  2 changes an installment of                                                               
compensation due,  meaning time lost wages  benefits.  Currently,                                                               
an  employer  has  a  duty   to  pay  or  controvert  within  the                                                               
timeframes  provided by  statute, and  in the  event they  do not                                                               
perform  one  of  those  two   requirements,  a  penalty  is  due                                                               
regardless of whether, ultimately,  they are responsible for that                                                               
care.    The  purpose,  she  explained, is  that  there  is  some                                                               
certainty  as  to   whether  the  medical  care   will  be  paid.                                                               
Although,  if  the  employer  denies  that  coverage  within  the                                                               
timeframe and  has a basis  to deny  the coverage, no  penalty is                                                               
due.  She  explained that it is  when no action was  taken that a                                                               
penalty would be due.                                                                                                           
                                                                                                                                
2:53:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FANSLER withdrew  his objection  to Amendment  2,                                                               
there being no objection, Amendment 2 was adopted.                                                                              
                                                                                                                                
2:53:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOPP  moved to  adopt  Amendment  3, labeled  30-                                                               
GH1789\O.7, which read as follows:                                                                                              
     Page 9, line 10, following "Services;":                                                                                
          Insert "or"                                                                                                       
                                                                                                                                
     Page 9, lines 12 - 16:                                                                                                     
          Delete ";                                                                                                         
               (15)      Hospital   Outpatient   Prospective                                                                
      Payment System, produced by the federal Centers for                                                                   
     Medicare and Medicaid Services; or                                                                                     
               (16)  Ambulatory Surgical Center Payment                                                                     
      System, produced by the federal Centers for Medicare                                                                  
     and Medicaid Services"                                                                                                 
                                                                                                                                
REPRESENTATIVE FANSLER objected for purposes of discussion.                                                                     
                                                                                                                                
2:53:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KOPP  related   that   the  committee   received                                                               
approximately  15 letters  from ambulatory  surgical centers  and                                                               
independent practitioners  that may  or may not  perform surgery,                                                               
voicing  concerns.   The first  concern  was that  the state  had                                                               
recently adopted new medical  reimbursement regulations that they                                                               
were  just   beginning  to  understand   and  implement.     This                                                               
legislation  adopts federal  reference  guides  for Medicare  and                                                               
applies  them  to medical  services  for  injured workers,  which                                                               
creates  confusion in  the  law for  both  medical providers  and                                                               
insurers because  they are  two distinct  types of  patients, one                                                               
being  the  elderly  and  the infirmed,  and  the  other  injured                                                               
workers on the  job.  It does conflict  with commercial insurance                                                               
regulations currently  applicable, he  related.   Another concern                                                               
was  that these  two  standards currently  in  the law,  Hospital                                                               
Outpatient  Prospective Payment  System  and Ambulatory  Surgical                                                               
Center  Payment  System,  reimburse  at  significantly  different                                                               
rates.   They  are based  on  Centers for  Medicare and  Medicaid                                                               
Services,  and the  rates are  biased toward  larger payments  to                                                               
hospitals, and  a reduced payment  for the surgical centers.   He                                                               
advised  that  surgical  centers  do see  Medicare  patients  but                                                               
almost as "mission  work, because they are  already getting their                                                               
reduced  rate."   Adopting this  standard  will further  decrease                                                               
incentive and a  center to see Medicare  patients, which includes                                                               
access to the care that  Medicare patient's need, which currently                                                               
largely entails choosing between  large hospitals rather than the                                                               
further  option  of  outpatient medical  surgical  centers.    He                                                               
related that the letters indicate  that if the legislature's goal                                                               
is cost  containment of  health care costs,  then they  asked for                                                               
time to engage the legislature  and the administration on what it                                                               
means  to   be  reimbursed  under  these   two  different  rates.                                                               
Removing these  references from the  bill would promote  a better                                                               
health  care   policy,  he  explained,   allow  access   to  care                                                               
facilities, and  an opportunity  to see  how the  current medical                                                               
regulations impact  its ability  to deliver care.   He  did speak                                                               
with the  governor's administration  about this  issue and  it is                                                               
supportive of Amendment 3, he advised.                                                                                          
                                                                                                                                
2:56:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS referred  to the  list of  medical                                                               
publications   the   department   can   reference   in   amending                                                               
regulations,  and  asked  the implications  of  new  publications                                                               
being added to this list.                                                                                                       
                                                                                                                                
MS.  MARX replied  that the  removal  of the  entities listed  in                                                               
Amendment  3, are  not critical  because all  of the  substantive                                                               
decisions regarding what reference  materials to incorporate are,                                                               
by  statute, made  through the  Medical Service  Review Committee                                                               
(MSRC) and  the Workers'  Compensation Board  through regulation.                                                               
The  list of  reference materials  is procedural  to advise  that                                                               
future amended  versions of the reference  material already being                                                               
used can be  updated as they become available.   In the event the                                                               
two are removed, the remainder  of the reference material already                                                               
being  used will  be updated  January 1,  2018, except  those two                                                               
will be one year behind.   She reiterated that the administration                                                               
does not object to this amendment  because it is not critical and                                                               
does  not  affect  the  substance of  the  medical  fee  schedule                                                               
because that  is decided  at the  MSRC and  Workers' Compensation                                                               
Board level.                                                                                                                    
                                                                                                                                
2:58:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  asked that if Amendment  3 is non-                                                               
critical,  why  is  there  such  a  negative  response  from  the                                                               
surgical community toward the inclusion of these two references.                                                                
                                                                                                                                
CHAIR  CLAMAN said  he would  let  Ms. Marx  answer, but  advised                                                               
Representative Kreiss-Tomkins that it  would be speculation as to                                                               
their objections.                                                                                                               
                                                                                                                                
MS. MARX offered  concern that she may  misstate public testimony                                                               
and  other's  positions,  and  said  she  would  speak  from  her                                                               
understanding and  not put words  into the mouths  of stakeholder                                                               
groups.    She opined  that  ultimately,  the concerns  are  with                                                               
regard to  the continued  struggle to balance  the high  costs of                                                               
medical costs  and bringing those down,  against injured workers'                                                               
rights and  medical providers  providing care.   The  division is                                                               
working hard to  strike the right balance  and stakeholder groups                                                               
expressed  frustration  as  to cost  containment  efforts.    She                                                               
related  that  the  division  met   with  medical  providers  who                                                               
expressed  frustration that  the  cost  containment measures  are                                                               
directed  toward the  medical community;  the  division met  with                                                               
injured  worker  groups  who   expressed  frustration  that  cost                                                               
containment is on the backs  of injured workers; and the division                                                               
met  with  insurer and  employer  groups  who all  are  similarly                                                               
frustrated.   She described it  as a balancing system,  and noted                                                               
that the objections  to its inclusion in HB 79  stem from overall                                                               
frustration with  the cost  containment measures  the legislature                                                               
directed  the department  to take  regarding cost  containment of                                                               
medical bills.                                                                                                                  
                                                                                                                                
3:00:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  said he was unsure  whether anyone                                                               
was available to answer his  question, it was determined that Ms.                                                               
King could respond, and she asked him to repeat his question.                                                                   
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS referred to  Amendment 3, and asked                                                               
that  if these  two reference  materials are  not substantive  or                                                               
critical  to  the  bill,  why  do they  elicited  such  a  strong                                                               
negative response from  the medical community.   He further asked                                                               
her  opinion  as   to  the  inclusion  of   these  two  reference                                                               
materials.                                                                                                                      
                                                                                                                                
MS. KING responded that it  is more substantive than the Workers'                                                               
Compensation Board  may realize with its  unintended consequences                                                               
as  they  are  already  using  both of  these  documents  in  the                                                               
Workers'  Compensation Fee  Schedule,  effective  April 1,  2017.                                                               
She described confusion and opined  that she is correct in saying                                                               
that "we're" just getting used  to the payment system established                                                               
in December  2015, and  that adding  this extra  layer comingling                                                               
the  two  separate payments  systems,  is  very confusing.    She                                                               
pointed out  the importance of  offering the vast  differences in                                                               
the  payment  system  between  an   outpatient  department  of  a                                                               
hospital  (HOPD), and  an ambulatory  surgery  center (ASC),  and                                                               
Centers  for  Medicare  and  Medicaid (CMS).    The  two  payment                                                               
systems are  vastly different, she  explained, and "we"  are paid                                                               
at a  much lower rate  than the ASC's  are paid.   She reiterated                                                               
that she  has been in medical  billing for greater than  20 years                                                               
and  she cannot  interpret this  new payment  system, and  if she                                                               
can't  understand it  then  certainly  small insurance  companies                                                               
will not  be able to figure  how to pay "us,"  and that currently                                                               
they are not even being  paid correctly.  Insurance companies are                                                               
not on board  with the system put in place  in December 2015, she                                                               
pointed out,  and this will make  it much more for  difficult for                                                               
insurance companies to  interpret and try to make  payments.  She                                                               
continued that  a federal register  is being  incorporated within                                                               
HB  79, and  there are  hundreds and  hundreds of  pages so  this                                                               
ability  for  them to  incorporate,  at  any  time or  amend  the                                                               
payment  system  at any  time,  within  those hundreds  of  pages                                                               
without any  kind of  oversight or  conversation or  anything for                                                               
the  insurance  companies,  the  state,  and  the  providers,  is                                                               
concerning to her.                                                                                                              
                                                                                                                                
3:06:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked whether  the coding system offered by                                                               
the  American Medical  Association (AMA)  is no  longer relevant,                                                               
and further asked  whether all coding is done by  the Centers for                                                               
Medicare  and Medicaid  Services  (CMS).   She  then referred  to                                                               
[Sec. 15. AS 23.30.098(a)(2)] page  8, lines 16-18, which read as                                                               
follows:                                                                                                                        
                                                                                                                                
         (2) Healthcare Common Procedure Coding System,                                                                         
        produced by the federal Centers for Medicare and                                                                    
     Medicaid Services [AMERICAN MEDICAL ASSOCIATION];                                                                      
                                                                                                                                
MS.  KING answered  that  the AMA  applies a  list  of rules  and                                                               
regulations for  every group  of CPT codes,  and those  rules and                                                               
regulations are expected to be  followed.  The CMS then compounds                                                               
the  rules  and   regulations  for  each  and   every  CPT  code.                                                               
Therefore,  she said,  when she  bills an  insurance company  she                                                               
follows the  rules of the  AMA, and  when billing to  Medicare or                                                               
Medicaid she follows the Medicare rules and guidelines.                                                                         
                                                                                                                                
3:08:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  offered that  she does not  understand why                                                               
Medicare and Medicaid  are written into this  bill because people                                                               
billing workers'  compensation are supposed to  use the procedure                                                               
code  of  the AMA,  and  commented  that  she doesn't  know  what                                                               
Medicare and Medicaid have to do with this issue.                                                                               
                                                                                                                                
MS. MARX  answered that when House  Bill 316 [passed in  the 28th                                                               
Alaska State Legislature], it  completely changed the methodology                                                               
and  changed how  maximum reimbursement  is calculated  under the                                                               
Alaska Workers' Compensation Fee Schedule.   She explained that a                                                               
base  value  is  established  by the  Centers  for  Medicaid  and                                                               
Medicare Services,  and to that  base value, Alaska,  through the                                                               
Medical  Services  Review  Committee   (MSRC)  and  the  Workers'                                                               
Compensation  Board,   determine  a   multiplier.     The  MSRC's                                                               
recommendation in  the report  was that they  now had  the codes,                                                               
they needed  some rules and  guidelines around  implementing this                                                               
system.  She explained that  rather than reinventing the wheel, a                                                               
call  was made  that there  are many  codes and  rules out  there                                                               
being used by  both the American Medical  Association and Centers                                                               
for  Medicaid and  Medicare Services,  systems across  the nation                                                               
that  people are  familiar with.   The  MSRC recommended  and the                                                               
board adopted  the recommendation agreeing to  spend money coming                                                               
with a completely  new book of rules and  guidelines, and rather,                                                               
would use  what was already in  existence.  When it  doesn't make                                                               
sense  for Alaska,  she offered,  parties can  go to  the Medical                                                               
Services Review  Committee (MSRC) to explain  their concerns, the                                                               
MSRC can then carve out an  Alaska exception, which has been done                                                               
in multiple instances.                                                                                                          
                                                                                                                                
3:10:27 PM                                                                                                                    
                                                                                                                                
MS.  MARX  offered  that  chiropractor  stakeholder  groups  went                                                               
before  the MSRC  and  raised concerns  that  the guidelines  for                                                               
Centers  for   Medicare  and   Medicaid  Services   didn't  allow                                                               
reimbursement of services, such as electrical stimulation.                                                                      
                                                                                                                                
The MSRC agreed to allow that  the service to be reimbursable and                                                               
carved  out  something specific  for  Alaska.   She  offered  her                                                               
understanding that  at one  point, before  she was  its director,                                                               
the division contracted to determine  its own fee schedule and it                                                               
cost  the  division about  $20,000  to  $30,000  per year.    She                                                               
remarked that when  there is a conflict between the  rules of the                                                               
American Medical  Association and  the rules  of the  Centers for                                                               
Medicaid  and   Medicare  Services,  regulation  read   that  the                                                               
American Medical Association has control.                                                                                       
                                                                                                                                
3:11:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX commented  that she did not  want to follow                                                               
up because it is "about as clear as mud right now."                                                                             
                                                                                                                                
CHAIR CLAMAN noted that when the  bill was passed a few years ago                                                               
there was a recognition that  both employees and employers wanted                                                               
to get better control on  costs for medical services.  Therefore,                                                               
there was  an effort to  determine a  reasonable price to  pay in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MS. MARX  responded that the  methodology was chosen  because the                                                               
existing  one was  inherently inflationary  as it  paid the  90th                                                               
percent of whatever the 90th percentile was of doctors' charges.                                                                
                                                                                                                                
3:12:26 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN  noted that  the committee  was created  to actually                                                               
look  at  prices  and  come  up  with  a  basis  to  determine  a                                                               
reasonable  price to  pay in  Alaska,  and it  realized that  the                                                               
Medicare  and Medicaid  rates  were, on  a  national level,  much                                                               
lower than what doctors were  paid in Alaska for private services                                                               
and by  insurance companies.   Rather  than determining  it would                                                               
just adopt  the Medicare and  Medicaid rates, it noted  that many                                                               
doctors won't take  Medicare and Medicaid patients.   He surmised                                                               
that it decided to start with  the Medicare or Medicaid rate, and                                                               
use a multiplier  to determine the Alaska  rate which, hopefully,                                                               
pushes down some of the  inflationary concern Ms. Marx addressed.                                                               
He then referred to all  of the referenced materials, and offered                                                               
that they  are not meant  to set the price  per se, but  they are                                                               
the  basis  upon  which  the  multiplier  is  applied,  and  this                                                               
commission  then decides  the right  multiplier to  apply to  the                                                               
Medicare and Medicaid rates.                                                                                                    
                                                                                                                                
3:13:31 PM                                                                                                                    
                                                                                                                                
MS. MARX related  that he was mostly correct, and  said she would                                                               
go farther to  say that the committee actually  decides "which of                                                               
these" it  wants to use initially  and "which of these"  it wants                                                               
to  change, which  is  why  Amendment 3  is  not  critical.   The                                                               
Medical Services  Review Committee (MSRC) agreed  that it chooses                                                               
the multiplier, makes  recommendations on the rules,  and what to                                                               
use  in reference  material.   She  remarked  that the  committee                                                               
makes recommendations annually,  per statute, and it  goes to the                                                               
board for  approval or non-approval,  and it addresses  more than                                                               
just the amounts.  Based  upon public comment, she explained, the                                                               
committee  can  decide  to  not use  the  outpatient  system  for                                                               
ambulatory  surgical centers,  or adopt  the ambulatory  surgical                                                               
payment system set of rules  and coding guidelines for ambulatory                                                               
surgical  centers,  which  is  within   purview  of  the  Medical                                                               
Services Review Committee (MSRC).                                                                                               
                                                                                                                                
3:14:34 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN  surmised that  by adopting  Amendment 3,  "we would                                                               
essentially be  saying to the  committee" it  can use all  of the                                                               
current version of these different  guidelines listed on pages 8-                                                               
9 of  the bill, but  will have to use  the older versions  of the                                                               
Hospital   Outpatient  Prospective   Payment   System,  and   the                                                               
Ambulatory Surgery  Care Payment  System in making  its decision.                                                               
He related,  "That information  will be  there from  prior years,                                                               
but not  for the most current  year.  And so,  that's mostly what                                                               
this  amendment  does  is  take   out  the  most  current  year's                                                               
information on those rates from the CMS."                                                                                       
                                                                                                                                
MS. MARX  said he was correct,  they just wouldn't be  updated by                                                               
telling  people "We're  using the  most current  version," as  it                                                               
would go  through the  regulatory process  which takes  about one                                                               
year.    She  reiterated  that  those  two  references  would  be                                                               
approximately one  year behind if  the MSRC preferred to  use the                                                               
most current version.                                                                                                           
                                                                                                                                
3:15:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   REINBOLD  asked   Ms.  Marx   to  identify   the                                                               
individuals on the Medical Services Review Committee (MSRC).                                                                    
                                                                                                                                
MS.  MARX responded  that currently,  under AS  23.30.095(j), the                                                               
commissioner  appoints members  of the  committee to  determine a                                                               
fee schedule, and nine members  are appointed by the commissioner                                                               
of the Department  of Labor & Workforce Development  (DLWD).  She                                                               
described that  one member  is affiliated  with the  Alaska State                                                               
Medical  Association,  one  member  affiliated  with  the  Alaska                                                               
Chiropractic  Society,  one  member affiliated  with  the  Alaska                                                               
State Hospital and Nursing Home  Association, and one member is a                                                               
health  care  provider, together  with  four  public members  not                                                               
within the  definition of  a health care  provider.   She further                                                               
explained with  regard to the  public members "that has  been one                                                               
member  from labor,  and some  people  from --  who have  billing                                                               
expertise  from the  industry adjusters,  and from  Alaska Timber                                                               
Insurance  Exchange,  Alaska   National  Insurance  provide  some                                                               
billing expertise."   One member  designated by  the commissioner                                                               
to serve as chair, which is  Ms. Marx as director of the Division                                                               
of Workers' Compensation, she related.                                                                                          
                                                                                                                                
3:17:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS related  that it  appears removing                                                               
the two  references will simply  set the division back  one year,                                                               
and   looking   at   these   documents    will   make   it   more                                                               
administratively complex.                                                                                                       
                                                                                                                                
3:17:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOPP  noted  that  House Bill  316  required  the                                                               
Department of Labor and Workforce  Development (DLWD) to annually                                                               
review and evaluate  the medical fee schedules  it publishes, and                                                               
this  adopts them  automatically by  reference.   In the  event a                                                               
person is  a provider  "and the reimbursement  rate that  you are                                                               
getting,  you forfeit  that  opportunity to  engage  in a  public                                                               
process, to give comment on the  record about the fee schedule as                                                               
it's   happening."     He   related   that   when  something   is                                                               
automatically  incorporated by  reference, it  does save  time by                                                               
simply appropriating it  by reference.  Society  is going through                                                               
a "see change" in the community  of medicine currently, and a lot                                                               
of it has to  do with "how are we getting  reimbursed, and -- and                                                               
what is the government appropriately  picking winners and losers,                                                               
and  right  now the  ambulatory  surgery  centers feel  they  are                                                               
providing  an effective  return on  investment for  every dollar,                                                               
and  they feel  that  the tipping  --  that --  that  there is  a                                                               
balance that  is inappropriately tipped toward  large hospitals."                                                               
Therefore,  he  said,  it  is asking  for  transparency  in  this                                                               
process.   The fact that "We  only have every single  one telling                                                               
us not to  do this, we --  I think we should  give some deference                                                               
to that -- those providers."                                                                                                    
                                                                                                                                
3:19:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  surmised  that the  inclusion  of                                                               
these reference  materials has the  consequence of  fee schedules                                                               
being set by reference, noting that  he did not pick that up from                                                               
the division's  testimony, and commented  that Amendment  3 would                                                               
be a substantive change.                                                                                                        
                                                                                                                                
3:20:03 PM                                                                                                                    
                                                                                                                                
MS.  MARX   responded  that  the  fee   schedule  uses  reference                                                               
material,  "and it  adopts the  reference material  already, this                                                               
would allow  future amended  versions of  -- of  material already                                                               
being used,  to use  the most  current version."   She  asked for                                                               
clarification of the question.                                                                                                  
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS said he was lost.                                                                                 
                                                                                                                                
3:20:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  advised that  she sponsored  Amendment 4                                                               
which is identical to Amendment  3, and withdrew Amendment 4 [not                                                               
yet moved  for adoption],  and asked  that her  name be  added to                                                               
Amendment 3 as a co-sponsor.                                                                                                    
                                                                                                                                
REPRESENTATIVE   REINBOLD  said   she  understands   adopting  by                                                               
reference,  and adopting  the  federal  reference guidelines  for                                                               
Medicare  and  applying  them to  medical  services  is  creating                                                               
confusion  for medical  providers and  insurers.   Therefore, she                                                               
said, she believes all  stakeholders, including medical providers                                                               
and the Department  of Labor & Workforce  Development (DLWD) need                                                               
better time to  understand the new provisions  adopted within the                                                               
past year.   The  reason she  brought this  forth was  because it                                                               
increases  local  control, it  empowers  "you  guys to  not  just                                                               
automatically do it," but that it  is a well thought out process,                                                               
she said.                                                                                                                       
                                                                                                                                
3:22:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FANSLER withdrew his objection to Amendment 3.                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN  commented that when his  personal surgeon                                                               
called him  and advised that this  was a bad portion  of the bill                                                               
it meant the  administration had not performed  its due diligence                                                               
in working out  issues with affected parties.   He suggested that                                                               
before the  administration proposes  such a  bill, that  it spend                                                               
more  time talking  with folks  to determine  its impact,  and he                                                               
concluded  that  if  this  language  was  to  be  "let  in,"  the                                                               
committee would  be deferring to  federal standards  perhaps more                                                               
than it needs  to be for Alaskans.  Also,  he said, the committee                                                               
would potentially have  the result of a less  diverse health care                                                               
option in Alaska, and that is not what was wanted at this point.                                                                
                                                                                                                                
3:23:38 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN  stated there  being no  objection, Amendment  3 was                                                               
adopted.                                                                                                                        
                                                                                                                                
[CHAIR CLAMAN announced that HB 79 would be held over.]                                                                         

Document Name Date/Time Subjects
HB079 ver O 3.27.17.pdf HJUD 3/31/2017 1:00:00 PM
HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Transmittal Letter 3.27.17.pdf HJUD 3/31/2017 1:00:00 PM
HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Sectional Analysis ver O 3.27.17.pdf HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Letters Index 4.4.17.pdf HJUD 4/5/2017 1:00:00 PM
HB 79
HB079 Supporting Document-Letters of Support 4.3.17.pdf HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB079 Opposing Document-Letters of Opposition 4.4.17.pdf HJUD 4/5/2017 1:00:00 PM
HB 79
HB079 HJUD Slide Presentation 3.31.17.pdf HJUD 3/31/2017 1:00:00 PM
HJUD 4/5/2017 1:00:00 PM
HB 79
HB079 Additional Document-Sponsor's Reply to House Judiciary Committee Questions 4.5.17.pdf HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Fiscal Note DOA-DRM 3.27.17.pdf HJUD 3/31/2017 1:00:00 PM
HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Fiscal Note DOLWD-WC 3.28.17.pdf HJUD 3/31/2017 1:00:00 PM
HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Fiscal Note DOLWD-SIF 3.27.17.pdf HJUD 3/31/2017 1:00:00 PM
HJUD 4/5/2017 1:00:00 PM
HJUD 4/13/2017 5:30:00 PM
HB 79
HB079 Amendments #1-7 4.4.17.PDF HJUD 4/5/2017 1:00:00 PM
HB 79