Insurance Consumer Forum

July 10, 2001
Harry S. Truman Building Room 492
Jefferson City, Missouri

BEFORE: Scott Lakin, Director, A.W. McPherson, Marsha Mills, Andrea Routh , Jim Casey, Susan Schulte, Molly White

STATEMENTS BY:

NORMA COLLINS, American Association of Retired Persons
DANIEL LANDON, Missouri Hospital Association
MARTY EXLINE, Missouri Assistive Technology 33
KEN VUYLSTEKE, Missouri Association of Trial Attorneys 47
CHRIS LONG, St. Louis Area Business Health Coalition 56

P R O C E E D I N G S

DIRECTOR LAKIN: We'll go ahead and get started. First of all, a little housekeeping. I want to welcome all of you here to the Insurance Consumers Forum. This is a third in a series of stakeholders meetings that we have had as a department. We've been very -- I think it's been a very good thing for the department to have these stakeholder meetings, and we are planning to have some in the future as well, but they have been well attended.

I think a lot of the points that have been brought up in the first two meetings have been very good and very helpful to the department. And we're -- as I've mentioned before, are going to take a lot of the information that we get and talk internally about it, and see how we can go about improving, not only consumer protection in the state, but also promote the industry and have an industry in the state that is productive for Missouri citizens.

I get a lot of questions, on a personal note, I made this announcement. Many of you might be aware of my daughter and wife were in a car accident here a few weeks ago. To save me having to answer 40 different questions during the break or during -- or shortly after this meeting, they are doing much better. My daughter is home from the hospital. She is able to sit up in a wheelchair. And she says the hardest thing she's ever done is put on mascara with her left hand. But I wanted everyone to know that we are very thankful as a family for the cards and well wishes. It's been a very challenging time for my family personally, but we are very aware of the support that we've gotten and feel very fortunate to have so many friends. That is the latest update on that.

I want to introduce, first of all, the people here on the panel with me from the department. Start on my far right, Susan Schulte, who is Manager of our Property and Casualty Section; Andrea Routh, who is our Manager of Consumer Services; A.W. McPherson, who is my Deputy Director for the Department of Insurance. On my immediate left is Marsha Mills, who is also the Director of Resource Administration for the Department of Insurance and also our legislative liaison. Next to her is Jim Casey. Jim is Manager of the Life and Health Section of the department.

And then also Molly White, who is Manager of our Managed Care Section.

We are here, frankly, to listen more than to talk. I'm not doing this because I'm an exlegislator, and I just can't get away from committee hearings. We are sincere when we say we want to listen and hear what you-all have to say. And probably we will handle it the way we've handled it the last two times. We have a fairly well booked agenda till lunch. And then after that, this afternoon, if there are individuals that you would like to meet with, if there are people within the department or a certain section that you have an issue with, and would like to meet with them individually, we can ask that you come up to the fifth floor, and we'll do everything we can to get you in contact with the right person. With that, unless there's questions from any of the panel members, we'll go ahead and get started. And the first person that is scheduled to speak is Norma Collins with the American Association of Retired Persons. Norma, welcome.

MS. COLLINS: Thank you.

DIRECTOR LAKIN: I met Norma for the first time here just a few minutes ago, and I'm glad to have her here today.

MS. COLLINS: Good morning and thank you for the opportunity to speak on behalf of AARP in Missouri. I am Norma J. Collins, Associate State Director for Advocacy. During the next few minutes I'd like to express the need for long-term care insurance rate stability. Long-term care insurance has been sold for more than 20 years evolving from restrictive nursing home insurance in the 1980s to coverage for a broader range of benefits during the 1990s.

Today long-term care insurance is designed to cover a variety of services such as assisted living care, care at home and adult care programs, in addition to care in nursing homes. By June of 1998 almost six million policies had been sold nationally since 1987, the first year that the industry began tracking the sales. The total number of sales between the mid 1970s and 1987 is unknown.

But consumers have been steadily buying these products with sales increasing on average of about 21 percent annually between 1987 and 1997. 63 percent of buyers in a study conducted by the Health Insurance Association of American, believed it was important to plan for the possibility of needing long-term care in the future. Though the age of purchasers have been decreasing in recent years, senior, those who are age 70 and older, have been the primary purchasers of these policies. They have the most exposure to the risk of needing long-term care insurance, and they understand the need to plan for this expense.

The premiums for these policies range from several-hundred dollars annually to several thousand, depending on the year of purchase, the age of the purchaser and the benefits included in the policy. Consumers who are still paying for policies purchased in the early 1980s may be paying as little as $900 annually. While someone age 79 buys a state of the art policy today, could be paying as much as $7,022 annually. In general, consumers over age 65 pay in the range of 1,500 to $3,000 annually.

The majority of purchasers of this type of insurance are age 65 or older and 58 percent have annual incomes of $50,000 or less. Because long-term care insurance is expensive, any increase in premium has the potential to make the policy unaffordable causing a loss of coverage close to the time a person may need care. Purchasers seldom know that the premiums for this type of insurance can go up.

In 1999, the NAIC revisited the issue of rate stability, revising and adopting a new Model Act and regulation on rate stability in 2000 as a consensus document between regulators, industry and consumer representatives. The Model requires insurance to file detailed information about their rates and certify that their rates have been constructed in such a manner that future rate increases will be unnecessary. If the company requests an increase later, a series of penalties are imposed on a company. It requires no changes in a state's filing procedures or authority to impose a series of penalties later if a company fails to live up to its promise that the rate increases will be unnecessary.

The industry and consumer groups have pledged to help states adopt the NAIC Model to ensure that consumers who buy policies will not be hit with future increases that jeopardize their coverage just at the time that they need to use it.

AARP believes a consumer rate guide bill is needed because, consumers often believe that-long term care insurance policies are level premium policies. That insurers cannot or will not increase premiums in the future. In fact, many insurers do raise premiums. Some relatively frequently. Others have never raised premiums.

The new NAIC rate stability standards require insurers to disclose their own 10-year history to those purchasing a policy. It does not require that this information be compared to rate increase histories of other insurers. No state except California currently requires that comparative information on LTCI premium rate increases be provided to consumers. This information should include information from the state where the policy is being purchased, along with information on all rate increases for the last 10 years on all policies from across the country.

AARP believes that comparative information is needed by all LTCI consumers. It provides a valuable indicator of how strictly a company underwrites its policies and how carefully it has priced its policies, at least in the past. Therefore, it provides a valuable indicator of possible future rate increases on all policies from across the country. AARP's consumer rate guide bill exceeds the standards contained in the NAIC model by requiring comparative information.

Currently, in the state of Missouri, the following long-term care insurance regulation provisions have no provisions, and they are: Rate stabilization, disclosure of rate practices and filing requirements, unintentional lapse provision, premium rate increases, marketing by association group, benefit triggers, benefit triggers for qualified long-term care contracts and implementation of nonforfeiture benefit.

AARP applauds the Missouri Division of Insurance and its initiative to gather a broad range of ideas relative to public policy. So we at AARP look forward to providing assistance by way of comment and/or review. We are very pleased that we were invited here today and that we're going on record to express to you our concern and our need, the need for having rate stability. And don't hesitate to contact our office. We are based in Kansas City, and my direct dial phone number is in this testimony. I thank you. DIRECTOR LAKIN: Norma, can I ask a quick question?

MS. COLLINS: Sure.

DIRECTOR LAKIN: You had said that no state requires rate info for consumers except California. And did you say also that the AARP has a rate guide? Are you-all putting that together on your own?

MS. COLLINS: We're working on that now. We have a staff person. We have several staff in our Washington D.C. office who work very closely with NAIC, and much of this information came from that office. And I can put you in contact with those who are working on that model guide.

DIRECTOR LAKIN: Okay. I was curious that maybe we can have a link or something from our web site to your-alls web site as far as what some of the rates and that kind of thing to --

MS. COLLINS: That's something I can certainly share with the staff person who works on our insurance issues and get back with you. We would be more than happy to work with you in any way we possibly can.

DIRECTOR LAKIN: Thank you.

Any other questions from members of the panel?

Thank you very much.

The next scheduled person to testify is Daniel Landon with the Missouri Hospital Association. Daniel?

MR. LANDON: Thank you, Director Lakin for pursuing your invitation to the Hospital Association to come and give you some brief comments on public policy issues. As you know, the Hospital Association has been quite involved over the years in public policy issues relating to health insurance and trying to improve the rate of -- improve the rate of insurance coverage in this state. I would be happy to report -- and you probably know this as well or better than I -- but there is very good news in Missouri. Based on the most recent census report, Missouri is now the fourth best state in terms of the number of uninsured residents it has.

Years ago when I first started on the staff of the House of Representatives with some of your staff, it was almost inconceivable that Missouri would have been fourth in the nation to have uninsured rate. So it's a dramatic progress. And things seem to be even on the upswing. For example, from '97 to '99, '99 is the last year the data was processed by the census bureau, Missouri was second best in its rate of improvement, next only to Arkansas who started at 24 percent and came down to 14. And that's obviously starting at a much worse rate than we had, which is about 13, I believe.

We're now at roughly about 8 1/2 percent, as I recall. So, again, we're doing remarkably well. Fourth best among the states. The ones who were higher than us are Rhode Island, Minnesota and Iowa. I note that one of states is not higher than us is Hawaii, which has an ERISA waiver, which essentially allows everybody to be required to have coverage. So things are looking good in the insurance market. I would say we're very pleased with how that has happened.

I would also caution to say that that's probably due to picking the right fruit that's lowest on the tree, and I would also say that probably much of that doesn't have much to do with the relationship that the General Assembly has had in modifying the insurance laws over the past five years or ten years.

Much of it has to do with the fact that Medicaid has been expanded under your leadership and others in the General Assembly, so that the number of people who have been covered by Medicaid since 1990 is almost doubled, and it's very strongly emphasizing children. I think I have the number of children which have been covered and it's in the hundreds of thousands. 250,000 children since 1990, 138,000 adults have been enrolled in Medicaid. And that's largely what has been driving much of the success we've seen.

Also until recent good times that we have had in the economy has also made it incumbent for many employers to offer health insurance as a fringe benefit to their employees. Now, we are worried that that may take a down turn since the economy seems to be going south.

Again, as I mentioned, some of the issues that have been dealt with have been some of the ripe fruit. And it's going to be much tougher to get the rest of those who are uninsured. For example, many of those who are still uninsured are those who may have access to insurance through either the HIPPA law or to the high-risk pool, but it is essentially unavailable to them because it is unaffordable.

It's a hollow victory to make access available to someone, if to say that there's a price to pay that you can't afford. And we would encourage you to work over the next years in your strategic plan to try to work on the issue of the high-risk pool and how to make it more affordable. The last I had checked, the high-risk pool was serving somewhere in the neighborhood of 1,015 Missourians, which in a population of 5.5 million is a very small percentage.

Just a few other small-picture things. That's kind of the big picture where we are, and we would like to commend you for the work you have done in working on health insurance issues, but some rather small issues that have come up as of late that we want to mention, too.

In the recently enacted and signed 328 Managed Care Bill, there's some language that talks about the Department of Insurance establishing a procedure for providers including hospitals to report issues that they are having in prompt payment claims. In the past it's obviously been somewhat difficult to report to the Department of Insurance, and I think that's probably reasonable. The Department of Insurance has wisely said that they are not able to be the policeman for ensuring that everybody gets paid promptly.

But now we have a body of laws to govern that, or we had before and have been strengthened somewhat. As part of that law, the Department is supposed to be collecting some information so that essentially you can keep tabs on how people are doing as far as insurers are paying their providers. And if certain standards aren't met, you can levy your own penalties. We would encourage you to make that reporting process as easy as possible, electronic, if possible. Again, that would be a lot more likely to get compliance of what I think the intention of the law is if we make the process of reporting as easy as possible.

On a related issue, you may be aware that the Hospital Association collaborated with some insurers in the state to work on the issue of prompt payment with the idea toward looking toward private sector solutions rather than trying to develop something that had to be passed into law. As you well know from your years in the legislative arena, the operative verbs in the law are "shall" and "may". And those are pretty blunt instruments to move something around as sophisticated as the health insurance system.

So we commissioned a study done by PriceWaterhouseCoopers, which is an accounting firm, and did some analysis of why prompt pay problems were surfacing. One of the things that might not have been obvious to those of us who looked at it at the outset, there were a lot of problems in electronic data interchanges. Those third-party payers that we send our claims through that eventually end up with the insurers, but it did explain some issues that we had been having where we'd say, Well, we sent the claim to you. And they'd say, Well, we never got it. Well, where does it go? Does it go the same place that the socks go in the washing machine? It just disappears.

Well, it does turn out that there is some problem with EDI. I would not want to put that all off to the problem, but there are issues that I think need to be addressed to that. And as you may recall in the General Assembly, there were some proposals put forth that would involve the insurance of putting together a task force to look at EDI issues.

One other issue that has come to mind in the course of talking to our members recently, you may be aware that there's a federal law called EMTALA that requires if anybody who shows up in one of our hospitals in the emergency rooms, must be screened and treated until they are stabilized. As part of the managed care bill in '97, House Bill 335, there was language put into the law that said that essentially insurers would be responsible for paying for emergency care services if it's such that a prudent lay person would have gone to the emergency room. And they are obviously allowed to collect whatever applicable co-pays and deductibles you might have.

What we're hearing from our members is that -- and somewhat not happening -- that insurers are refusing to pay for emergency care on the grounds that the person was not a member of that particular hospital's network. And we don't see any exemption in the law for not being in the network. And so we would be happy to work with you on that issue. Again, I'm just trying to provide you the information that we're hearing on the street as to how this law is being enforced and interpreted.

And finally --

DIRECTOR LAKIN: Daniel, excuse me. Is that a Federal law or a State law?

MR. LANDON: EMTALA is a Federal law. The State law is from the House Bill 335.

DIRECTOR LAKIN: 335. Okay.

MR. LANDON: Yeah. It's a State law. And in fact, the cite is 376.1376.

DIRECTOR LAKIN: Okay. I just wanted to make sure you weren't asking us to enforce Federal law.

MR. LANDON: We'll let them do that.

DIRECTOR LAKIN: Okay. Good.

MR. LANDON: And then finally, we also heard from our members recently that they would be interested in receiving some of the HMO financial information that is reported with the Department now and obviously the public, because it's published in paper form in a document that we make available for a nominal cost. Actually, this fellow is with a hospital that also operates in HMOs, so we notice that that data is actually submitted to you in electronic form. And he would like to suggest that it would be good to have that made available in electronic form, perhaps for purchase.

Just in doing some brief looking, I found that that was not available on the Department's web site, but low and behold if you go to the Department of Health's web site there's some Excel spreadsheets that deal with HMOs. I'm not quite sure if the man on the street would know to go to the Department of Health to look for HMO data. So that was just something that he suggested that he thought would be nice. He certainly would be willing to pay for it. But since it seems to be coming to you in electronic form, in keeping with the way things seem to be going as far as technology, it would be nice to have it available for people to use in process in electronic form as well.

With that, I'd be happy to answer any questions.

DIRECTOR LAKIN: Questions? We've got a quiet panel today. I've got -- you had mentioned earlier in your testimony about how well Missouri is doing as far as uninsured. I guess I would be interested in your comments as far as how related is -- how we do economically to that uninsured rate? I think the rate I saw was 8.3 percent, and most of that is because of the CHIPS Program. But it seems to me rather than rest on our laurels, we might want to be more proactive on discovering other ways that we can provide access to coverage at an affordable price and not let up now because we're doing fairly well, but keep at it, because when and if the economy does take even a further downturn, since health care is so tight in employment, you know, my worry is we'll have a dramatic increase.

But I was wondering if you could comment on that, and I've got a couple of other questions for you.

MR. LANDON: I agree with you completely, and I think that's certainly the view of our association. Not to say that we need to rest on our laurels, because we have an uninsured rate of 8 percent, in the neighborhood of 8 percent. But clearly Medicaid played a significant role in reducing that rate. But as I think I mentioned, a lot of it was due to the fact that we had such a rosy economy. And if you went to work at Quik Trip or McDonalds, they were offering you health care benefits, which again is a dramatic change from the early '90s, say, for example, when the common plea that you would hear as a legislature was that people would get service jobs and they couldn't get any benefits. And that's probably more likely than not to change under the economy, seems to be in a downturn of some prolonged duration.

DIRECTOR LAKIN: What do you think about -- we've got children that are covered under CHIPS. What do you think about maybe looking at ways to cover the parents of those children?

MR. LANDON: That certainly would be a reasonable proposal. We think that -- again, the CHIPS Program seems to have worked well, because at the higher income levels they do pay a premium. It's not a give away. People don't tend to perceive it as a give away, but it seems to be a very good way of getting people to get coverage. Again, as I think we've said, we've covered hundreds of thousands of people, and some of that may have been done to the fact that when that law was passed. There was substantial publicity. And a lot of providers, physicians and hospitals were very active in trying to make sure that everybody possible knew about this law. So that it was not a case where there were a lot of people who were eligible, but who didn't sign up because they didn't know about it.

DIRECTOR LAKIN: Well, in fact, I think the advertising on the CHIPS Program actually stimulated people that were eligible for Medicaid but didn't know it, and so our Medicaid enrollment also went up at the same time the CHIPS Program, people were being enrolled.

But the other -- and I got this a lot as a legislator, but there is a gap of coverage for people about 55 to age 62. Do you have any ideas on how we might approach that as far as writing some options for people in that age category?

MR. LANDON: Well, as I'm sure you know, at the Federal level, there was some discussion of allowing those people who essentially would be what we call early retirees to buy into Medicare. That clearly is not something under the jurisdiction of the state. We might look at something like that. Again, once you get into that age group, they are much more expensive to insure. As you know, one of the reasons that the state was able to cover a lot of children is that kids are on the whole, relatively cheap. They get the sniffles once in a while, and some of them get terribly ill, and they show up at our childrens hospitals, but on the whole, kids are pretty cheap.

People who are 55 to 60 in general are not so cheap, and they will be paying much more for the coverage that might be extended to them if they are paying the full rate. And so we would certainly support something that would allow, give them an opportunity to, perhaps, buy their own coverage. Because, again, as you pointed out, it's a very vulnerable population. If they do lose their employment sponsored coverage, they are likely to be uninsurable.

DIRECTOR LAKIN: I think a lot of that is how the private industry spreads the risk. If they spread it appropriately, then they should be able to offer coverage in those age groups. But when you've got a 60-year-old diabetic, you know, we're having -- my theory has always been, we're going to pay for it anyway.

MR. LANDON: Right.

DIRECTOR LAKIN: I mean, you can either pay on the front end with preventative care, which is pennies, or you pay for it with hundreds of thousands of dollars on the back end when they show up at the emergency rooms in the later stages of their disease. So we're going to pay for it one way. The question is whether we want to pay for it with discounted dollars for preventative care or whether we want to pay for it with catastrophic dollars or catastrophic care.

MR. LANDON: And that's very much the advantage of having more people covered is because they feel like they can go to a physician and get treatment for something early, and they don't wait until something gets really bad and go to the emergency room where it's much more expensive to treat.

DIRECTOR LAKIN: The last question I wanted to ask regarding the prompt-pay bill that was recently signed, and it's been made clear to me by a number of people within the Capitol Building that this is a big responsibility of the Department to implement this bill and make sure it's done correctly. And you mentioned some of the electronic filing problems. Is some of that going to take care of itself just with passage of a little bit more time? It seems to me that the whole prompt pay issue, once the electronic billing and the electronic part is solved or becomes more mature, I guess, that a lot of the prompt pay issues that we're experiencing now with mail time and with denials and things like that, will sort of take care of themselves. Is that how you view it?

MR. LANDON: Yes, I do. With the implementation of the data, privacy and security standards, administrative and location standards under HIPPA, it's going to cost our hospitals a lot of money to do that. But once it's done, the system should work better for all of us, and it should be a savings over time. We're having some difficulty coming up with the cash to comply, but I think it's going to be, we hope, a much better world when it's all finished. We can communicate electronically and all use the same language. And so we don't have a lot of different kinds of forms flowing in, problems with standardization.

Again, I concur. A lot of this should iron itself out. And we're hopeful that the HIPPA standards will, at least, allow us to speak the same language to the EDI contractors we have, and say, Look, this is how it's going to work. And improve that possibly without even -- well, certainly probably without involving legislation, because it's not really a legislative matter, but perhaps, without even meeting a lot with a regulatory system. It may be just something we could work with our contractors on to say, This is how we want you to do it as part of our contract.

DIRECTOR LAKIN: You mentioned HIPPA a couple times, and as you know, Missouri is the only state, I think, that has not written its own legislation. And we've gotten testimony in the previous two stakeholder meetings about we need to do something about HIPPA. And I think I know why, but I guess my question to the Hospital Association is, what's your view of how we are as far as HIPPA? Do we need to do something or is the Federal regulation sufficient right now?

MR. LANDON: Well, we're kind of getting under a bailiwick there. I remember that the history as to how some of that happened at that time, and I think you were involved in this as well. We were working on legislation that would have talked about the issue of modified community rating. And at that point that legislation didn't pass, of course. And as part of that, it took down with it language that would have authorized a state HIPPA compliance program so you wouldn't have HCFA, now CMS running program.

At that time the reaction from the Insurance Department was that this may not be the worst of all things. That there would be a reasonable role of HCFA to play. And at that time, I believe, California was one of the other states that was not in compliance. I did not realize that Missouri was now the only one. It seems to me the reasonable thing we could go ahead and let the Department of Insurance regulate insurance and try to get something like that done. We clearly would want to maintain the same level of standards that have been placed on the industry, as far as compliance, but it seems to us that the Department of Insurance is probably a better place to serve as the regulatory enforcement arm rather than having to have the Department collect information and essentially pass it on to HCFA.

DIRECTOR LAKIN: I think the downfall of the HIPPA bill, I think it was '96 or '97. I think it was '96, that we were trying to get some sort of guarantee from the industry, as far as portability of individual policies or as well as the group. And their comment to us was, we would rather have Federal regulation than that. But there is a need out there, as you know. And this age group of 55 to 62 that I talked about, is a perfect example. There is a need out there to have some kind of portability of individual policies.

And I don't know what the answer is, to be real honest with you, but I think it's something that is worth exploring, and it's something that is very important to a large number of people here in the state.

MS. MILLS: Daniel, you mentioned at one point making the high-risk pool more affordable. How would you propose to do that and how would you propose to finance that?

MR. LANDON: Well, that's always the question, isn't it? Right now the burden falls on the state general revenue fund. I mean, since it's passed through the insurers, but the burden falls on the state revenue fund. And I suspect that you've gotten a few messages from the budget office that indicates there won't be a whole lot of state general revenue flowing around these days. It may be an issue of trying to spread it among the insurers as some sort of real assessment that actually falls on insurers. Again, right now it's basically passed through the general -- to the general revenue fund.

Again, there are things being talked about at the federal level now, even being proposed by Dick Army, that would essentially say that all insurers would need to participate in some sort of risk sharing mechanism for sharing the cost of the uninsurable. And there may be some sort of model, perhaps. I know this is an intractable problem, one we've worked on for a long time. Clearly, we recognize the general revenue funds are probably not going to be available. And the only other source that we can see would either be to pass it on to all ratepayers through some sort of assessment to the insurers. We would certainly be willing to look at other options, but that's the one that comes to mind.

MS. MILLS: I'm interested in alternatives. There seems to be a solution that a lot of back, but financing is really tough.

MR. LANDON: Right. And there have been a number of proposals, as you have seen, that have lowered the caps down to 100 percent of poverty and things like that. The key issue is going to be financing.

DIRECTOR LAKIN: Molly?

MS. WHITE: Can you give the Director a little bit of prospective on EMTALA? I thought originally I could fill him in afterwards, but you might speak to that better than I could. It kind of puts hospitals in a real vice to be stuck between EMTALA and an HMO that says, Well, you're not participating.

MR. LANDON: Right. Under Federal law, hospitals have no choice to treat and actually, several have to screen somebody who comes in to the emergency room. It doesn't matter if there's nothing wrong with them. You still have to screen them to make sure there's nothing wrong with them. And essentially you are obligated to treat them until they are stabilized. It does not require of someone that they be admitted to the hospital from the emergency where they have to be treated and stabilized.

And obviously, emergency rooms are one of the most expensive places to go for treatment. We're doing a lot of work right now as far as part of looking at our trauma centers. There's an increasing amount of Missouri population that is getting its primary care in emergency rooms unfortunately. And what we're running into, I think I mentioned this to some extent earlier, we're hearing from our hospitals that claims that are coming for people who are going to the emergency room and getting services were presuming that those are services that the prudent lay person would seek emergency room care for and not just the sniffles. That they are being denied by the HMO because they are saying that the hospital was not a network provider of theirs.

I mean, if somebody happens to start having chest pains, and they are near St. Johns in Springfield and they go there because it's the closest ER, essentially St. Johns will treat them, but they are saying, Well, no. You should have gone to Cox across the road or across the city because they are a network provider. Well, that doesn't seem to jive very well with common sense as to what people want to do when they start feeling chest pains. And so that's been brought to our attention as an increasing problem.

But we have no choice and don't really have a choice. It's also part of our policy to treat somebody who comes in to the emergency room. And what we're really asking for is it seems to us that the law says and we certainly intended to say that if somebody goes to the emergency room to get care for some service that's reasonably presumed to be an emergency, that we ought to get paid.

MS. WHITE: There's also an issue with EMTALA that the hospitals are prohibited from seeking payment information until the patient is stable.

MR. LANDON: That's a good point, and had I forgotten to mention that? We are not permitted to essentially ask about financial matters at all. We just are directed to treat them. And this is not something that the federal government takes lightly either. This is very closely enforced.

MS. WHITE: And the fines are big.

MR. LANDON: Yes. Fines are very big. And it's a very serious violation for hospitals, obviously, if they are shown to be turning people away in an emergency room, and then Federal law says they have to be treated.

DIRECTOR LAKIN: Any other questions? Daniel, thank you very much.

MR. LANDON: Thank you.

DIRECTOR LAKIN: I appreciate it. Marty Exline, with the Missouri Assistive Technology. Marty, welcome.

MR. EXLINE: I'm with Missouri Assistive Technology, and I think a few of the panelist members know what assistive technology is. Jim Casey serves on the statewide Assistive Technology Advisory Council. Assistive technology is basically any device or equipment that would help a person with a disability to become more independent or improve their functional abilities.

And so we can include what you look at as traditional durable medical equipment like wheelchairs, hospital beds, that type of thing, but also hearing aids. I said traditional and durable medical equipment, not necessarily traditionally covered by insurance companies as durable medical equipment.

But also includes things like stairway lifts, communication devices for people who are unable to speak, electronic enlargement devices for people with vision impairments, environmental controls for people with mobility impairments, access modifications to homes or to vehicles to make them more accessible with people with disabilities.

And I basically wanted to comment on four areas of dealing specifically with coverage of assistive technology, but also dealing with coverage in general for people with disabilities. First of all, related to directly improving the coverage of assistive technology, a couple weeks

ago I spoke to a group, the Amputee Coalition of America. And we were talking about funding resources for assistive technology and certainly and, obviously, brought up private insurance and public insurance.

And there was a gentleman that we were talking about the coverage of environmental controls, which are devices for somebody who, say, was a quadriplegic, and enable them to control the temperature in the room or maybe even unlocking the door, the oven, maybe controls for their television or whatever. And he was just amazed. It turned out he was from England. And he was just amazed that there was no private insurance coverage for environmental controls and devices like that in this country. So it just kind of drove home the difference in viewpoints in terms of the types of equipment and the focus on what illnesses and acute care as opposed to being more focused on independence and the ability of a person to function more independently.

There have been several bills introduced in the last few years in Missouri legislature related -- directly related to private insurance coverage of assistive technology. There have been several bills introduced that require insurers to cover hearing aids, which have not really gone anywhere. I don't think that any of those bills, I don't recall them getting out of committee. Obviously, there's, again, the finance factor and the question of where is the money going to come from to pay for these. So, obviously, there's opposition from the insurance industry.

There was legislation, of course, a couple of years ago to require insurers to cover infant hearing screenings. And part of that bill did also require the insurers to cover the initial amplification if it's determined that that child needs a hearing aid or some type of amplification device. And that bill did pass, so that was one small area where there was some additional coverage of assistive technology.

There was in one of the seniors pharmacy assistance bills that was introduced this year, there was one version that was included not only assistance for coverage of prescription drugs, but also included coverage of assistive technology. So at least I think there is some increasing recognition in the legislature about what assistive technology is and what some of the incredible new technology that is coming up that people are seeing more and more of can do as far as people with disabilities and helping them to become more independent.

There was a bill, quite broader bill introduced in the Kansas legislature last year that required coverage of durable medical equipment by private insurers. It also defined durable medical equipment as equipment which allows the user to regain, maintain, increase or improve cognitive or physical functions which are prevented or restricted due to disability. So that bill would cover vision devices, hearing aids, augmentive communication devices. Just kind of a wide band of different assistive technology devices that would help somebody maintain or regain their functional abilities.

It also required a minimum of $10,000 in available coverage per individual. It did not pass; surprise. I think that folks are at least somewhat optimistic that maybe portions of that bill might eventually pass to at least strengthen some of the areas where there are severe shortcomings in coverage, private insurance coverage of durable medical equipment and assistive technology.

One hopeful development did occur this year at the Federal level. And for years Medicare had not covered augmentive communication devices, which are devices where somebody who is unable to speak can actually key in words or sentences or phrases into a device, press a button, and that device will go ahead and speak those words for that individual. For years, forever, since Medicare was initiated, augmentive communication devices were classified as convenience devices. So it couldn't quite be seen that it would help a person who can communicate in the same way, but a wheelchair would help a person who was not mobile.

As of January 1st of this year, Medicare does cover augmentive communication devices. They've developed coverage guidelines. So we're hopeful that at least that might filter its way down to some other private insurance plans. And there are some that do cover those devices right now, but there's an awful lot that don't cover them. So we're hopeful that by Medicare, you know, taking the reigns on saying, Yes, this obviously is a medically necessary piece of durable medical equipment, then more private insurance insurers will start covering them.

So the bottom line, I think, as far as equipment, durable medical equipment is, No. 1, that there are a lot of policies that don't cover durable medical equipment at all. A lot of folks don't really figure that out until they need it, and a lot of times that's because of situations that come on very suddenly.

The second area is, when it is covered, it's very restricted. It's with a very restricted definition with a lot of different exclusions. People who have coverage policies are often unclear about the types of devices that are covered. For instance, if somebody needs a customized wheelchair, they know that maybe their policy covers customized wheelchairs, but they don't know about the different features or seating systems they might need for that wheelchair. So there's a lot of areas in the area of hearing aids in the very small instances where hearing aids are covered.

There's now just a completely new breed of hearing aids, programmable digital hearing aids that are more expensive, but they are also allowing people to hear things that they have never heard before. People who are maybe 50 or 60 years old who now are able to hear sounds that maybe they haven't been able to hear since they were born. So there's a lot happening, but there's a lot of areas also in the area of dollar caps when they are covered, durable medical equipment is covered. Limited dollar caps on the amount that can be covered and other issues like replacement policies on a wide variety of things from prosthetic devices to, again, hearing aids or mobility. There's a lot of shortcomings in instances where a private insurance policy does cover assistive technology and durable medical equipment.

Three other things, a little more general, but important, I think. Certainly we were very supportive of efforts made this year to strengthen Missouri's 1977 managed care consumer protections. I certainly think that the stiffening or altering the prompt pay requirements certainly does filter down to that health care consumer and make it easier for that person to obtain a health care service that they need. I know that was an area that a lot of states were working on this year, and we were very happy to see that Missouri was able to pass legislation.

Certainly, I think anybody, a very strong concern for persons with disabilities with relation to health care will remain the privacy issues. And I know, again, there was some legislation passed this year with relationship to keeping financial information of patients private. We're hopeful that there will be some other information, some other legislation pass.

There was an article in the paper this week about the drug companies that make Prozac, releasing some information. They sent out, I guess, a weekly reminder to certain people, and the lists are about taking their medication. And somehow everybody, all the names on that list were made public. So obviously people who were on that list certainly had some concerns about who is going to see this, who has access to this, and that doesn't relate specifically, I think, to privacy needed and insurance reform, but certainly it's a really good demonstration of the fears that people can have.

I think especially a lot of people with significant illnesses or disabilities about who is going to find out the information, what is the information going to be used for. Obviously there are still a lot of concerns about genetic testing and information being kept private and how that type of information can be used also. So we're very supportive of continuing efforts to pursue legislation related to privacy medical records.

And, finally, I think that certainly from our perspective, we try to help consumers. One of the things we do is try to help them if they are having problems accessing assistive technology through their private insurance or through Medicaid or whoever their health insurer is. We have referred people to departments, consumer services and to consumer hotline, and we do know of people that have been helped. I know Missouri, I think, has a reputation of having a strong consumer services area. And I know that departments throughout the state are facing some tough decisions in terms of budget cuts.

But we would just encourage the Department to maintain a strong consumer services or consumer hotline to try to make it as effective as they possibly can, because a lot of times when somebody does call the consumer hotline, they don't have any place else to turn. They have asked everybody else they know if this is an issue that they think they can resolve or if they get a certain service or device through their health insurer. So I will just encourage the Department to do everything they can to maintain strong consumer services.

DIRECTOR LAKIN: And you have that commitment from me.

Marty, on these advances in technology for assisted living devices and things, has that increased the cost or decreased the cost overall?

MR. EXLINE: It's been both actually. For instance, augmentive communication devices, there's probably certainly over 100 different devices from very simple 12-button boxes for persons with maybe children with limited vocabulary that they can push when they have a certain need, like, if they need a drink or if they are feeling pain or something like that. They are very sophisticated devices that cost thousands of dollars.

One thing that Medicare did when they started improving augmentive communication devices, at first they said they were only going to cover dedicated augmentive communication devices. They would not cover computers that were being used as augmentive communication devices. And then I think they realized that if they did cover computers with some software that could turn that computer into an augmentive communication device, then they could go from, perhaps, paying for a device that costs $6,000 to paying for a device that might cost $3,500. So it's going in both directions.

I think that in some areas it will keep coming down. Obviously, with new devices that come out on the market, they are usually pretty pricey at first. But generally within the first couple or three years you see a little bit of a drop so they become more affordable.

DIRECTOR LAKIN: Your comments about some companies covering certain things, but most not, reminded me a lot of what we went through when we worked on childhood immunizations in this state. It was very interesting, because I had went to people in the industry when we were talking about ways to increase our childhood immunization rates in the state. And I had a lot of companies say, you know, Scott, we would cover childhood immunizations up front, no deductible, no co-pay, but if we do it and our competitors don't, then we have a price disadvantage in the marketplace. And we don't feel like we can do that.

So that was one case where the industry, you know, did not fight a mandate because we mandated it across the board for every company to have to pay for childhood immunizations. And the lesson I got out of that was -- and I think we've got to be very careful on mandates that we don't put so many mandates on that it does make the cost of coverage more unaffordable -- but my point is that there are some issues.

And in the immunizations case, it was preventive health care that would save money over the long run. And, you know, I guess your comments reminded me of that, is there some common ground that we can work with in the industry to look at, Okay. These are legitimate areas that will save you money over the long term if this person is covered with insurance that we can look at it and maybe get some buy in and get some agreement across the board from the industry to provide some coverage on different items. And I don't know exactly what they are, but that we can work together on and get some coverage up front for some of these people for the heavy cost.

And the other thing on the childhood immunizations was the cost; again, it was spread appropriately, so it didn't raise the cost dramatically of any one person's policy.

MR. EXLINE: I want to just add, there is an assistive technology project in every state. And they have in a lot of states that have been working with purchasing groups, and not only trying to go through the legislature, but certainly working with purchasing groups and definitely looking at preventive assistive technology things like modification to a bathroom to make it safe for grab bars or bath stools or things that a person can't usually get through their insurance. Looking at simple things like railings or ramps for somebody, looking at the cost of, say, somebody who is elderly who falls and breaks a hip and trying to see if they can come up with any way of measuring what the potential cost segments would be to at least cover some of those items that can be looked at as a little bit more as preventive items.

DIRECTOR LAKIN: And the other thing that I've thought of is maybe not a mandate, but a mandate offer. There's a difference. And those people that wish those kinds of riders on their policy could -- you could provide that as a mandated offer where they could sign up for it and pay an extra premium to cover the cost of that.

And that would be a way to help fund it as well.

Any other questions from the panel members? Okay. Marty, thank you very much. Ken from the Missouri Association of Trial Attorneys.

MR. VUYLSTEKE: You're not going to try the last name?

DIRECTOR LAKIN: I'm not going to try the last name. I'm a smart enough politician. How do you pronounce your last name?

MR. VUYLSTEKE: It's pronounced Vuylsteke.

DIRECTOR LAKIN: I'm glad I didn't try it.

MR. VUYLSTEKE: I've got handouts here that might help you a little bit. My name is Ken Vuylsteke, and I'm the chairman of the HMO Health Law Committee and legislative liaison for the Missouri Association of trial attorneys. I'm also chairman of the Medical/Legal committee for the Bar Association of Metropolitan St. Louis. However, today I'm appearing in my capacity on behalf of the trial attorneys and what I do for them.

What I've given to each member of the panel here was what has been ordered to be printed as passed. That is the Senate Bill 1052, which is the Bipartizan Patient Bill of Rights that was recently passed by the United States Senate. As you all are well aware, the fight now moves to the House. And in the past a substantially similar bill has been passed by the House by 67 votes, and the sponsor of that, the legislation Republican Representative Dangle said that he and Norwood have both said that they would agree in total of this bill if it would be able to pass the House.

So I think it's appropriate at this time in anticipation with the public policy aspects of this meeting to talk about what -- if this bill is passed in this form or close to it, what is this going to mean to the Department of Insurance here in Missouri? What I've highlighted for you -- this is a 91-page act, so what I did was, the first three pages are basically the index to the Act. And what I have highlighted for you is Section 152, which is entitled, Preemption State Flexibility and Construction.

That portion of the Bipartizan Patients Bill of Rights talks about what happens if the State law of a particular state case, in this case Missouri, is in conflict or substantially compliant with this new Federal act. If you look at Subsection 15 -- it's under Subtitle Section 152C1, which I've highlighted for you in yellow in your packet. It talks about what happens if a state believes that their law is in substantial compliance with the Federal law. Because the Federal law states that unlike ERISA now, if State law is in substantial complicance with the Federal law, there is no preemption. So that Missouri State law will remain in full force and effect.

Under Subsection C1, which is, I think, the basis of my appearance here today, it talks about what happens when a state believes that its State law is in compliance with the Federal law. And, of course, Director Lakin is well familiar with House Bill 335, which I believe in legislation that was passed. And that's been codified in our state, and we have a lot of different provisions that are or may be substantially compliant with the Federal law.

The question that I think the Department of Insurance is going to have to address if and when this becomes law is, will the Department be proactive or reactive to the new law. Because if you notice under Subsection 152C1, which is in the upper right-hand corner you will see page 59 of 91, it's on that page. It says, A state may submit to the Secretary of Health and Human Services, a certification that a State law provides for patient protections that are at least substantially compliant with the Federal law. It does not require that the State of Missouri or any particular state submit particular provisions of State law that may be substantially compliant for certification.

So it's up to the Director, as I would believe, or at least up to the particular state, to determine will we submit to the Federal Department of Health and Human Services the provisions of our present managed care law to determine whether or not it is substantially complying with the new Federal law, and therefore will not be preempted.

You don't have to do that. You can go to the next page. In the upper right-hand corner is page 60 of 91, you will see that there exists a petition process under the Federal law where a group health plan, health insurance company, participant, beneficiary or enrollee can apply outside of the state. Can apply directly to the Department of Health and Human Services for an advisory opinion as to whether or not the State law is in compliance with the Federal law.

So in other words, you can go outside of the Division or the Department of Insurance to do so. I think there's a lot of problems with that. For one, it's an advisory opinion. Whereas if the Department of Insurance takes a proactive stance and looks at the law and asks for certification, we'll have certainty, not only from the side of, say, trial attorneys who are representing participants or enrollees in health plans, but also on behalf of the industry, of the managed care industry.

Absolutely, they are going to want to seek, I'm sure, certainty as to what State laws apply and what don't. The last thing they want is to be exposed to two different levels of oversight, both federally and statewide. The next question, I think, that has to be addressed is, how would the Division of Insurance, assuming they are the entity, which I believe they will be, that would seek the certification on behalf of the state, how would they go about seeking which laws they want to have certified, and what information would they supply to the Federal Government.

You can see there's some time limits in here. The Federal Government must act within 90 days after the submission of information or ask for additional time to approve or disapprove the request for certification. What would the Division or Department of Insurance do? Well, my suggestion would be that there would be -- hold public hearings or at least ask for public comments from industries, from interested parties, from enrollees, from all different patient and consumer groups as to what laws presently exist in the State of Missouri are, quote/unquote, substantially in compliant with the new Patients Bill of Rights.

I think that allows everyone to get a say to do things that are appropriate, which is to comment from all aspects. I think industry needs to have input. I think consumers need to have input. And we certainly need the expertise of the Department of Insurance here. As you know we have our own managed care division. They have a lot of experience already since 1997 in dealing with complaints and other portions of the law.

One other thing I'd like to point out in closing, which I think is very important in this law, if you look -- and I've highlighted this for you -- on page 60 of 91 that Subsection 4 where it says, Construction. It says, Nothing in this subsection shall be construed as preventing certification of a State law under this subsection solely because it provides for greater protection for patients than the Federal law.

Well, what does that mean? Let's take a look at the way our laws have been operating in the State of Missouri since House Bill 335 has been passed. The law says that you certainly can grieve a denied procedure with your health plan through internal procedures. Then you can go on to the State of Missouri, and you can grieve with the State of Missouri, who then the Department of Insurance has the option of turning a grievance over to an independent review board or entity, as described in the statute, for an advisory opinion to the Department of Insurance as to whether or not the denied procedure was properly denied.

That procedure exists here in State law, but it also allows in the State of Missouri for the enrolling our participant to bypass the internal grievance procedure and go directly to the Department of Insurance for that determination.

Now, I would suggest to this panel that that provides patients and consumers a greater amount of protection than is allowed in the Federal law, which requires an exhaustion of both internal and external review before you can go to court. Okay. So what we would talk about here is would be a bypassing of internal review process and be able to go directly to an external review which has been provided by the State of Missouri. The other decision, of course, does the State of Missouri want to keep in the business of external review or do they want to have that given to independent bodies that are approved by the managed care plan by consumers.

That's something that a policy decision is going to have to be phased. I just highlighted a portion of this Act, but the Director was talking about mandates to industries. There's a mandate by the Federal Government under this act for each state to review their laws and to see whether or not they are substantially compliant. And I would suggest that this is going to be time consuming for you, and that I would hope that you would ask for input both from the managed care industry and from consumer groups.

DIRECTOR LAKIN: Thank you very much. Any questions?

MS. ROUTH: I do.

DIRECTOR LAKIN: Andrea Routh?

MS. ROUTH: Can you hear me?

MR. VUYLSTEKE: Yes.

MS. ROUTH: Does MATA have a position regarding your last point whether or not we should maintain our review process, our external review or go in line with the Federal law?

MR. VUYLSTEKE: We have not made that stance yet or even talked about it, because we don't know that this has to go to the House. And they may or may not, you know, work on that, touch it up. So rather than jump the gun on that and establish a position, I felt at this time it's only appropriate to let you know that that is going to be an issue, though, we're going to be looking at.

MS. ROUTH: Do you support that provision of the Federal law right now as it's going through or have you not taken a position on that?

MR. VUYLSTEKE: You mean in terms of the external review?

MS. ROUTH: Uh-huh.

MR. VUYLSTEKE: Well, first of all, I can say that I don't speak for MATA. We have not taken an official position. Personally I have my own views, but I don't think it would be appropriate for me to say that under this discussion.

MS. ROUTH: Okay.

MR. VUYLSTEKE: What I wanted to do, and I understood from the Director's letter was, to basically put you on notice and highlight what is going to be important in public policy decisions for this Department. And the effective date proposed in this law is October 1st, 2002. So if you don't have enough work already, there's going to be a lot more it looks like. Anything else?

DIRECTOR LAKIN: I just say that, you know, obviously we have to wait to see whether there is a bill or not and whether the President signs the bill. And once that happens, obviously, we'll evaluate the situation and move accordingly. I appreciate your testimony, I really do.

MR. VUYLSTEKE: Thank you.

DIRECTOR LAKIN: Chris Long of St. Louis Area Business Health Coalition. Chris, welcome.

MR. LONG: Thank you. First of all, I'd like to thank Scott, you and the Department for inviting the St. Louis Area Business Health Coalition to be a part of today's meeting. I've had the pleasure to work with you in the past and many members of the Department. And we look forward to working with you in the future.

The St. Louis Area Business Health Coalition, just as a matter of background, we represent 42 separate employers in the St. Louis area that represent about 400,000 covered lives. So from that particular statistic, you get the idea that we represent most of the large employers and most of the major employers in the St. Louis area. And the coalition was founded way back in 1982 in response to large increases in health care costs in the St. Louis area. But I think most importantly, over the years the coalition has evolved into a leader in providing data, in providing information to not only the Department, but the state legislature, and we would like to continue in that particular role.

As a matter of background, the Coalition regularly takes part in national studies. They compare the St. Louis area and compare the St. Louis area in terms of health care costs, quality of care, patient outcomes, service utilization, other important relative data to other metropolitan areas like metropolitan areas across the country. Indianapolis, Denver, Rochester, various other cities around the country.

And I'm here today to talk from the standpoint that St. Louis at this point does not compare favorably with some of those particular areas in terms -- most notably in terms of health care cost increases. Most of our coalition member companies are seeing health care cost increases in the area of about 11 percent. But if you also take a look at some of the business group studies such as the National Federation of Independent Business, Missouri Chamber of Commerce, Associated Industries of Missouri, you see cost increases that are well above 11 percent. Sometimes in the 20 percent to 30 percent particular area.

And as we know, if you look at the role that health care benefits play for employers throughout the state, obviously, health care benefits are extremely important in terms of attracting businesses to the State of Missouri. Because more and more employers are doing their homework in terms of looking at states as they pertain to Workers' Comp costs, unemployment comp costs, health care costs. What is that going to do to their bottom line. And, obviously, what we're doing in terms of controling and regulating health care costs, play a large role in our ability to attract new businesses, and our ability to keep the businesses that we have here in the State of Missouri.

We already see some decisions going on right now, I believe, as a result of rising health care costs for employers. You see employers going from defined benefit plans to defined contribution plans. And you will begin to see that more and more in the future. Employers are basically saying to employees, you know, Here's what we can afford. I'm going to give you so much money in a particular month, and it's your ability to apply that to gaining your own health care coverage that is in your best interest.

All in all, however, employers view health care as a vital benefit tool. I think that's probably the most important thing I can say today. We're in a very tight economy right now. It's very difficult for especially small employers to attract and keep quality workers. And their ability to attract and keep those workers lends greatly to their ability to put a quality product into the marketplace and put an affordable product into the marketplace, and their ability to provide health care, to provide a 401K retirement plan, to provide various other types of retirement plans and various other benefits, lead directly to their ability to attract and retain quality workers.

One of the things I'd like to talk about, and we'll move kind of back and forth between regulatory and legislative issues. First of all, a regulatory issue I think is one of the things that the Department might want to take a look at. The St. Louis market has seen a rapid consolidation of health care plans in the very recent time period. Not unlike the economy across the nation as a whole. You know, Dan mentioned from the Hospital Association, the economy and the impact that the overall economy has on what goes on healthcare wise. And this is something that we're seeing that mirrors not only the economy as a whole, but the health care industry as a whole as well.

We believe that any further consolidation of health care plans in the St. Louis area and throughout the state must be reviewed carefully by the Department of Insurance. We believe this is consistent with the Department's role as an industry regulator. It may be that additional Department of Insurance resources with expertise in market concentration might be needed or perhaps some closer affiliation with perhaps the Attorney's General's Office, perhaps other like state agencies that can work in concert with the Department of Insurance might be necessary in this particular area.

Secondly, in terms of data and in terms of disclosure, we mentioned the St. Louis Area Business Health Coalition and the work that we have done in terms of providing information to our member employers and also consumers. Health care is entering the consumer age. And it's time that both the Department and employers realize that we are entering a new era of trying to disseminate information as best we can to health care consumers so they can make proper and prompt and prudent decisions as to their particular coverage.

Consumers will increasingly be taking more control of their health care purchasing decisions. We mentioned the defined contribution, the defined benefit issue. The technology for making health care price and quality information is available. And this is something that the Department might want to take a look at it in terms of its role and in terms of improving its service and enhancing its service to the people that they service.

The Department of Insurance as years evolve will be increasingly asked for data that can be used by consumers. The St. Louis Area Business Health Coalition recently utilized data from your counterpart organizations in eight states to profile a regional comparative performance of managed care. And I have an example of this particular publication. And, Scott, I'll give you a copy of this. And if any member of the panel would like an additional copy, I would be happy to provide that as time goes on.

We would encourage and support an expansion of the data that the Department makes available. And we would be happy to participate in any particular efforts to help augment some of the data that we have collected over the years and help the Department in terms of that particular endeavor.

In terms of legislative issues, it's been mentioned this morning, House Bill 335 back in 1997, Missouri's managed health care reform bill. Many portions of that particular piece of legislation are still under litigation. The St. Louis Area Business Health Coalition is a participant in some of that litigation pertaining specifically to the pharmacy provisions of House Bill 335 as they apply to mail order benefits. And obviously they, of course, will rule in their good time as to the merits of the mail order pharmacy benefit provisions of House Bill 335.

Our second concern with 335 regard the network adequacy for HMOs in rural areas. We would support regulatory or statutory revisions of those two sections. Both have cost consumers through higher premiums in terms of those network adequacy provisions.

Also I would throw in -- and, Scott, I'm glad you mentioned the fact in terms of the federal Patients Bill of Rights. Obviously that is something that's going to be under review by President Bush. And he has threatened to veto if the bill obviously goes over certain constraints. Obviously, in terms of the federal Patients Bill of Rights, employers in the St. Louis Area of Business Health Coalition have been concerned regarding employer liability provisions of the Patients Bill of Rights.

I've seen some statistics from the National Association of Manufacturers that have indicated that perhaps a full 38 percent of small businesses that currently offer health insurance coverage may perhaps drop that coverage if there is employer liability in the federal Patients Bill of Rights. And obviously, that's something that we have worked on as a bill moved through the Senate, and would obviously communicate to the House and obviously to President Bush.

Also on the legislative side, this is something that we have communicated over the years and other business groups have communicated over the years, health insurance mandates, health care mandates. Obviously, we are very much against state government opposed mandated health care benefits. Those particular benefits place state government in the role of health insurance benefit manager for employers throughout the state. Obviously, we are against that.

You see more and more employees and employers coming to agreement on health care benefit packages based on what that employer can afford, and what types of benefits the employee wants. You see more and more employers meeting with employees saying, Here are some of the cost restrictions that we face in terms of providing benefits to our workers. Here are some of the choices and allowing employees to make choices within those cost constraints.

This is something that should be allowed to continue as opposed to state government taking over that particular role. We would also encourage in the next legislature a long, hard look at perhaps a mandated benefits review committee or some form of cost benefit analysis as it pertains to mandated health care benefits. Because right now none such exist. We have certain provisions for that, an environmental regulatory law here in the State of Missouri, and we ought to take a long, hard look at that in terms of the health care area.

ERISA, the coalition is a strong opponent of any attempts, both on the state, which is probably unconstitutional, and the national level of weakening ERISA. Most often state governments look at ERISA employers as employers that try to escape somehow mandated health care benefits, state-mandated health care benefits and hide behind ERISA. But if you look at recent studies, most notably from Foster Dickens and some other groups, ERISA protected employers are leaders in terms of health care innovations, in terms of coming up with new health care ideas and ideals, to pass on to their employers again in the efforts to attract and keep quality workers. We would be very much an opponent of any state attempts to weaken ERISA.

In terms of market conduct, and this gets back into the regulatory area, the coalition is in favor of opening health plan market conduct exams to broader consumer participation. We get back to the idea of empowering consumers and involving consumers more in health care decisions. For example, we would favor a system of early notice to the public of planned exams and allow an opportunity for input prior to the exam. That will be something that the Department might want to consider, and we would be happy to provide more information.

In terms of contract termination, the practice by health plans and providers of terminating their contracts with each other in the middle of contracts with employers has become a significant problem. What's going to happen for covered individuals once their contracts are terminated. Do they receive a continuation of particular benefits? Are they left out in the cold? This obviously is something that is of concern to health care consumers, and a concern to employers in terms of making benefit decisions.

In terms of rate reform, it has been mentioned by previous individuals. Missouri has struggled with rate reform especially as it relates to small employers. Large employers are often affected by public policy in this area and feel it can be a productive voice at the table when these policies are obviously considered. Because what impacts small employers gets back directly to large employers. Because oftentimes those small employers are suppliers to large businesses.

In conclusion, the institute of medicine and a report published in the Journal of the American Medical Association in 1998 in part said, Quality of care is the problem in our national health care delivery system, not managed care. The recent backlash in the media and in the legislature towards managed care must be balanced. We believe that the Department of Insurance plays an important role in balancing the needs of sound regulatory oversight of HMOs where the flexibility that will allow innovation and best practices in managed health care.

Without such a balance, affordable quality health care will be less available to the consumers and not available at all to those who lose their insurance because of premium increases. And with that, I would attempt to answer any questions that the panel would have.

DIRECTOR LAKIN: Chris, you said that you represent now the St. Louis Area Business Health Coalition, and that is made up -- is it 42 businesses?

MR. LONG: Right.

DIRECTOR LAKIN: Covering about 400,000 lives?

MR. LONG: 400,000 lives.

DIRECTOR LAKIN: Do you have any kind of surveys or any kind of contacts with those 400,000 lives, and do they agree with all you have said here today?

MR. LONG: I think once you take a look at the information I'm going to give you, the St. Louis health care or regional comparison takes into account not only issues from the employer standpoint and cost issues from the employer standpoint, but it also looks at, for instance, availability of care, over utilization of, perhaps, procedures. But I think you will see a pretty balanced approach in terms of what's the impact not only to employers, but also the impact to employees as well. And I've learned this over the years in terms of representing business in the capitol and representing business, period, the employer that does not take some type of approach to what's best for his or her employees is not moving in the right direction. So that's something that we try to embellish in this particular report.

DIRECTOR LAKIN: Do you have -- again, do you have any kind of surveys or anything of the actual -- sort of the quality survey of the satisfaction of the people that are covered under these --

MR. LONG: Right. I would invite you to take a look at this. And if there's anything we can -- any gaps that we can cover up in terms of some of the questions you have after looking at this particular data, we would be happy to provide that.

DIRECTOR LAKIN: I'm asking a little bit more questions, because I'm trying to clarify, you know, exactly.

MR. LONG: Sure.

DIRECTOR LAKIN: The 42 businesses, that's made up of -- I mean, isn't McDonnell Douglas in that group and --

MR. LONG: Boeing.

DIRECTOR LAKIN: -- Boeing? There's big and little. Are there small businesses in that group?

MR. LONG: Mostly big. Mostly big. I would be hard pressed to tell you that we have had very many small employers. And you can divide 42 into 400,000 and get a workable figure.

DIRECTOR LAKIN: The reason I ask that is in '94 when we were doing health care reform, it was really interesting because we had one of the bigger employers from Missouri come to me and say, Scott, we've done the review. And we just can't support health care reform. And I said, Well, of course not. And he looked at me sort of strange.

And the reason being is I think that there is -- the interest of big businesses are different than the interest of a small business owner, because the big business, the Boeings and the Anheuser-Busch's, and the Hallmark cards and a lot of the bigger employers of the state, they get big discounts from insurers to insure that group. And those discounts are cost shifted onto the smaller employers in the small businesses that are subsuppliers to Boeings and Hallmarks and things like that.

And so I think the interest of the small business owner is different than the interest of the large employer.

MR. LONG: I would agree with your statement in terms of the fact that there are discounts available to large employers that aren't available to small employers. I would probably -- without knowing who the large employer is that you talked to, I probably would guess that their statement wasn't that they are against health care reform. It might have been against a particular version of health care reform.

DIRECTOR LAKIN: They were against it because it would cost them money. And my argument was this, that, yeah, it is going to cost you money in the short run as far as your bottom line. You might be paying more for your health care. But when you think about the small businesses or your subsuppliers, and if they are forced to pay extra for their health insurance, then they are going to pass that on to you anyway. Or if they are forced to go out of business because they can't afford their health insurance, then you lose a subsupplier that might have been a good subsupplier.

So I'm saying there's got to be some flexibility as we look at -- you know, and I'm not sure we can't, you know, have a big reform. I think, as we have done the few three years, a little bit at a time. But a lot of these challenges that I've tried to do over the last eight years as a legislator and now as the director, is just simply educate, not only the consumers as to what their choices are, but educate the purchasers of this coverage, which includes big businesses and small businesses as far as, you know, how this all works together and how it's intertwined.

MR. LONG: I think, Scott, if we had this discussion 10 years ago, I would say that most employers in the State of Missouri basically were not savvy in terms of health care cost, in terms of why their health care costs are going up, in terms of what they can do to perhaps control their health care costs and what the legislature was doing or contemplating doing concerning their health care costs.

I think you have seen over the last especially five years, you have seen employers becoming, I think, increasingly better at understanding health care. I think at one point an employer was basically signing the check, and they knew the check was either going up or going down, and they really didn't know why. But I know in terms of spending some time with our members of the coalition, I think most people in the room would be very enlightened in terms of their understanding of health care costs and their understanding of the direction perhaps the state from a regulatory and legislative direction was headed in terms of health care costs. I think large --

DIRECTOR LAKIN: And your comment, I think they do understand health finance. I'm not sure they understand the health care part of it or the cost aspect of it they understand very well.

MR. LONG: Talk to me about how -- I'll answer your question with a question. What's the difference between health care financing and health care cost?

DIRECTOR LAKIN: There's nothing. But when we are talking about health care, true health care, not health finance, you've got to make sure we're getting people that are sick healthier.

MR. LONG: Right. Right.

DIRECTOR LAKIN: And I think right now we have got incentives in place where the insurance companies are making their profit not on accepting risk and managing risk, but they are making a profit based on avoiding risk. They privatize the good risk, and they socialize the bad risk. And what we're seeing that now and it's effecting you-all directly in the St. Louis area on this whole issue of network advocacy where we're getting these mergers and all of the sudden, you know, we've got some real concerns regarding competitiveness over the St. Louis area now.

MR. LONG: Right. Right. Exactly.

DIRECTOR LAKIN: And so what I'm saying is, and what I'm trying to do as director, is provide a market that is not government-run health care, it's not government, you know, interference. But what we're trying to do is make the playing field level, provide an atmosphere where there can be competition, and that you-all have as businesses, both big business and small business, have choices for your employees when you go out to purchase your health care.

MR. LONG: Right. Because as I mentioned in my conclusion, our problem is quality of care, and that's our major problem. And I think that gets to the statement that you just made, if I listened correctly.

DIRECTOR LAKIN: But it also has to be affordable or it's not available, it's not accessible if it's not affordable.

MR. LONG: Exactly.

DIRECTOR LAKIN: Any questions? I took up my allotted time.

Molly?

MS. WHITE: Can you give me an idea of your member businesses, like, what's the breakdown with the plans that are fully insured or the plans that are going towards self-insured, and also are you aware of how many companies are taking the defined contribution route? Do you have that with you or --

MR. LONG: In terms of our -- the answer to your second question is that I don't have that information. The answer to your first question in terms of the breakdown between fully insured and self insured, it mirrors basically a lot of the data that you see. It's about a 60/40 split. About 60 percent of our companies are self insured, about 40 percent are in the open-insurance market, which is basically, from what I understand, mirrors a lot of the data that's out there in most states.

MS. WHITE: There are provisions in House Bill 335 that govern the provider contract termination. They allow for what you're saying, the continuation. And when you said that, I hadn't heard before that that was becoming a growing problem. But if you've got 60 percent of your member businesses that aren't covered by plans that have to follow that rule, that explains a lot about why that's causing trouble.

DIRECTOR LAKIN: Questions? Andrea?

MS. ROUTH: Chris, you mentioned you guys have a lot of data, and I know the coalition does. Are you aware of any studies or have you heard of anything about companies who provide maybe fitness activities, gyms, you know, stress release, et cetera, and how that relates then to their claims in their health insurance coverage?

MR. LONG: Not that I'm aware of. I know, though, from my own personal experience that more and more companies are doing things along those lines. I had the opportunity not too long ago to visit Bass Pro Shops in Springfield. And although this doesn't get specifically to your question, they have --

DIRECTOR LAKIN: Was that a business trip or --

MR. LONG: Yeah. Thank you very much. Don't pry into my personal life. I'm here representing a professional organization. But, you know, in terms of what they have done, they have purchased a day care organization, and brought that day care on the site, which I would assume would address, you know, some employees' personal concerns in terms of how, you know, families are being treated during the day and how families are taken care of during the day. But I think you see more and more of it. Companies that say, Okay, as a part of your compensation here with the company, you receive 25 percent off a membership at the local health care club or something along those lines.

So I think you're seeing more and more innovative retention strategies by employers. And they don't just pertain to the health care side. I think they just pertain to life in general, in terms of employers trying to find innovative ways to track and keep the right kind of people.

MS. ROUTH: To me it's not just a retention strategy. It's a productivity strategy.

MR. LONG: That's true, too.

MS. ROUTH: Your folks can work better if they are in better shape and they are under less stress or they are handling their stress better. But I've always been curious if anyone has looked at how that relates then to health care claims, because if we are all going to be concerned about the cost of health care, and then we all may have to participate in bringing it down. And so one of the ways to try to lower that rate of growth might be to invest in the preventive side, which would be, you know, helping folks get fit and --

MR. LONG: Right. I would agree with your statement and your line of thinking.

DIRECTOR LAKIN: A.W.?

MR. McPHERSON: Chris, if you can expand on what you meant when you said that we should be given early notice to consumers for market conduct exams?

MR. LONG: In terms of trying just to generate more information as market conduct exams are executed. It seems like often times, this might be a situation where notifying consumers, allowing consumers to come in at least in person or perhaps, you know, via written document might be able to attest to some of their positive experiences regarding HMOs, some of their negative experiences regarding HMOs. It seems often times that when those exams are conducted, maybe we're not notifying consumers as best as we could or maybe we might need to redouble our efforts in those particular areas.

DIRECTOR LAKIN: Any other questions of Chris?

Chris, thank you very much.

MR. LONG: Thank you.

DIRECTOR LAKIN: I appreciate it. Is there anyone else that would like to come forward and say anything to the panel? Any other issues that anyone would like to address? If not, I, again, would like to let you know that we will be available this afternoon at the Department if someone has specific issues or a specific person they want to talk to, we will make ourselves available. Thank you for coming today. And, again, we will be planning on having this type of forum more than just once a year, so we will be doing this more. And I appreciate you coming today. Thank you.