House Insurance Committee
February 5, 2025
Jill Thayer Jill Thayer, Bureau of Legislative Research. You should all have in your meeting folders a copy of the procedures for the fiscal impact statement process. Any bill related to the state Public School Life and Health Insurance Program, which is run by EBD, had a bill filing deadline of this past Friday, January 31st. Under the Joint rules, no bill that will impose a new or increased cost to that program can be taken up by committee until a fiscal impact statement has been provided.
The Legislative Council has approved a contract with the Segal Group to produce these fiscal impact statements, and they're in the process right now of gathering what they will need for their data request to EBD. And we'll start producing those fiscal impact statements in the next week or two. Under these procedures, which do have to be adopted by this committee-- the Senate Insurance and Commerce Committee adopted them yesterday. It just really follows what the joint rules have set out that you all just adopted.
But I will point out just a couple of things. Segal has been tracking these bills since the pre filing began in November and providing me with a list each day of bills they've identified. I've notified all of the sponsors prior these procedures if they do have a bill that falls under that. And those bills have been flagged on your agendas and on the Public Health committee agendas. Once Segal provides the fiscal impact statement, that will be given to the sponsor of the bill, as well as the committee chairs to which the bills have been assigned.
And then it will be up to the committee chairs, whether or not they want Segal to come to present the fiscal impact statements when the bills are presented to the committee. If there is a bill that comes before your committee that you would like to have a fiscal impact statement produced on the committee, a majority of the committee can make that request, or the committee chair can request it, and then your analyst Michelle will notify me and Scott will work on this. At this point we have about 27 bills that have been flagged. As I said, they're all indicated on your agendas. And Mr. Chair, that's really a highlight of these. I'll take any questions.
Representative John Maddox Any questions, members? Representative Achor, you're recognized.
Representative Brandon Achor Thank you, Mr. Chair. Jill, what about shell bills that were filed that may apply when that language is engrossed? Who will be reviewing that? And I'm understanding from BLR that that still met the deadline requirements. And is that language being reviewed and will we be contacted when that's assigned a fiscal impact need?
Jill Thayer There are, I believe, three bills that have been identified that were shell bills that could potentially affect that. They were filed before the bill filing deadline. Segal has those on their list, as do I, and we'll just be tracking for any amendments that fill in the content, and then they'll make a determination of whether they need a fiscal impact.
Representative John Maddox Thank you. Any further questions? Representative Warren, you are recognized.
Representative Les Warren Motion to approve the fiscal impact procedures.
Representative John Maddox Okay. We have a motion to adopt these procedures. That's a proper motion. Any discussion on the motion? Okay. All in favor, say aye. Any opposed, say no. Thank you. Thank you, Miss Thayer. Members, a couple things, just reminders. I think we all know this, but HB 1353, unfortunately we're going to have to come back after session to hear that. Representative Eubanks could not be here this morning. But he has witnesses in town. So we're going to do that after session. So I apologize for that. But that is how we're going to have to accommodate him. HB 1177, we're not going hear today. And I believe one we can take fairly quickly is Representative Rose. Are you? Yes. Representative Rose, would you come to the table, introduce yourself and present your bill?
Representative Ryan Rose Thank you, Mr. Chair. Thank you, committee. I believe I've spoken to most of you and I've emailed and texted with others. Presenting HB 1309. The title of the bill is to amend the Law Concerning Coverage of Examinations for Breast Cancer and to clarify the cost sharing requirements for examinations for breast cancer. So, in short, this bill helps to ensure full coverage for breast cancer screenings.
Last session, we eliminated co-pays for mammograms to remove the financial barriers to breast cancer screenings. Kind of in response to that, costs were shifted to co-insurance. And this creates an additional financial burden for women. And so this bill closes that loophole, ensuring that women can access breast cancer screenings and diagnostic follow ups without out-of-pocket costs. So what this really does is it prohibits insurers from charging copays, deductibles or coinsurance for mammograms, breast ultrasounds, and diagnostic MRI's that are related to breast cancer detection. It also prevents any cost shifting.
And this has a very narrow focus in that it only applies to breast cancer screenings and diagnostics, not for any unintended expansions. Bottom line, and I'm about to be open to any questions, but it's a pretty straightforward fix that protects women's access to lifesaving breast cancer screenings. And something to understand is that these are preventative in nature. Early detection literally saves lives. And so the sooner that women can detect breast cancer, more lives will be saved. Better treatment can happen on the front end.
That also staves off much more expensive and aggressive treatment that would take place in a later stage of discovery and at that later stage, much less likely of the same results that we can get when we detect it early and we save lives. It also reduces health care costs. And we remove financial barriers for women having early detection. I appreciate your time and consideration for this. I'm open to any questions.
Representative John Maddox Thank you, Representative Rose. Are there any questions from the committee? Seeing none, is there anyone here to speak for or against this bill? Seeing none, what are the wishes of the committee? I have a motion do pass. That's a proper motion. Is there any discussion on the motion? Okay. All in favor of Representative Rose's bill? All opposed. Hearing none, congratulation, Representative Rose, your bill is passed.
Representative Ryan Rose Thank you.
Representative John Maddox Next up, without objection, we will take Representative Johnson's House Bill 1184. If you would, please come to the end of the table. Please identify yourself and you may continue or may start.
Representative Lee Johnson Representative Lee Johnson, District 47. I have someone here with me today. If it's okay with the committee, I'd like to have him introduce himself.
Representative John Maddox No objections from committee. Please identify yourself.
Greg Raymer Thank you. My name is Greg Raymer. I am with the Mortgage Bankers Association of Arkansas.
Representative Lee Johnson Members, this issue, it's nice for me to be up here and talk about something outside the health care realm. This is an issue that came on my radar when one of my sons purchased a house this past year. We were warned by the closing company to be on the lookout for phone calls, for emails, for texts from people passing themselves off as potentially the new owner of the loan.
Apparently, what happens in this segment is once you apply for a mortgage and a credit check is run, there are third parties that can purchase your information and then, in an unsolicited way, reach out to you to solicit your business. And sometimes in the way they portray that, the practice is somewhat deceptive in the sense that it does make it sound like this is the new person now that owns your loan.
We were counseled to not take any calls from anyone that wasn't specifically related to the person that we were told was the loan officer through the closing process. And so when this issue was brought to me, it was something I wasn't familiar with and wanted to try to help correct.
So what we're doing here is we're just adding some language that presents some requirements for people that are presenting themselves in this way to be upfront in how they present, and then create some penalties around that as well. And I have someone here with me who can answer more questions in a more intelligent way. So I'll have him introduce himself and explain the issue a little better. Thank you.
Greg Raymer Thank you, Representative Johnson. What we are here today discussing is the practice of what are called trigger leads. And if you've purchased or financed a home in the last three years, perhaps you firsthand experienced this for yourself. But in case you haven't, I know the agenda is long today, I'll be very brief. But I do want to briefly describe the problem here and why it's a problem. So this all begins when a mortgage applicant completes an application with their lender of choice.
And as a part of that application process, the mortgage lender has to access a copy of their credit report. That is the trigger in this process. Companies like Equifax can tell the type of loan that you're applying for, and they will sell your contact information as a lead to someone who seeks to purchase leads like that. Here's why it's a problem. Those who purchase these leads place calls to these borrowers during the application process, and the calls are intentionally deceptive. This is done to try to make the applicant believe they're talking to someone who is associated with their mortgage lender. For instance, the caller may say, I'm working on your home loan and need more information. That's an actual quote. This is done in an attempt to get the applicant to share enough information with the caller so that the caller can make a loan offer right there on the phone.
And as you might guess, the offer is going to sound too good to be true so that the applicant continues the call. Vulnerable or less savvy applicants may unintentionally share sensitive information with someone they're not doing business with and have no intent to do business with. Our applicants have repeatedly expressed frustration about this practice. But our lenders, us as a lender, we have absolutely no control over it. Often the applicant will receive 10, 20, or maybe even as many as 30 phone calls or text messages in the 30 minutes following the completion of their mortgage application.
Now, we can't completely stop this practice altogether. To my knowledge, that would require action at the federal level. But we can put some common place protections in place for our fellow Arkansans. This bill would require the caller to state their name and their company name, state how they obtained the customer's contact information, i.e., the explanation of a trigger lead, state that the call is a solicitation and based on personal information about the consumer that was purchased from a consumer reporting agency without the knowledge or permission of their lender, broker or banker, and state that they are in no way affiliated with the creditor that the applicant actually applied with.
I'm a 25 year practicing mortgage originator here in Arkansas. I am more than happy to answer any questions you may have about this, and ask you to please support the passage of this bill. Thank you.
Representative John Maddox Are there any questions from the committee? Representative Wooten, you're recognized.
Representative Jim Wooten Isn't there any way to control Equifax and that bunch other than going through the federal government? And I agree with your effort on your bill, but it looks like to me we need to get to the heart of the source of who's selling that information that should be given, in my opinion, confidentially to Equifax and the others.
Greg Raymer I share your belief that a mortgage application is something that should be private between an applicant and their mortgage lender. I can tell you through doing advocacy at the federal level as well, I don't think we're likely to see a bill at the federal level that will completely prohibit this practice.
There is a bill that was in the House as of last session before they adjourned. It did not get passed. I'm hopeful that something will happen in this session at the federal level, but I can tell you that that will only require consent from the borrower or require the caller to have a previous relationship with the borrower. So they'll still be able to receive these calls if they consent to receiving them, or if the person or the company who purchased the trigger lead has an existing relationship with that borrower. So it will cut down on them. It will not completely eliminate them.
Representative Jim Wooten Well, unless the current administration in Washington can make some changes, I don't see the federal government changing their position. Is that correct?
Greg Raymer That's probably hearsay for me to say.
Representative Jim Wooten Thank you very much. Thank you, Mr. Chairman.
Representative John Maddox Thank you, Representative Wooten. Representative Ladyman, you're recognized for your question.
Representative Jack Ladyman Since you recognized me, I'll ask a question.
Representative John Maddox I have that on my list.
Representative Jack Ladyman Well, my son works in this industry and been in it for years. And this is the number one complaint that he gets from people that he works with. Is that high on your list and other lenders? Is that like the number one complaint you get from consumers?
Greg Raymer Without a doubt, it is the number one complaint that we receive, for sure. I mean, most of us have template language that we use when we receive an application. Now we'll just copy the text over to the borrower and say, look, I'm going to pull your credit report. You're going to get a bunch of phone calls. Just know that they're not from us. It's certainly an added burden on our behalf. But at the same time, it doesn't stop the phone calls that come to us of applicants saying, what did you do? Who did you sell my information to? And the truth is, we haven't done a thing.
Representative John Maddox All right. Thank you. Representative Eaves, you're recognized for your question.
Representative Les Eaves It is there a penalty if someone violates this?
Representative John Maddox I can answer that question if I can get my mic on. This is enforced by the Securities Commission. They can impose up to a $10,000 fine or/and they can suspend or revoke a license. So those are the penalties at their disposal. They can also issue a cease and desist.
Representative Les Eaves But that language is not in here. That's referenced I guess in some other--
Representative John Maddox Because we're doing this under the Fair Labor Act, that's a reference back to that act. That's who does that enforcement.
Representative Les Eaves Walk me through how that would work if I received a phone call that violated this law? Do I report it to my lender or?
Representative John Maddox Yeah, I may have to have somebody else answer this officially, but I think the way that would work is the report would eventually be to the Securities Commission. And then they would investigate and have some sort of adjudication.
Representative Les Eaves I guess I'm asking, how would I initiate a complaint or who would I talk to first if I got this phone call or my parents got it or something like that?
Greg Raymer Well, you're probably going to contact your lender and ask what to do next. The lender would refer you to the Securities Commission to make the formal complaint.
Representative Les Eaves Okay Thank you.
Greg Raymer And we've done things similar. If you own a home, you know that you're subject to junk mail, and a lot of that junk mail is deceptive as well. And those fall under the attorney general's office, and we've had to refer things to the AG's office for deceptive practices in the past. Thank you.
Representative John Maddox Thank you, Representative Eaves. Representative Achor, your mic's lit up. Do you have a question?
Representative Brandon Achor Oh, no. Sorry. Representative Eaves stole all of my words.
Representative John Maddox Thank you. All right. Any more questions for the committee? Seeing none, is there anyone in the audience that would like to speak for or against this bill? Seeing none, Representative Johnson, you're recognized to close for your bill.
Representative John Maddox I'm close for my bill to make a motion do pass.
Representative John Maddox I have a motion do pass. That's a proper motion. Is there any discussion on the motion? Seeing no discussion, all those in favor say aye. Opposed? Congratulations, Representative Johnson, you've passed your bill. All right. We're going to move on to Representative Cavenaugh. Are you ready to take a seat at the end of the table? Please recognize yourself or identify yourself and present.
Representative Frances Cavenaugh Thank you, Mr. Chair. I can't speak this morning. State Rep Fran Cavenaugh, District 30. This bill is, as you see, it's a simple one page bill. What it's just requiring is that if there is a preferred or perfected lien holder, when there is a claim made on a motor vehicle claim that that perfected lienholder's name be on the check when it's issued. So it would be on the customer and the lien holder. And that only applies to lien holders that have a physical location in the state of Arkansas. And that's what the bill does. And I'd be glad to answer any questions.
Representative John Maddox All right. Any questions from the committee? Seeing none, is there any-- oh, Representative Ladyman. You're recognized for your question.
Representative Jack Ladyman Representative Cavenaugh, I mean, I like your bill, but how would this work? Would the insurance companies know the lien? I mean, how would that work?
Representative Frances Cavenaugh Yes. In the state of Arkansas, it's really easy to find out who the lien holder is. If there's a lien on the state, you can get a search account with DFA, put the VIN number in and it pops up. In the dealership world, we use that all the time to help us with title problems. So that is easily done. And in the current process, most insurance companies or all insurance companies have a way to find the lien holder when it's a total loss.
Representative John Maddox Thank you, Representative Ladyman. Representative Eaves, you're recognized for your question.
Representative Les Eaves I'm surprised this is not already the case. I remember having vehicles that were either totaled a wreck or whatever and you get a check from the insurance company. It had my finance company on there. Is that just something they were doing on their own and this would force them to do it? Or is that not the case?
Representative Frances Cavenaugh That is usually the case on a total loss. But if we're talking about a partial loss of a $6,000 check when you've got a $10,000 loan, usually those checks are only made out to the customer, does not have the lien holder's name on it. And then what is happening for most of those checks, I would say a good portion of them, is the customer is cashing those, not applying it to their debt, and then a lot of lien holders and finance companies are then being told to come in, please pick up the car. It's going to be a repossession. And so if you are able to add the lien holder's name on the check, then it could be applied to their debt. Or it could also help facilitate getting that vehicle repaired rather than, actually, what happens in the long run is it hurts the consumer's credit because they have a ding on their credit for a repossession.
Representative Les Eaves Thank you.
Representative John Maddox Thank you, Representative Eaves. Representative Perry, you're recognized for your question.
Representative Mark Perry Thank you, Mr. Chair. Representative Cavenaugh, we spoke about this a little bit. So is there a minimum amount that would be added, like, the claim was 2,000, 3,000. You made a reference to 6,000. But even for a $400, $500 claim, they're going to have to track down the lien holder to get a signature on a check. So if I'm a local body shop and or I have a damage to my car and y my lien holder is in northwest Arkansas, I've got to mail that check to them, get a signature, get a return back, which, in the mail time, that's another 5 to 10 days of rental car that I've got to pay for, or another insurance company has to pay for it. So is there a minimum amount listed in this?
Representative Frances Cavenaugh No. And I will say that's why I limited it to the state of Arkansas lien holders. And I will say lien holders in the state of Arkansas, if that check is already made out, we have a process already in process that if someone has our name on it and are at a body shop, we already had that process set up so it doesn't really delay it anymore. And from a secured lien holder process, we're the secured lender. We're the ones is at risk on that loan. It is not the insurance company. It's not the body shop. It is actual the person who took the risk in financing that automobile.
Representative Mark Perry So follow up on that. So you have a process worked out. But that doesn't mean everybody's got a process worked out. So that would entail more time and headaches, as far as getting a check signed from a minimal amount of claims.
Representative Frances Cavenaugh I would say most lien holders, if not all, have had this happen when there's already been claims made with an insurance company. And so they already have that process in place where we're not really asking anything different than that if you're a perfected lien holder in the state of Arkansas, that your lien is perfected for a reason. It's so that you actually can have that that money applied to a debt that is owed to you. And that's all we're asking that that do, is either repair the vehicle or have it applied to the debt.
Representative Mark Perry Thank you, Mr. Chair.
Representative Mark Perry Thank you, Representative Perry. Representative Achor, you're recognized for your question.
Representative Brandon Achor Thank you, Mr. Chair. Representative Cavenaugh, is there any requirement here for when this check is issued, will it be mailed to the lien holder or is it still going to be mailed to the insured individual? The 'or' language seems, in my experience, that that check could be cashed by either or person. They don't need both to sign off on it. Is that correct?
Representative Frances Cavenaugh Currently, the way that those checks are made out is made in both our names, and both of them had to sign off on the check. And they normally get mailed to the consumer, and then the consumer will come to the lien holder and say, can you sign off on this check?
Representative Brandon Achor So it's more of a kind of holding the insured individual's feet to the fire to come to the table and say, hey, we both need to sign off on this?
Representative Frances Cavenaugh Yes.
Representative Brandon Achor And you're confident that the 'or' language doesn't allow them to do it individually, that it doesn't have to be 'and'?
Representative Frances Cavenaugh That is my understanding, Yes. But I can verify. But that is my understanding.
Representative Brandon Achor Yes, in my experience with dealing with this exact scenario, I think the 'or', the consumer may still be able to make the argument that the law allows them to cash it entirely, and that might undermine a little bit of the intent.
Representative John Maddox Thank you. Thank you, Representative Achor. All right. So is there anyone in the audience that would like to speak for or against this bill? Seeing none, Representative Cavenaugh you're recognized. Oh, okay. I see an audience member. If you would please come to the table, please identify yourself for the record, and you may start.
Derek Smith Thank you, Mr. Chair. Committee, my name is Derek Smith. I'm an attorney with the Mitchell Williams law firm here in little Rock, Arkansas. And I'm here speaking on behalf of State Farm Insurance Company. I think Representative Perry's points sort of reflects what our concerns are. In in the last two years, State Farm has made over 80,000 physical damage claim payments in the state of Arkansas. Individual loss claim payments.
Under this bill, they would have to conduct a lien search for each one. And before the consumer would receive the payment to repair their vehicle, they would have to send the check to the lien holder and get that back. So it's a lot more work than I think people anticipate. And the delay to our policyholders is of significant concern to us.
Representative John Maddox All right. Would you be open to questions?
Derek Smith Yes, sir.
Representative John Maddox Any questions from the committee? Representative Achor, you're recognized for your question.
Representative Brandon Achor Thank you. Derek, would you argue that it's not already in the fiduciary responsibility of the insurance company to make sure that they're issuing the check to the real risk holder?
Derek Smith It depends on the product. So first party claim, we know who the lien holder is. That's our policy holder our obligation is to. And in those cases you typically do see it. Third party claims, our obligation is to our policy holder to make sure they pay the damage debt. Once we do that, what happens is really not our concern.
Derek Smith Okay. I guess that's where I would disagree. I would think that it's the fiduciary responsibility of the insurance company to make sure that the claim is paid. And if there's a lien on that, then I don't see the difficulty of a massive company like State Farm not being able to execute that expeditiously.
Representative John Maddox Thank you, Representative Achor. Are there any questions from the committee? Seeing none, thank you for your testimony. Is there anyone else here to speak for or against this bill? Seeing none, Representative Cavenaugh, you're recognized to close for your bill.
Representative Frances Cavenaugh Thank you, Mr. Chair. This bill simply can't be summed up much better than Representative Achor just did. This is really about trying to even the playing field. When the insurance companies say that it's going to put a burden on them to find a lien holder, I will just leave you with this. On a third party claim when it's a total loss, they can find us. If they can find us on a total loss, they can find the lien holder on a partial claim. And with that, I would appreciate a good vote.
Representative John Maddox What are the wishes of the committee? I have a motion do pass. That's a proper motion. Any discussion on the motion? Seeing none, all those in favor say aye. All opposed, say no. The ayes have it. Congratulations, Representative Cavenaugh, you have passed your bill. Representative Beaty, I believe you have a couple bills to present. Which one would you like to do first? Just introduce yourself and present your bill, Representative.
Representative Howard Beaty Thank you, Mr. Chair. Representative Howard Beatty, District 95, Ashley, Chicot County. Today I'm presenting House Bill 1378, which is to amend the composition and meeting requirements of the State Board of Finance and repeal requirements for the employment of a chief compliance officer by the State Board of Finance. House Bill 1378 basically makes four updates to the State Board of Finance. One, it lowers the required number of board members to make a quorum from 7 to 6. The board in the past has struggled to reach a quorum because members have other responsibilities in state government. One member, the insurance Commissioner, can only vote on health benefit plans, so there are some restrictions.
The second thing the bill would do, the securities commissioner on the board, it would replace securities commissioner on the board with the secretary of TS&S. I think Act 475 of 2023 transferred the administrative duties of the State Securities Department to the State Bank Department, and allowed the Bank Commissioner to act as the Securities Commissioner. So this will ensure that two board positions are not held by a single individual on the board.
And the third thing is, it permits the governor to have a designee to serve on the board. So it would allow flexibility in event that the governor's schedule prevents attendance at a meeting. And then the last thing is it eliminates the requirement that the chief compliance officer be employed by the board. The compliance officer is the position that's authorized for the treasurer of the state, and it's not practical for the chief compliance officer to be paid by the treasurer of the state, but employed by the State Board of Finance. So those are the four things that that bill would do. With that, I would entertain questions.
Representative John Maddox Thank you, Representative Beaty. Any questions from the committee? Representative Wooten, you're recognized.
Representative Jim Wooten Thank you, Representative Beaty. How did you arrive at the decision to make it the Transformation and Shared Services secretary on that board?
Representative Howard Beaty On that board? As far as the TS&S, I think that was just the agency that was handling the transition and to designate that individual. I don't think there was any great effort or thought placed into that. I just think that was the board that was designated.
Representative Jim Wooten Okay. Could you refresh our memory as to who all the members are?
Representative Howard Beaty It's in the bill. But I think it cites the members of the board. The governor is a member of the board, the treasurer of state, the auditor of state, the bank commissioner, the Secretary of the Department of Finance and Administration. Secretary of the Department of Transformation & Shared Services will be the additional person if this bill passes. Also requires one person with knowledge or experience in commercial banking, a person that holds a series seven licensure as general securities representatives. And that person has to have at least five years experience as a general securities representative. One certified public accountant, who is licensed in Arkansas, has at least five years of experience as a certified public accountant. One member of the general public. The Insurance Commissioner is only a voting member on health benefit plans. And those are the members of the board.
Representative Jim Wooten Well, most of them have qualifications like DFA and auditor and treasurer. What experience does the Transformation Secretary have as it relates to finances of billions of dollars?
Representative Howard Beaty I think that they're a key player in state government. And actually in Transformation and Shared Services, they touch all the different agencies of the state. So I think they have an important role for the state.
Representative Jim Wooten Well, do they have any financial experience relative to interest rates and money investments and that type?
Representative Howard Beaty I think by sitting on this board, they'll get some good experience. And I don't know the qualifications of the current secretary.
Representative Jim Wooten So the board is going to be used as a training ground for the transformation secretary.
Representative Howard Beaty I don't think it'll be a training ground, sir. No.
Representative Jim Wooten Is the purchasing department in Transformation?
Representative Howard Beaty I don't know. You probably have more knowledge in that area than I.
Representative Jim Wooten Well, I just have some questions about, not the fact that it's a cabinet member, but the fact of the one that was selected. But that's fine. Thank you. Thank you, Mr. Chair.
Representative Howard Beaty Thank you, sir.
Representative John Maddox Thank you, Representative Wooten. Any further questions from the committee? Representative Lundstrum, You're recognized.
Representative Robin Lundstrum Thank you. Can you give me some background as to why the Securities Commissioner was taken off? I would have thought that would have been an and, then add that. I'm not understanding that.
Representative Howard Beaty The securities commissioner and the bank department are now one person. So the reason they moved securities commissioner is the bank commissioner serves in a dual role in that position.
Representative Robin Lundstrum Could that be split out so that we'd have somebody that understands securities and has that experience?
Representative Howard Beaty If we went back and repealed Act 475 of 2023, I think that could be an option.
Representative Robin Lundstrum Well, we do that type of stuff all the time. I just wondered what the logic was.
Representative Howard Beaty That's the logic.
Representative John Maddox Representative Wooten.
Representative Jim Wooten Representative Beaty, one more question about the compliance officer. What were they complying with or checking on or making sure that the board complied to?
Representative Howard Beaty I think overall general compliance on the board.
Representative Jim Wooten Do what now?
Representative Howard Beaty Overall general compliance of the board in that position with the treasurer's office.
Representative Jim Wooten Okay. All right. Thank you.
Representative John Maddox Thank you, Representative Wooten. Any further questions, committee? Okay. Seeing none, what is the will of the-- well, let me ask. I don't believe there is, but is there anyone who signed up? Anyone who would like to speak against this bill? Okay. Representative Beaty, are you closed for your bill?
Representative Howard Beaty I am closed and I would appreciate a motion and a good vote.
Representative John Maddox Thank you, Representative Beaty. Representative Wooten, you're recognized. And we have a motion do pass from Representative Wooten. All in favor, say aye. Any opposed, say no. Congratulations, you have passed your bill.
Representative Howard Beaty Thank you, committee. The next bill, if I can move right on, is Senate Bill 133. Senate Bill 133 is to amend the Uniform Commercial Code to define a central bank digital currency under the Uniform Commercial Code and to modify the Uniform Commercial Code definitions of money and deposit account. Been a little bit of false information that's been spread out on this bill.
To give a little background information, as policy makers in the US and around the world start looking at forms of digital asset called central bank digital currency, or CBDC, CBDCs are digital assets that would be issued by a central bank, so the Federal Reserve, and would remain as a liability on the central bank's balance sheet. So, contrary to popular belief, CBDCs are not intended to digitize the dollar, as the dollar's largely digital today. Instead, the issuance of a CBDC would fundamentally rewire the banking system and financial system of the US by changing the relationship between the individual customers and depositors of the bank and the Federal Reserve.
While there are several different potential models for CBDC, I think in January of 2022, there was a discussion paper by the fed that indicated it was exploring such a model where CBDC would be a liability to the Federal Reserve and would widely available to the general public. The fed promised not to move forward without clear support from the executive branch and Congress, ideally in the form of specific authorizing law. The Bankers Association responded to the Fed's paper, and its continued to advocate that there is no compelling case for a central bank digital currency.
Why it matters and why we need this language in there, the implementation of a CDBC would change the very nature of the banking industry and financial system and economy. Proponents claim that they could bring benefits. Many of these benefits are just theoretical in nature, and would be hard or impossible to realize. The risk associated with the issuance of a CBDC are tangible. In many cases, they're unavoidable. Importantly, the issuance of CBDC would set the fed up as the direct competitor for bank deposits and deposit accounts. Because CBDC would be a liability of the Federal Reserve, it would inevitably sit on the Fed's balance sheet instead of at your local bank.
Even if delivered through the bank to the fed, CBDC would be more akin to your cash sitting in a safe deposit box rather than your actual bank deposit account. This deposit substitution would drain the nation's deposit base and limit the bank' ability to make loans and make economic impact in their communities. Generally, it's unclear what policy goals a CBDC would achieve in the US that can't be better achieved by other means.
CBDC would enhance weak and non-existent financial systems in the US, and CBDC does not appear well-positioned to enhance the underlying financial capabilities or extend the reach of financial services to well-deserved markets in the US. A couple of things that this bill specifically will do. The bill does three things. It defines what a CBDC is. It clarifies that a CBDC is not money in an Arkansas bank. And it clarifies that CBDC is not a deposit account in Arkansas. By clarifying that CBDC is not money in Arkansas in the Uniform Commercial Code, it places a constitutional speedbump, so to speak, in the way our federal government implements CBDC in the state.
Other states have done similar rules and laws. This law pretty much models what Florida did in their system. This is not implementing the language of the 2022 UCC, which would have smoothed out and laid the road work for CBDC. The Banking Association has spoken in favor of this bill. There's no opposition. And with that, I'll entertain questions.
Representative John Maddox Thank you, Representative Beaty. Representative Wooten, You're recognized.
Representative Jim Wooten Representative Beaty, could you explain that in a country boy's terms exactly what you're trying to keep from happening in ten words or less?
Representative Howard Beaty I can. Basically what we're trying to do is to keep the federal government from coming in and creating a central bank digital currency and having control. Because once they have that central bank currency out there, pretty much they have access they can control.
Representative Jim Wooten I think you went over ten words.
Representative Howard Beaty I did. It basically gives them control of your money because they can tell where you're spending it, where it is. They've got control and they can limit you on where you could spend it. So it's maintaining control in the systems that we have in the state and the financial system we have here in Arkansas.
Representative Jim Wooten So it's trying to keep the fed out of the Arkansas banking business mainly?
Representative Howard Beaty Yes, sir. That's well said.
Representative Jim Wooten They can make the rules and regulations up there, but that's up there. Where here, it's our ball game, correct?
Representative Howard Beaty This is a protection bill for Arkansas depositors and banks.
Representative Jim Wooten Okay. Thank you. That's what I wanted to hear. Thank you.
Representative John Maddox Any other questions from the committee? Seeing none, is there anyone who would like to speak against this bill? Seeing no one, would you like to close for your bill?
Representative Howard Beaty I'm closed. And sorry I went on for so long with this, but there was some false information out there. I felt like it was to lay the groundwork, put all of it out there. So I'd appreciate a motion and a good vote.
Representative John Maddox Thank you, Representative Beaty. Representative Ladyman, You're recognized. Motion do pass by Representative Ladyman. Any discussion on the motion? Seeing none, all in favor motion do pass? Any opposed, say no. Congratulations, you have passed your bill.
Representative Howard Beaty Thank you, Mr. Chairman. Thank you, members of committee.
Representative John Maddox Represent Johnson, do you want to go to the end of the-- I think you have a couple you'd like to run? Members, I spoke with Representative McAlindon. She is not wanting to run 1307 today. So I'll try to keep you posted on that. I believe you have a couple bills, Representative Johnson.
Representative Lee Johnson I do.
Representative John Maddox Which one would you like to start?
Representative Lee Johnson House Bill 1287, please.
Representative John Maddox Okay. Thank you. You may proceed.
HB 1287: Requiring healthcare providers be notified of “downcoding” service (Passed)
Representative Lee Johnson Representative Lee Johnson, District 47. Members, this is one of what I hope to be several bills that I can bring before this committee over the next few weeks that have been discussed, negotiated with carriers in our state. I don't believe there's any opposition to this bill.
This bill, right now, there's currently a requirement if you submit a claim to an insurance company and they deny that claim, they have to notify you as the provider that that claim is being denied. That gives you the opportunity to ask why, to appeal the denial. This just adds a stipulation that if they down code a chart-- so what that means, and we define it in the law because it's a new term for the statute.
If I submit a claim and I think I provided service to charge up to like a level two-- in the ER, there are five levels of service. Level one is the highest. Level five is the lowest. I submit the claim as a level two charge, and then the insurance company says, you know what, I don't think you did enough to merit level two, we're going to down code that to a lesser paid charge of level three, this just requires that they give us notification they're doing that so that we can have an opportunity to look at that, try to understand why, and if need can appeal that process. And I'd be happy to try to answer any questions.
Representative John Maddox Thank you, Representative Johnson. Any questions from the committee? Seeing none, there's no one signed up, but is there anyone who'd like to speak against this bill? Representative Johnson, you're recognized to close for your bill.
Representative Lee Johnson I'm closed for my bill and make a motion do pass.
Representative John Maddox A motion do pass by Representative Johnson. All in favor, say aye. Any opposed, say no. Congratulations. You have passed your bill. Senate Bill 48. You may proceed.
Representative Lee Johnson Members, this is a bill I'm helping co-sponsor with Senator Boyd. This is a transparency bill. This bill is intended to try to make sure that insurance companies are disclosing fully all the deductibles that are tied to a policy. Where this might come up is if you had an add on policy, so say for wind or hail damage. Sometimes those are something that is tacked on towards the back of the policy. The deductible is presented at the front. You as the insured might expect that the deductible is all you have to pay, and this back end deductible sometimes can catch you by surprise. This is just requiring disclosure upfront of any deductibles in the policy to the person that owns the policy. And I'd be happy to answer any questions.
Representative John Maddox Representative Eaves, Representative.
Representative Les Eaves Thank you. I just noticed you changed, or I guess Senator Boyd did, from a residential property to an owner occupied residential property. Is the intent to leave out rental properties or what's going on there?
Representative Les Eaves So this is a great question. You might have seen me slip to the back of the room to visit with some folks from AID. And I'm going to ask them to come to the table and help me try to answer that. My understanding is there are other other places in the statute that perhaps cover this for commercial properties, for owners of other rental properties. I don't think the intent is to exclude.
But, I think at the end of the day, the reason for specifying owner is the owner is the one that's responsible for the roof, which is the part of the house is most likely to be damaged by wind or hail, whereas the renter is not necessarily responsible for that. So the reason, I think, for the specificity, and I'll let my colleague here explain it better, is because those add on policies are tied back to the owner, specifically in the case of like the renter could claim the roof came in and it's the owner's ultimate responsibility. I may have butchered that. Go ahead. You try to do a better job than me. Thank you.
Representative John Maddox Sir, if you don't mind, just introduce yourself and who you're with and proceed with your testimony.
Jimmy Harris Jimmy Harris, Arkansas Insurance Department. So how this bill originated, I believe it was several insurers started adding separate wind and hail deductibles to property insurance policies. They might throw a 3% wind hail deductible on your homeowner's, along with your, say, $2,500 all peril deductible. Some insurers would have the all peril deductible on the deduct page.
And generally endorsements are found at the end of your declarations page. Well, in the endorsements would be where that 3 or 4% or 5% wind hail deductible could be found? $300,000 home, that might be a $15,000 deductible. What this bill does is it requires all those deductibles to be found together early on in the deduct page. Where the all peril deductible is, the separate wind hail deductible amount should be found together.
I believe owner occupied was added just to clarify the intent. Residential property insurance is an older term that generally meant owner occupied. If a renter is in a structure, they're not going to have a separate wind hail deductible, as he was just saying. So there's no need for that disclosure. Generally a renter's policy is going to cover the contents alone. Commercial policies are generally more sophisticated buyers. They're more experienced in their insurance purchases. And most of these deductibles are fully disclosed upfront. So those are the reasons why owner occupied.
Representative Les Eaves What if a person owns, 4, 5, 10 rental properties. They're not owner occupied. Help me understand that.
Jimmy Harris They're going to be covered under a landlord's policy. And all of those deductibles would be listed in the policy.
Representative Les Eaves Are they going to be listed together?
Jimmy Harris As it's written now, this law would not require that.
Representative Les Eaves I think it's a good idea but I don't know why you'd limit it to only owner occupied, unless I'm not understanding. Representative Lundstrum said whoever's paying the policy should know. I mean, I'd like to know if I had rental properties that all those are together and I can see what I'm getting into if I had several rental properties. Is that something we could-- is there an issue that you see doing that? Or am I misunderstanding what we're doing here?
Jimmy Harris The Insurance Department does not see an issue doing that.
Representative Les Eaves Okay. So you're saying the bill sponsor is who we need to talk to.
Representative Lee Johnson I'm happy to pull this bill down and have some discussions around that amendment. I had some of the same questions and I think it's a great idea.
Representative Les Eaves You're leaving a group out.
Representative Lee Johnson Yeah, I think the disclosure idea is very appropriate. I had some of the same concerns that it appears to me, the way we've written this now, that now we're exempting residential policies from any disclosure if it's not owner occupied. So it's like you almost should be the owner of the policy, as opposed to the occupancy. Again, I'm cosponsoring this bill. I wasn't involved in the negotiations on the Senate side. It's now on the House side. I'm happy to pull this bill down and have some discussion with folks to try to clarify that issue if that's the will of the committee.
Representative Les Eaves I think we're going in the right direction. I think what you said was than better than me that we may be limiting a group here.
Representative Lee Johnson Yeah. We'll be happy to pull that down and work on it and we can bring it back. Thank you.
Representative John Maddox Representative Johnson, even though you're going to pull it, would you entertain a question?
Representative Lee Johnson Yeah, 100%. Happy to have more discussions and do it the right way.
Representative Jim Wooten I need Mr. Harris back in there. So what y'all are saying, I had one company that quoted me a $5,000 increase in my deductible to $5,000. And then they said, well, on the roof, it'll be $9,000. So you're saying if that $9,000 is somewhere else in that policy, that this will lump it all together?
Jimmy Harris Yes, sir.
Representative Jim Wooten And so you said the Insurance Department sees that it's wrong to lump it all together?
Jimmy Harris No, sir. No, sir. Not at all.
Representative Jim Wooten I understand these policies that's written. But why a rental property? And then you said that you didn't have a problem with the bill.
Jimmy Harris No, I think I stated I wouldn't have a problem with changing the bill. The Insurance Department would not have a problem.
Representative Jim Wooten Well, did the bill start out with the owners and the rentals in there?
Jimmy Harris I believe two years ago is when the deductible.
Representative Jim Wooten What happened in the ensuing two years?
Jimmy Harris I can't answer that.
Representative Jim Wooten I feel like that it ought to all be in one area of the policy so it's not hidden down in the bottom part or an afterthought that someone may not see.
Jimmy Harris I agree 100%. Yes.
Representative Lee Johnson Yeah, I also agree. I think that's the intent of the bill. We just want to clarify that it applies to all residential policies and not excluding some or the other.
Representative Jim Wooten That's what I think it needs or agree with Les Eaves. Thank you. Thank you Mr. Chair.
Representative John Maddox Thank you, Representative Wooten. Thank you, Representative Johnson. Thank you. Okay. I believe we have one more bill left. Representative Richardson, you have a bill? Members, there is an amendment that staff will be passing out now. Representative Richardson, if you'd like to go ahead and commence explaining the amendment.
Representative Jay Richardson Yeah. Thank you, Mr. Chair. Jay Richardson, Fort Smith, District 49. Members, you'll be receiving amendment of some changes that we have made to the bill. We reached out to a couple of organizations to solicit feedback. And the changes that have been made were a result of one of the big players in this market. So we've made it a more friendly bill for them that's not going to be a significant increase in their cost for doing business.
One of the big changes in there is in the original bill, we had it to where you needed to have two people on site. We removed that. We also had on there where we clarified on page three regarding the lighting. I think the original had 'maintained a lighted parking lot illuminated at an intensity of at least two feet.' We've changed that to 'maintain lighted parking spaces and walkways.' So with some of those changes, we feel like this is a bill of safety and not one of what I've been told overreach. But this is the amendment. And I can explain as we move forward with the bill.
Representative John Maddox Would you like to proceed with a motion on your amendment?
Representative Jay Richardson Motion do pass for the amendment.
Representative John Maddox We have a motion to adopt the amendment made by Representative Richardson. Is there any discussion on that motion? Okay. All in favor of the motion to adopt the amendment say aye. Any opposed say no. Representative Richardson, you're recognized to present the bill as amended.
Representative Jay Richardson Thank you. Thank you, Mr. Chair. Members, we bill came to me through a constituent. And if you don't mind, I'd like to read a statement from the gentleman how this came about. He's actually in the audience and asked me to read this for him. So if you guys would give me a little latitude to do that.
It reads, "Sitting front now to a funeral for a person that you thought you pretty much had forever, which this earth shattering when the person's life has been taken from you. It's only been one another funeral that shattered my heart. And that was my mother. My mother told me once that she wanted her children to bury her, and not for her to bury her children, because that's a pain that no parent should have to deal with. I didn't understand what she meant back then, since death is death. But I can honestly say that I know now what she meant. It definitely shifts your perspective on life.
People talk about what it's like losing somebody you love. But it is truly a moment you could never prepare yourself for. Going back to March 24th, 2023, I found myself in a space that I felt like was a tunnel. People were talking, but they seemed to be so far away. I felt like my head was underwater. Someone talking and speaking, but I just couldn't hear them clearly or even articulate what was being said. I would not wish this pain on my worst enemy. I lost my child, but my grandchildren lost their mother. One death impacted so many households.
The generosity of compassion, big hearted, cheerful and thoughtful person that my daughter was and show to others was life changing to so many. I like to say that with time that is passed, I'm completely better. But I'm not. Every day is a new battle and some days are better than others. I spent months focusing my energy on a reason to push forward. My daughter and my grandchildren were in my world. Chanel's children were her world. The light at the end of the tunnel was the fourth beautiful grandchild that was left behind. I see her in my grandchildren every day. As long as I have breath in me, my mission is to tell my grandchildren what kind of mother they had and how their smile could light up a room.
We are all living on borrowed time, being counted down by the unknown stamp clock. Death is just a penalty that we all have to endure. The purpose of trying to create a law is so that babies will not have to suffer when a young mother is taken from them for selfish reasons, or taken away from them because of a person who has no respect for human life. My grandbabies suffer and will always suffer, especially the youngest boy, because he always stayed up waiting on his mother to get home from work at four in the morning.
So this proposed law is to protect mothers and other people who work late hours by themselves, My daughter and grand babies trying to make the world a better place. If this proposed law would pass, it would give my grandbabies light at the end of a dark tunnel. It also show them that their mother did everything she could to get back to a better life. I would like to make the world safer for all citizens of the world and Fort Smith.
When I researched the crime rate for Fort Smith, it was 40.5%, well above the average with 22.7 assaults, robbery and murder. Even though Fort Smith has been working towards reducing the crime rate, it is still so much room for improvement.'
This was Mr. Charles Moore. In 2023, his daughter was shot and killed in a convenience store robbery. While we understand that this bill will not get rid of crime, and that's not the purpose of the bill, the bill is just to provide some framework for basic safety measures for people that are working at these convenience stores. I think if you read through the bill and the amendments that have been made, most good players are already doing these things.
So it's not adding anything. But there are some out there who refuse to take safety precautions for their own employees. I think the original bill that we had may have gone a little too far. Specifically, when you're talking about private entities. But I think after a conversation with some of our larger owners, the bill makes a lot of sense.
And again, I can't guarantee you, but I'm sure what we're asking to see happen, they're already doing. It's just the ones that aren't, we want to put some guardrails tha t they would start doing. And with that, I'll take questions.
Representative John Maddox Representative Lundstrum, You're recognized.
Representative Robin Lundstrum I completely agree with the owner on losing his child. It's horrible. I'm just wondering, convenient stores can do all of this stuff right now. There's nothing stopping an owner from adding more parking lot lights, adding a strip to tell you how tall the perpetrator is. All these things now can happen without us. How come that isn't happening? I mean, they can choose to do this or not to protect their employees in a bad area. Help me with this.
Representative Jay Richardson So I think you just answered your question. They can do this. What we're asking is that they have to do this.
Representative Robin Lundstrum I pulled in the other day to a convenience store and it wasn't well lit, parking lot wasn't well lit. I pulled out. it just didn't seem like a safe place for me to be. The market will take care of that. Well lit means clean. And I'm just wondering, if you want to do business, you make your business safe. So help me understand this. I'm just lost a little bit of why we need it. They can do this on their own.
Representative Jay Richardson Again, they can do this on their own, which means that they don't have to. What we're asking is that they have to do these basic things to keep people safe.
Representative Robin Lundstrum Does the city council not, aren't they in charge of this type of thing? Wouldn't the city council, if you had an increase in robberies or this type of horrible crime, wouldn't the city council come in and go, okay, we got a problem here, this section of town needs--
Representative Jay Richardson I again, I think this is a choice for an owner to make. I'm not aware of our city council being involved to enforce that.
Representative Robin Lundstrum Okay. Thank you.
Representative John Maddox Thank you. Representative Wooten, you're recognized.
Representative Jim Wooten Thank you. And Representative Richmond, before making comments, I want everyone to understand that I'm a former owner of numerous several convenience stores all over the state. And I agree that we have some out there that need this type of regulation. But my concern is that i goes too far. And could you share with us what each one of the amendments do, the change from the original bill? Before I make any comments.
Representative Jay Richardson Yes, sir. On page two, line 30, we're removing the requirement of two people there.After 9 p.m. We changed the wording on the lighting and it, yeah, that moves everything-- I'm sorry. I'm listening to your conversation. And I think those were the biggest ones that we've had. And another one is one that I had looked at was I thought we had changed and we didn't was the window. I meant to pull that one and I didn't get that done. So I'll need to do that.
Representative Jim Wooten The other one that I may ask you about is the did you take out the 9 p.m. locking the doors?
Representative Jay Richardson No, sir.
Representative Jim Wooten You left that in?
Representative Jay Richardson Yes, sir.
Representative Jim Wooten What about a truck stop that has truckers in and out all night long and showers available and that type thing? And then your inside sales is where you really make your money. You don't make your money on gasoline. It's more of a leader for sales versus the inside sales. So can you share with us how will Pilot and some of the other larger truck stops, and I had several of those too, but how would they deal with this?
Representative Jay Richardson That's a very good point, Representative Wooten, and I didn't-- I'm sorry. I thought somebody else was talking. I was letting them speak. Didn't take that into account, to be quite honest with you, Mr. Wooten. But you make a very, very good point that needs to be addressed. Yes, sir.
Representative Jim Wooten Okay, so we need to address that. And on locking the doors, we had one big operator that had the great idea of putting where they could lock the door if the robbery was about to take place or was taking place. Well, what happened, they locked the door with the robber inside. And then, all hell broke loose.
So, and my condolences to your constituent. I fully understand what they're saying, because I lived with this day and night for 30 years. So it's a challenge that the industry has faced. But also law enforcement, as Representative Lundstrum pointed out from the standpoint of enforcement, how would you enforce this to be sure that they would comply? Would it be the tobacco control people? They don't have enough to do what they're taking care of now. Who would enforce to be sure that they are meeting these regulations?
Representative Jay Richardson Yeah, that was a thought that it would potentially go through ABC. But I'm not sure, to your point, that they're staffed enough to do something like that.
Representative Jim Wooten So who would enforce the rules?
Representative Jay Richardson So it'd probably be local PD from that provision. But again it's information that I didn't take into account, but we'll have to look at.
Representative Jim Wooten Okay, well, would you pull your bill down then in consideration and push through to be sure, because probably all of you have been in a convenience store. The counter is well away from the door. And so they'll have to remodel. And that'll be quite an expense for most operators to be able to have a push through drawer and then lock the doors at 9:00. I just really have a problem with that.
Representative Jay Richardson No, sir. I don't disagree with that. I think there is some opportunity to make those adjustments. My concern would be, even with those adjustments, I think they're made-- yes, sir. I would be happy to.
Representative Jim Wooten And I fully understand what you're saying. We have a crime problem in this nation, and there's no doubt about it. And for the sake of stating that Tommy Robinson solved the problem years ago in Pulaski County when he said, We're going to have deputies with shotguns in back rooms, and you're not going to know which one. And our law enforcement needs to adopt that attitude. And I think most in Arkansas do.
Representative Jay Richardson Yeah. Thank you sir.
Representative Jim Wooten So will you pull the bill down?
Representative Jay Richardson Yes, sir. Absolutely. Yes. We'll pull it down.
Representative Jim Wooten Thank you very much.
Representative John Maddox Representative Richardson has agreed to remove the bill or pull the bill. A couple of you did have questions for him, so maybe just discuss that with him offline. Thank you members. I believe that is the last bill for this morning, not for today. O
ne announcement real quick. February 12th we're taking our committee picture 9:50 a.m. on the House steps. So let's not be late. That's next Wednesday, 9:50 a.m.. And of course, we're reconvening after session to accommodate Representative Eubanks. So is there any further business for the committee? Seeing none, we are adjourned.
[Recess for Session]
020525 H Ins2.mp3
Representative Jon Eubanks All right, members, I know over the last few weeks you've been contacted by various people regarding this bill. It is, as it states, an act to regulate vision benefit managers. I'm gonna be honest with you. They would really like me to go through all these talking points. And I don't know, I think you're all very familiar with them. I'm going to hit some of the highlights. And then I think Doctor Jones and Doctor Sugg can get into the details of it. But what we have seen is that vision benefit plans have started doing similar practices of pharmacy benefit plans as far as vertical integration and how it affects the individual providers, both on how they can manage their business and also dealing with reimbursements.
Specifically, 1353 prohibits certain business practices by benefit managers. This will preserve the patient's choice while helping to keep their costs down. It requires vision benefit managers to identify participating providers and a neutral manager. As a neutral manager, the VBM or insurer can't use misleading advertising that additional services are covered if the plan does not actually reimburse the provider for those services or materials. A provider can't be required to accept reimbursement payment in the form of a virtual credit card or other payment form, where a fee is assessed to the provider to get reimbursed.
Also, a VBM shall not use their batch style formula or extrapolation to audit a participating provider. Any additional payment due to a provider or a refund due to an insurer must be based on the actual overpayment or underpayment. Also, a plan cannot prohibit a provider from accepting cash payment from patient if that is less costly to the patient than the total cost of out of pocket costs. And finally, a VBM insurer can't reimburse a provider at a different amount based on the optical lab, health record software or equipment the doctor chooses to use. So basically, like I said, these VBMs are starting to dictate certain business practices to optometrists that I think are harmful to their profession and ultimately to our constituents and their patients. And at this time, I'll turn it over to whichever one wants to begin. Doctor Sugg.
Joe Sugg Thank you. Thank you, Mr. Chair, and members of the committee. As I said, my name is Joe Sugg, and I am a practicing optometrist and small business owner in Heber Springs. And here to represent the association and my patients and colleagues around the state, but wanted to thank some of you and your predecessors for passing Act 959 in 2015, which helped to curb some of the abuses from these vision plans. That was passed unanimously in 2015. And so we still use aspects of that law today. But we're here to ask you to expand on that law due to the massive vertical integration that's occurred in the vision care market in the last ten years.
This vertical integration promotes self-dealing, anti-competitive practices, restricts patient choice, and threatens patient access to care by the doctors they prefer to see. These vertically integrated multi-billion dollar conglomerates own vast majority of frames and lenses. They own retail opticals where the frames and lenses are sold. They own optical labs where those lenses are made. They own doctors offices around the country and private equity owns doctor's offices. They own group purchasing organizations and doctor alliances. They own claim filing systems, electronic health records that doctor's offices use. And they even own e-commerce sites that directly compete with their own in-network doctors.
These companies use their power and influence to incentivize and steer patients to the products and locations they own by offering enhanced benefits such as lower co-pays or higher frame allowances. They then differentiate and tier doctors based not on quality of care, but the amount of product each doctor purchases from these companies. We believe that patient choice and access should not be affected or influenced by vision benefit managers or the products and locations they themselves own.
Ultimately, we believe doctors within a particular vision plan network should be treated equally or neutrally and not differentiated by the products they purchase, where they practice, and who happens to own those products and locations. This bill also would allow coordination or combination of benefits with patients' other insurances. There's some cases where vision plans won't cover services they would typically cover if those were billed on a separate visit. But patients aren't allowed to use those benefits that they pay for at the same time.
And we think that coordinating these benefits would allow for patient convenience and more efficient delivery of care. Some of these plans do this now, but not all of them. There are certainly some financial aspects of this bill and specifically reimbursement. And I'm going to let Doctor Jones speak more to that specifically. And I'll be happy to help answer questions when he does that. Thank you.
Matt Jones All right. Thank you. One of the parts that Representative Eubanks was going to mention is the rest of this bill does have a financial reimbursement aspect where the same services that we would bill to a vision care plan would be at no lower than that current year's Medicare reimbursement rate. So I want to talk a little bit about that, because I know that's a talking point that we want to explain there.
So like I said, my name is Matt Jones. I'm an optometrist. I live in Blytheville. I have managed and run clinics in Osceola, West Memphis and in Paragould. So what this bill does is it provides greater transparency as to who owns the products, provides greater transparency to our patients and to the doctors. So today I want to share a little bit about what vision plans are. Represen tative Eubanks talked a little bit about what's happened in the pharmacy world. So vision insurance is not traditional insurance in that vision plans don't have any unexpected loss.
A vision insurance covers one comprehensive eye exam a year, and that's it, along with some materials and a material allowable. And since they are prepaid discount plans where a person's premium isn't tied to any actuarial risk, they're not like medical plans and pharmacy plans at all in that sense. What that does is that allows them to set premiums and reimbursement at any rate they want. It allows them to make as much money as they can. And with that money, they have began vertically integrating and monopolizing the market. In the sense what that does is that certainly can affect small businesses, optometrists and communities. I mean, you know your optometrist.
The other thing it does is it also puts a business decision on the optometrist whether to even accept the vision plans or not, whether it's fiscally responsible for their business. So I certainly have a choice of whether I'm going to accept a vision plan or not. My practice philosophy has always been I'm going to accept each and every one that my patients have, or that maybe an employer within the community has, because I feel that's the right thing to do. So other doctors, though, it's up to them to decide that. And unfortunately, a lot of doctors are not providing these vision plans.
And so that takes the benefit from the patient not to be able to use that within their community. So for more than 30 years, vision plans, we have not seen any significant increase in reimbursement in services. $40, $50 and $60 are what these vision plans pay for comprehensive eye exams. That's the same as it was in the 90s. The American Optometric Association that I work closely with, too, has sat down with some of these big plan executives to try to work out some deals and to find compromise. But nothing has come from that.
As you obviously know, a lot's changed in 30 years. And the cost of business will continually increase, technology within our practices. And we provide living wages for our employees. So interestingly enough, the same corporations, we receive letters every year talking about the price of how things should go up. You know, the cost of business keeps going up. The same comprehensive exam that I provide to a Medicare patient, to a Medicaid patient, is the same comprehensive eye exam that I provide to that vision care patient, no matter what insurance they have.
But they reimburse significantly lower than Medicare and even significantly lower than Arkansas Medicaid. So you might ask, why do we accept these plans? Certainly, we could all get together and decide not to accept a vision plan. But that's illegal. That violates antitrust laws. And it's colluding. In my case, in Mississippi County, Greene County, Clayton County, it's not my patients' fault or your constituents' fault what vision plan they have, right? It's what the employers tend to offer.
And again, that's why I decide to accept those plans. So talking about the antitrust part, with these vertically integrated vision plans, they use these extremely high profits to make themselves more powerful. Again, unlike traditional insurance plans, they're allowed to make as much profit as possible. And this helps achieve market consolidation, vertical integration. And so requiring these plans to compensate us fairly with reimbursements, with competition we feel will help lower cost and help small business in Arkansas. So thank you. If you have any questions, we'd be happy to answer.
Representative John Maddox Thank you for your testimony. I believe we do have some questions. Representative Dalby, you are recognized.
Representative Carol Dalby Thank you, Mr. Chair. You made a statement a while ago, and I'm just curious. Can you give me an example of the coordination of benefits or the lack thereof? Because not being in that field, I'm not quite sure how or what you meant by that.
Joe Sugg Yeah. The best example is with the service called refraction. That's the test where the eye doctor measures your eyes and determines your prescription. That's a service these routine plans typically cover. Say you were in the office and getting your exam, and maybe you had cataracts or dry eyes. And therefore the visit itself might be billed to your medical plan because of the medical diagnosis. Some of these plans, even though they typically cover refraction and you performed it that day, won't allow you to coordinate those benefits so that the refraction could be covered that visit. So that's probably the best example I can give you of it.
Representative Carol Dalby Okay. And one other question. I understood you to say that vision plans-- or maybe you said vision plans often pay less than the floor of Medicaid or Medicare, I guess. And this was a question that I asked Representative Eubanks, so it's not a surprise. I was just wondering why make that the low amount? Why not be more than what they pay?
Matt Jones Sure, we've been asked that. And I appreciate that question. We want to tie it to something. There have been other states that have used the nominal de minimis or a reasonable figure. We want to at least have something to go by. I mean, CMS Medicare is something that's studied and universally listed as what payments are. And even that floor is a significant advantage or a sufficient increase to the way that we can operate our businesses and hopefully, again, help optometrists want to provide those services to their constituents.
Representative Carol Dalby Thank you.
Representative John Maddox Thank you, Representative Dalby. Representative Achor, you're recognized.
Representative Brandon Achor Thank you, Mr. Chairman. I appreciate both your testimony. I'm intimately sensitive to all of the challenges you guys have shared here today, and I appreciate the efforts you put forth. Can you give a little insight into what it's like negotiating with these entities?
Joe Sugg Yes. I'll give you an example. Most recently, one of these plans sent out a new plan they made that reimbursed at about a 40% less rate than what they typically did. And when you say, well, no thanks, I don't want to sign up for that plan, then we were told, well, you'll be out of our network entirely. So it was basically sent a plan, sign on the line, and send it back. And no ability otherwise to pick and choose on those plans which one we would want to be a part of.
Matt Jones And if I may, we have no negotiating power really with these mega plans because of antitrust laws. I mean, they're take it or leave it, and they're contracts of adhesion pretty much.
Representative Brandon Achor Yes. So to follow up, I hate to hear that you guys are going through that. I deal with that on a daily basis in the pharmacy space. And I think what's a little misleading is that they assume all negotiations are done in good faith. And what's frustrating is the leverage they have is y'all's heart for your patients. It's not a real fair negotiation of take it or leave it when you're wanting to provide care. And they know that they have a leverage of you're going to err on the side of even wanting the bare minimum just to provide that level of access. And so I commend you guys for basically wearing that continually. And thank you for your presentation.
Representative John Maddox Thank you. Representative Gramlich, you are recognized.
Representative Zack Gramlich Thank you very much, Mr. Chair. I think I'm supportive of this bill. Obvious question, how do you think this will affect insurance costs for my patient premiums and stuff? What do you think will happen?
Matt Jones Sure. Vision care premiums are extremely low as it sits right now. And a lot of that is tied to the vertical integration. If they can get you in the office, they're going to steer you into their products. What we have seen in Texas and Oklahoma, those bills are fairly new when it comes to the reimbursement part. We haven't seen any increase. We don't really have any data right now. I would say that if these companies can't provide a reasonable product that would satisfy both consumer and provider, while again making this financial business decision as to what they continue to buy and vertically integrate, then I think they're broken as it is. But I certainly I think that's the business decision as far as what premiums go. And again, we want to provide better transparency in that. We want to see more prices go down through competition. +.
Representative John Maddox Thank you. Representative Wooten, you're recognized.
Representative Jim Wooten Thank you, Mr. Chairman. Gentlemen, I appreciate your being here today. Would you elaborate just a little bit more on the vertical integration? Like an insurance company buys a lens company buys a frame company. Would you elaborate a little bit more on that?
Joe Sugg Yeah. So like I said, it's basically every step of the way. I mean, so you've got offices and retail opticals and optical labs. And basically over 80% of individual vision plans are owned by one of these two companies. And then they own a large portion of the branded frames that are out there. And they make the lenses, they own the labs that make the lenses, and then the e-commerce sites, electronic health records. There's just so many steps in the way that they bought up to vertically integrate the market.
Representative Jim Wooten Okay. And also these are insurance plans that have done that?
Joe Sugg Yes.
Representative Jim Wooten Do they have the attitude that here it is? If you want it, you sign it. If you ask, well my attorney wants to look at it, are you told either sign it or we'll move on?
Joe Sugg Yes, that's correct. As I stated with that example earlier, it was basically, here, we need your signature, and you're either accepting this or you're out of our network entirely.
Representative Jim Wooten So they come in, they control and they have vision stores where they have people give exams, and they sell lenses there and they sell everything.
Joe Sugg That's correct.
Representative Jim Wooten Okay. In other words, they can steer people to their providers.
Joe Sugg That's exactly what's happening. So that's exactly what we want to address.
Representative Jim Wooten Basically, while you have a tangible item and a pharmacist has a pill or liquid that they provide, you still facing the same problems and difficulties in your business that they are facing. And it's all caused, in your case, it's a vision manager versus a prescription manager.
Joe Sugg Yes, sir.
Representative Jim Wooten Thank you. Thank you, Mr. Chairman.
Representative John Maddox Thank you, Representative Wooten. I do have a couple quick questions. So I think you touched on it, and I don't want to put you on the spot. But have surrounding states passed similar legislation recently? Did you touch on that? And if so, what state were those if you know.
Matt Jones Sure. Texas passed very similar language and they had all of the tiering and the steering those types of things. Their tie to reimbursement was a nominal or a reasonable rate, nominal de minimus. Again that didn't hold any water. They haven't seen anything like that happen. Oklahoma more recently passed a similar bill. It was passed and you might hear that it was passed with zero no votes. You might hear that it was vetoed. It was vetoed by the governor and then overridden almost unanimously with only three no votes once it was overridden by the governor. And then we are the next state that would pass something as wide reaching as this. And we wanted to tie reimbursement again to something that you can grasp.
Representative John Maddox Thank you. One other question. I'm taking notes. Want to make sure I'm right. Did you say no significant reimbursement on, I guess, certain products for 30 years? Was that the testimony?
Joe Sugg Yes, sir. Yes, absolutely. 40 bucks in 1995 getting reimbursed, 40 bucks in 2025. Or 60 bucks. So it depends on what plan it is.
Representative John Maddox Okay. Thank you. Members, any further questions? Okay. Seeing none, gentlemen, thank you for your testimony. Okay. We do have someone signed up to speak against this bill. Well, we have two people. The first person would be Miss Forsyth. If you are in the room. And Mr. Smith, if you want to accompany her, I see you're on the list. If y'all want to come together, however, you guys would like to handle that. There's no preference. You just have a seat wherever you'd like. Hit that button to activate the microphone, introduce yourself and who you're with, and then you can proceed with your testimony.
Lisa Ann Forsythe Here we go. Hi. Good afternoon. My name is Lisa Ann Forsythe. I am the vice president of Government affairs for the National Association of Vision Care Plans. And some of you may have seen me at NCOIL. I testified recently in November, and I testified in a number of different states. So I'd just like to respond to some of the points that were raised by the previous speakers, and then mention a couple of other data points that I think are just worth hearing. And of course, happy to take questions.
Firstly, regarding this vision benefit manager business, that is a made up acronym. It does not exist anywhere outside of the various affiliations of the American Optometric Association. And it is, quite frankly, a thinly veiled attempt to create some sort of correlation in people's minds between pharmacy benefit managers, which are much maligned entities-- and I don't have to explain that to anyone here-- and what we do in the vision care space. So from a lobbying perspective, it's brilliant. From a reality perspective, it could not be further from the truth. Some of the largest criticisms of PBMs-- and I'm not here to bash PBMs at all, but rather to differentiate business models.
So pharmacy benefit managers, part of the largest criticisms lobbied against them are that they operate in an opaque manner. So you don't know what's happening, sort of like a black box behind the same kind of scenario. That's part of it. Also that they are making money off of a hidden margin known as the spread pricing, and a number of other things. None of those things have anything to do with our business model. And quite frankly, I find it amusing that the opposition is stating that this is a transparency bill, when in fact it is putting an effective gag order on the vision plans and preventing us from sharing discount related information to consumers. So today, when you go into your provider directory, I think all of us are aware that we're trying to be better in the health care transparency space. We want folks to be making informed consumer decisions about their health care, just like they do with other things. So today, if you go into a provider directory, you will see information contained in there about the different types of discounts that various providers would offer to you as a consumer. And if you are a consumer that is price conscious, which many folks are, that information can be extremely valuable.
And you may make your decision based on where you can go and get your glasses at the least cost possible. The reality is that the two largest contributing factors to the cost of a pair of glasses are where you are in the country-- spoiler alert, you guys are doing great. Not Washington State. So geographically wise you're doing well. Although, that said, if you are in a smaller town, you're more likely to pay more than you would in a larger town. However, the second biggest driver is what office do you walk into. Quite frankly, if you go into a regular vision center or a retail optical center, you're looking at 50-70 bucks.
If you go into a doctor's office, an optometric doctor's office, you're looking at around $150 on average. So for that same set of glasses that you could get, you could go to a Warby Parker and get it online, they're not one of our members. I don't have any vested interest in speaking to Warby Parker. But point being, if you have a relatively uncomplicated prescription and you are looking to go somewhere and save money, you want to be able to make that decision in an informed basis upfront. So running a bill that prohibits the plans from sharing information that's related to price transparency is not beneficial to Arkansas consumers, irrespective of where I stand as a plan.
Secondly, I'm going to share some additional information with you. And this is with respect to whether someone has vision insurance or not. In 2022, if I look at a baseline of 2016 to 2022, we have seen the number of employers offering vision care increase from around 20% of employers to 84% of employers. Well, why is that? Well, I'm going to call out most of the people sitting here at the table with me. The reality is, now we're at a situation where 70% of Americans require some sort of vision correction. And the vast majority of those require prescription correction. So the demand for vision care services now is larger than it ever has been.
So when we're talking about what is keeping the price of vision insurance low, and allegations are being lobbed at us it's because of this fictitious vision integration. In fact, what it is is simple mathematics. And that is that the denominator, in other words, the number of covered lives, is much larger now than it ever has been. So we have more employers offering the insurance. Of those employers that offer the insurance, over three quarters of the employees actually choose to enroll in the plan.
So we have many, many more covered lives today than we had, say, ten years ago. So since we have a larger base, we are able to spread that risk amongst a larger base. And so that has kept our premiums stable over the past ten plus years. They've stayed stable even with the slight decline. And our benefit levels have maintained the same level that they have been all along. So as far as health care goes, we are one of the very small segments of health care that I would argue is actually working. We do not have skyrocketing premiums. We don't have reductions in cost in giant co-pays. We don't have any of those things. We're one of the few areas that's actually working.
From a transparency perspective, as I mentioned before, I think it's critical that we provide as much information to consumers as possible for them to make informed health care decisions. And this bill will greatly undermine that. Partnered with the issue that was mentioned with respect to extrapolation for auditing. All extrapolation is, is doing statistics, sampling to make a determination about a lot of claims. That's what it is. It's used considerably in the Medicare space. The Macs use it. It's used a lot.
Back in 2019, Medicare passed some guidelines with respect to extrapolation that we can talk about using if we want to talk about modifications to the extrapolation methodology. But I have a lot of concerns with passing a bill that eliminates transparency in pricing and partners that also with the elimination of the fraud, waste and abuse tools that extrapolation uses to help catch folks that are doing things that they shouldn't be doing, quite frankly. So the fact that we have more folks enrolling in our plans, more folks that are covered today, more employers offering it, level premiums level, benefit levels.
I'm having trouble seeing when I look at the data, which I've spent a lot of time doing. In Arkansas, you have more licensed optometrists today than you ever have had. So there's no shortage of optometrists in the state. Quite to the contrary, your own data would say otherwise. So this state seems to be doing extremely well in that space. So I'm not sure what we're solving for here or why. So I'll leave it at that. And of course I'm happy to take any questions.
Representative John Maddox Thank you for your testimony. I believe we have some questions. Representative Dalby, you're recognized.
Representative Carol Dalby Thank you, Mr. Chair. In your testimony a few moments ago, you said you couldn't see how it was that this bill was preventing transparency or something to that. But when I'm looking at page six, line six-- hang on, let me pull it back up. Page six, line six says an insurer, a vision benefit manager, vision care plan or vision discount plan shall not incentivize, recommend, encourage, persuade or attempt to persuade an enrollee to obtain covered insurance, non covered services, etc. But it doesn't say that-- it's not preventing them from being able to put that out.
Lisa Ann Forsythe It is in another section.
Representative Carol Dalby Can you point it to me? Because I can't find where it says you can't put the information out. It's just saying that you can't say, go to this person. But you could still list. And I'd be happy to find out where that was. I don't see where that is.
Lisa Ann Forsythe Sure, it's on page five. And thank you for asking the question. Because it is confusing, because there are multiple terms that are in there. So I had to reread it several times myself. But on page five under sub G, like Grover, it states that an insurer shall not shall not distinguish between participating vision care providers based on the following characteristics. And then there's a huge laundry list in there, including discounts, dollar amounts, all of these things. So today when you go in and look at a directory, as I mentioned before, sometimes it'll be a star by a provider. That's an in-network provider that offers a greater discount, etc. This would prohibit us from being able to distinguish on that basis.
Representative Carol Dalby I guess I'll ask the sponsor when he gets back up there, but I'm afraid I'm not seeing that interpretation as you interpret it. And I'm not trying to argue. I will have to look at that, but it just seems like to me they can still list those things out, can still list how much it is. And then I'm the consumer, I mean, I don't see how that-- I guess we can differ. I'm sorry, but I just don't see it. But I'll accept your explanation.
Lisa Ann Forsythe No. Yeah. That's fine. To their own testimony, they were trying to basically reduce optometrists to a commodity, which is an inability for us to distinguish between one and another. I would argue that health care is not a commodity, and certainly medical services are not a commodity. And so not being able to share that kind of information about one versus another, I don't see how anyone can argue that that benefits consumers.
I also realized I forgot to mention, chair, if I might, with respect to the Texas and the Oklahoma legislation that was introduced, you should be aware that the Texas bill that passed was immediately enjoined. It was never put into law, and it was challenged on constitutional grounds very much similar to those that-- this is what reminded me of it, that the representative just mentioned, which is that it doesn't make sense from a consumer and a health care transparency perspective to not be able to share that distinguishing information about providers.
That is the crux of that lawsuit. It is on appeal. But at this point, our appellate arguments went well. We expect it to be found in our favor. But as of this moment, that Texas law was completely enjoined.
Representative John Maddox Thank you for your testimony. I believe we have some more questions. Representative Wooten, you're recognized.
Representative Jim Wooten Thank you. You say it's on appeal?
Lisa Ann Forsythe It is.
Representative Jim Wooten So that means that a court found in favor of the optometrists?
Lisa Ann Forsythe No, the court found in favor of the plans, and the optometrists took it up on appeal.
Representative Jim Wooten Why would it be appealed? Who is appealing it?
Lisa Ann Forsythe The Texas version of the AOA has appealed it.
Representative Jim Wooten Okay. Would you tell me one more time who you represent?
Lisa Ann Forsythe Of course. No worries. It's a mouthful. It's the National Association of Vision Care Plans, NAVCP.
Representative Jim Wooten You represent insurance companies?
Lisa Ann Forsythe We represent-- yes, so we have most--
Representative Jim Wooten How many do you have that own retail stores?
Lisa Ann Forsythe I don't know how many of them. We have 29 members so I don't know.
Representative Jim Wooten You mean you can't tell me how many of them have retail stores?
Lisa Ann Forsythe Of the 29, I don't know, because we don't, quite frankly, from an association perspective, we're not focused as much on the retail aspects of the medical.
Representative Jim Wooten Let me ask you this question. How many of them have lens companies?
Lisa Ann Forsythe Lens companies? Again, that's not really-- I sort of focus on the medical aspect.
Representative John Maddox How many of them have frame companies? That make frames?
Lisa Ann Forsythe Again, that's kind of the same question. So I can find out and get back to you. I just don't know off the top of my head.
Representative Jim Wooten I would appreciate knowing how many companies you have that have retail stores. And if your plan is so good, do you have a facility available in every community in every 75 counties of the state?
Lisa Ann Forsythe No, no one has community-- there aren't even optometrists in all 75 counties of the state.
Representative Jim Wooten I didn't ask that question. I asked you, do you all, if you're plan is so good and you say this bill would cost the consumers, how can you say that when you don't have retail stores to be able to provide the elderly, who maybe can't drive 75 miles to a metropolitan area. I think that if you look and check, I think you'll find that most of your retail stores that offer the advertising on television are located in large communities where the population is.
Lisa Ann Forsythe Absolutely.
Representative Jim Wooten But the elderly people out in the state, they cannot get to those facilities sometimes. Is that correct?
Lisa Ann Forsythe I totally agree, representative. I will say, given that we have a state with 40% population located in rural areas, we have to look to alternative solutions for those coverage in those areas. To your point, I agree. And that's where we have had some of our members, not all, but some members have looked at online examination options and telehealth as an alternative for some of those rural areas, because that is admittedly an issue as far as the geographic representation of Arkansas. Thankfully, it's stayed pretty stable in terms of the percentages of optometrists in the different geographic areas. The one exception, though, sir, is in the northwestern quadrant. There has been a growth there from 33% to 39%, which is probably similar to your population growth in that area.
Representative Jim Wooten Okay. Let me ask you another question. How does your membership handle plans that are with a company that's providing vision plans for their employees? Do they steer them to their facilities to get their vision tests?
Lisa Ann Forsythe I'm not sure, I understand the question. Would you mind?
Representative Jim Wooten The question is do they steer, do they tell the employer that is purchasing the visual plan that their people have to buy, get their eyes checked, and then they have to buy their lenses there, or at a facility that is owned by the company, which the insurance company may very well own?
Lisa Ann Forsythe There's never a 'have to do' anything. Our networks are very broad based. So while there are plan offerings where someone who goes to a plan owned facility may be able to secure those services at a lower price, the choice is still theirs to go anywhere within the network. So many of the folks that are in the optometric association are in our networks.
Representative Jim Wooten Well, they don't have a choice, do they, if their plan is being paid for by the company?
Lisa Ann Forsythe No, they do still have a choice. All that's offered is--
Representative Jim Wooten But they'd have to pay out of pocket. Because their plan perhaps will not be accepted anywhere but to where your insurance company steers them.
Lisa Ann Forsythe Usually it is a static benefit. It's a flat benefit irrespective of where you go. But the question is what would be the out of pocket above that flat amount.
Representative Jim Wooten My question that you keep avoiding, do your plans steer their clientele in a company, do they direct that directly to a facility that's owned by one of your companies?
Lisa Ann Forsythe I am not familiar with how self-insured employers, if you're referring to self--
Representative Jim Wooten It's convenient to me the questions that are very relevant you don't know the answer to. And yet you're here representing 29 members.
Lisa Ann Forsythe I'm representing vision care plans. So I'm not representing employers, so I wouldn't be able to speak on behalf of employers. But again, that is certainly information I could get.
Representative Jim Wooten My question did not apply to employers. My question applied, do you have companies that tell employers where their plan can be used? That's my question.
Lisa Ann Forsythe I've never heard of such a provision. That's all I can say. I've never heard of such a thing. I've never heard of telling anybody anything. So, as I mentioned--
Representative Jim Wooten You're not saying it doesn't exist.
Lisa Ann Forsythe Well, I can't prove a negative, sir, but based on my knowledge thus far, a plan offering includes some plan owned facilities that are often offered at a discount and many that are not. And the consumer has the choice of where they would like to go within that network offering. So I believe that's what I did explain before. That is how the plans operate. I don't know what else to say. But I can't speak to the details of every single individual plan, because of course, the plan offerings vary.
Representative Jim Wooten So you're not saying that they don't.
Lisa Ann Forsythe I think I've answered the question. We're going in a circle.
Representative Jim Wooten Thank you, Mr. Chair.
Representative John Maddox Thank you.
Lisa Ann Forsythe Thank you sir.
Representative John Maddox Are there any further questions from the committee? Okay. Seeing none, thank you for your testimony. There's no one else signed up, but is there anyone who wants to speak for the bill at this time? Okay, then we will go back to speaking against. I believe, Mr. Smith. Mr. Smith, just introduce yourself, who you're with and you can present your testimony.
Derrick Smith Thank you, Mr. Chairman, committee. Thank you for the opportunity to to visit about House Bill 1353. My name is Derrick Smith. I'm with the Mitchell Williams law firm here in little Rock, Arkansas. Today I'm representing the American Council of Life Insurers. The ACLI is the leading trade association representing the life insurance industry. They promote and protect consumers' financial well-being through life insurance, annuities, retirement plans, long term care, disability income insurance and dental, vision, and other supplemental benefits. ACLI has 275 members throughout the country.
And in Arkansas, ACLI's members represent over 93% of life premiums, 97% of annuity considerations, and has 245 members licensed in the state. Today, I find myself in the unfortunate circumstance of having to testify against a bill being sponsored by my good friend, Representative Eubanks. And I have to oppose it today, not because we disagree with everything that's in the bill or have objections to the entirety of the bill, but there are certain provisions in it that that do cause us significant concern. And because it was only filed on Friday, we haven't had a chance to negotiate any of them.
Most of them were referenced by the previous witness. But I do have to say that the provision on transparency is of significant concern. And I know there was some conversation back and forth, but we read the bill in the same way that it prevents a visual insurer from disclosing discount information of providers, and we can't see any reason why a consumer should not be able to know truthful information about the providers in its network. We see no reason why a vision carrier should not be able to tell its consumers that some optometrists offer discounts at one level, while other offers offer discounts a different level.
We see no reason why you can't describe the products that are sold, the brands that are offered at different optometrists, as long as the information is true. We see no reason why that shouldn't be permitted. But there are other things in the bill that we quite frankly don't understand, would like the opportunity to to visit about them. But primarily it's transparency. And if the sponsors or others are willing to say that the bill doesn't prohibit the things that we think it does, then we certainly take that.
But based on our reading that says an insurer shall identify participating providers in a neutral manner and shall not distinguish between vision care providers based on the following characteristics, including discounts, dollar amounts, brands, sources, materials covered. In our mind, that means you can't do it. And we see no reason why you shouldn't be able to.
Representative John Maddox Thank you, Mr. Smith. It appears we do have some questions. Representative Achor, you're recognized.
Representative Brandon Achor Thank you, Mr. Chair. I think the issue is not on the transparency of it being listed. The issue is how those discounts were negotiated on the back end and the transparency that doesn't exist, and the lack of negotiating power that the providers have. So should these exist? The reason that they're, I'm assuming, wanting to be prevented is because they weren't negotiated in good faith across all participating providers. So I understand the concern there that the consumer needs to be made aware. But transparency starts well before it shows up on a website that's owned by the company who makes the product.
Derrick Smith I don't know if there was a question there. But if I could, do I agree?
Representative Brandon Achor Do you agree?
Derrick Smith Representative Achor, it's a reasonable point. And if the concern is the negotiating position, I suggest we get together and talk about that, not about telling consumers what is factual, actual information.
Representative Brandon Achor Follow up. So I guess my concern is that we heard testimony about a growth in them paying into this program, and they've used that to spread the risk to provide this level of care. But what it sounds like is that they've reinvested those funds into actually vertically integrating and creating a position where there is no negotiation. So I respect your request that negotiations happen, but it looks like we're well past that. And so I would just, I guess, argue that the transparency starts again well before the consumer sees it. Wouldn't you agree?
Derrick Smith Sure. Transparency is transparent. We believe in transparency.
Representative John Maddox Thank you, Mr. Smith. I see no further questions from the committee for Mr. Smith. Okay. Thank you for your testimony. Is there anyone else in the audience who would like to speak for the bill? Absolutely. Just refresh our memories. We know who you are but go ahead and restate who you are.
Matt Jones Matt Jones. I'm an optometrist and live and work in Blytheville. I just wanted to clarify a few points. It was said that the Texas law was put on hold and that it's not in law. That is not factual. The law is actually well in effect. There is a lawsuit against two provisions, which is the tiering and the steering part of which NABCP and certain vision plans have filed a lawsuit against the state because the bill was passed. So it is actually, in fact, is just the tiering and the steering part has been put on hold while that is listed. You know, you talk about transparency again and debate on whether you can talk about this. But, you know, I was offered a six figure deal. We talk about transparency to the to the consumers. I was offered six figures last summer by one of the insurers to increase my percentage of my bill in their labs and to sell frames that they own.
Again, when you're talking about vertical integration, one of the particular insurers owns Ray-Ban, Oakley, Costa, DKNY. I mean, they actually own these companies. Ray-Ban, Costa, Oakley. I tried once to not carry these plans to try to help independent providers. And I did. And slowly they started getting bought up by them. And so I was offered a six figure deal to increase my product. That's not transparent to the patient where I would have to sell their products, which ended up costing more.
And I turned it down because that's not the way I want to do business. So that's not transparent either. And as far as Representative Dalby, your question, I think that goes back to what Mr. Smith is talking about. The language in our mind reads that they could advertise discounted products. You just can't rank to distinguish doctors not on quality of care, but rank and distinguished doctors based on discounts based upon these companies that these VBMs own. Thank you.
Representative John Maddox Any questions? Thank you for your testimony. Representative Eaves, you're recognized for a question.
Representative Les Eaves Thank you. I don't think I understand this issue quite as well, or even close to the way that Representative Achor does. But at the end of the day, if we're trying to do what's best for our constituents, I'm trying to understand the sentence in here that says, 'shall not distinguish between participating vision care providers based on discount or incentive offered by the vision care provider that are not not covered by the insurer.' I mean, what would be wrong with telling the consumer there's a discount available? Help me understand that.
Matt Jones Can Dr. Sugg answer that? Is he able to come back?
Representative Les Eaves I don't care. Blake Eddins can answer that if he wants to. I don't care.
Representative John Maddox Absolutely. We're still in the testimony. Dr. Sugg, if you want to come back, reintroduce yourself. We are still in the for portion of this. So absolutely we can do that. And the no's will have a chance to respond of course, too. So just reintroduce yourself, please, and you may proceed.
Joe Sugg Yes. Doctor Joe Sugg from Heber Springs, optometrist. And of course, for this bill. And so, if you would, repeat your question.
Representative Les Eaves Yeah, I'm just trying to figure out, I think I'm understanding the vertical integration part, but there's a sentence here that says that the vision benefit manager shall not distinguish based on the following characteristics, discount or incentive offered by the vision care provider and then that are not covered by the insurer. I mean, are we saying we don't want the end user to realize there's a discount available. Or am I misreading it? Just help me understand.
Joe Sugg The best example I can give you, with these companies, if you go in their directory and search for doctor, those doctors are going to be listed as premier or plus providers if they've purchased more of that company's product. So they're differentiated as a different level or recognized differently on those directories based on how much product they purchase. And that's what achieves that top tier or better looking appearance on the directory.
Representative Les Eaves What directory are you talking about?
Joe Sugg So the vision plans have their website directory. So if you're going to find a provider in your network and you search for that, then they offer lower copays, higher frame allowances, etc., to these providers who are considered premier or plus providers based on the amount of their product they have purchased and sell in their offices.
Representative Les Eaves Okay, thanks.
Representative John Maddox Representative Gramlich, you're recognized.
Representative Zack Gramlich Thank you. I've got a series of questions. So did you know if you were to go into a search engine and just search up an optometrist locator, it would take you to a website called EyeDoctorLocator.com? Did you know that if you were to go onto an AI and look up who owns this particular company, they would tell you it's Celular Luxotica. And did you know that, if I ask, well, do they own any insurance companies, they'll say that, yeah, we own I-Med Vision care, which when I went back to the website, it said that it is I-Location.IMedVisionCare. So did you know that? Did you know that if I asked, do they own any other things, and they would say that they own a variety of brick and mortar ophthalmic lenses, optical equipment, and vision care solutions along with design, manufacturing and distribution? I didn't know any of this just a few minutes ago. So it really kind of puts it into context. And I know we had someone who spoke earlier who said, well, I just don't know if anyone owns this stuff, but apparently at least this one, I-Med Vision Care owns different companies such as glasses.com, contactsdirect.com, LensCrafters, Ray-Ban, Target Optical and Oakley. Did you know that?
Representative John Maddox Thank you. Representative Dalby, you're recognized.
Representative Carol Dalby Thank you, Mr. Chair. Representative Eaves made me think of something, and I guess I would ask this question. I'm fascinated by the fact that they're ranking doctors as preferred by how many services are, in my world, we call it widgets, in the law world, how many things they're buying from this company.
So maybe should this bill have a provision in there that in what they can list and everything that they have to then identify that these doctors are ranked by how many products, glasses, lenses, or whatever that they buy. Have you all thought of that? It seems like that would certainly tell the consumer that the reason why they're being preferred is because they've bought X number of things. Just a question, thought.
Joe Sugg Yeah. So I think that's to a degree what we're trying to achieve by not allowing providers to be differentiated based on that. Not, I mean, obviously it doesn't say advertising providers based on how much of this product they do carry, but just trying to achieve neutrality in not differentiating those providers that carry more of that product.
Representative Carol Dalby I appreciate that. I just didn't see that clearly in the bill. And if that's the purpose, and understand I'm a co-sponsor. I'm not against the bill necessarily, but I want it to be really the very best bill that we send out and a really strong bill to put people on equal footing. And I'm not sure, after hearing Representative Eaves' question, whether or not this has been accomplished. But you're telling me you feel like it is by this wording, is that correct?
Joe Sugg That is our goal to try to accomplish that with this. We feel like we're trying to address that. I don't think I answered his question very well as far as prohibiting anyone from advertising discounts, just not differentiating between in-network doctors, doctors in the same network just based on that amount of product they've purchased and what level of provider they are.
Representative John Maddox Thank you, Representative Dalby. Representative Achor, you're recognized. Your microphone is still on so you might proceed.
Representative Brandon Achor Thank you, Mr. Chairman. So if I get this correct, what you have is the insurance company that you've agreed to be in network with listing its providers that its members have paid for this plan to use it, and it shows that there is a ranking and some sort of, for lack of a better word, steering towards providers who have purchased product that the insurance company has another indirect affiliate relationship with. Is that correct?
Joe Sugg Yes. That's correct.
Representative Brandon Achor Okay. So I think that to answer your question, the issue is, is that they're steering patients based off of a pay to play sort of scenario where it has nothing to do with the insurance company's agreement between the insurance and the provider. It has to do with this secondary relationship where if you've purchased a product owned by our sister company, you'll be listed higher in the provider database.
Joe Sugg That's exactly right.
Representative Les Eaves Representative Achor, this may be an odd way to do it, but the discount or incentive offered, is that the discount and incentive offered to the consumer? Are we talking about the discounts and incentives that have been offered to the vision care provider? I don't care who answers that.
Joe Sugg Yes. So, I mean, it could be both. I mean, it's our lower co-pays or higher frame allowances to the consumer, but again, based on how much of that product that provider has purchased, not for any other reason.
Representative John Maddox Thank you, Representative Eaves. Any further questions from the committee? Okay. Thank you, gentlemen. Okay. Is there anyone else who would like to speak against the bill? Absolutely.
Lisa Ann Forsythe Thank you, Mr. Chair. Just to clarify, several of the points that were brought up in the last discussion. Firstly, it is a flat out misstatement to say that the Texas law is in effect. It just isn't. I have the case number here for you. It is 5:23-CV-187-C. So I read that into the record. You can look it up. The law's been enjoined. Period. There's no further discussion to be had there, so that just needs to stop that whole discussion with respect to disclosing discounts. It is subjective at best to make a guess as to what the ranking criteria is in the directories.
If, as the representative asked, we want to have a disclosure that indicates what the ranking is based on, we would not necessarily even be opposed to that and would be willing to speak to the author's office about entertaining language of that sort. However, that is not the language that is in the bill today. The language in the bill today prohibits us from sharing discount information of any kind with consumers in any way in the directories. So the bill itself does not draw any differentiation based on anything.
So if there is a desire for greater transparency in terms of how the rankings are achieved, then I think it would be great for us to have a discussion about that and figure out how best to achieve those goals. And I don't believe that we would even be opposed to that. I just would like to have a discussion about it. So that would be great. Let's talk about it and figure out a way to achieve those goals. Because I believe where we are coming from is in favor of transparency. So if we need to provide more information to consumers to make that more clear, so be it.
But I don't think putting a gag order on the vision plans, prohibiting us to tell a consumer where they can go to obtain those services at a lower cost is beneficial to consumers. And I will say that all day long. So the ranking doctors based on amount of product purchased, I've never heard of such a practice. So if it exists, I certainly don't know about it. And as I mentioned, if we are going to aim for further clarification and disclosure to consumers, I believe that that issue would be alleviated entirely. And I do agree with the comment that the current language doesn't achieve the goal of trying to improve transparency for the end consumer, and that was what I said at the outset of this discussion.
And I really feel that we need to revisit the language as a result. With the question that was asked about, are the discounts transferring to the end consumer or are they only going to the insurer? They are absolutely going to the consumer. That's the entire point. So when they are listed in the directory and they indicate which providers offer what discounts, it is the discount that will ultimately be received by the consumer, whether that's in the form of a higher frame allowance or whether there's different ones depending on the different plans. But that definitely goes directly to the consumer. That is the target audience of that. So, I just wanted to clarify those points. Thank you, Mr. Chair.
Representative John Maddox Okay. Thank you. We do have some questions. Representative Eaves, I believe you were first.
Representative Les Eaves Thanks. So, are any of the doctors punished in any way or dinged in any way if they don't sell the products that these vision benefit managers want them to sell?
Lisa Ann Forsythe I don't know about dinged. In terms of, I know contracted providers, just like anywhere else in health care, you've got in network and out of network providers. And if you go in that in network, you'll recognize more bang for your buck, as it were, than if you go out of network. It's exactly the same in vision care. So I'm really not understanding the differentiation there because it's the same exact idea. You're going to have preferential providers just like you do in commercial health care. Same is true for vision health care. So I guess I don't really understand the distinction, because it's exactly the same.
Representative Les Eaves Are benefit managers trying to steer patients to those particular doctors that buy more stuff from the PBM, whatever it's called, VBM?
Lisa Ann Forsythe Firstly, VMB is a false acronym, as I mentioned before, so I will object to use of that term. For vision care insurers, do they offer incentives to go to certain contracted providers? Absolutely. But again, this is no different than we see in all of health care. If I go to get an MRI, I can go out of network and pay a higher deductible and higher co-insurance, or I can go in network and get a lower cost. It's exactly the same model, so I don't really understand the distinction.
Representative Les Eaves Actually, I don't understand why you're saying vision benefit manager is a made up term.
Lisa Ann Forsythe It is a made up term.
Representative Les Eaves Centene Vision uses that term.
Lisa Ann Forsythe I don't know who Centene Vision is, but none of our members use that term and I've never seen such a thing.
Representative Les Eaves I just googled it. They're all over the place. That's not a made up term.
Lisa Ann Forsythe I believe you. Well, I don't know about Centene. But we have 29 vision plans, none of which use that terminology.
Representative Les Eaves Oh, okay.
Representative John Maddox Thank you, Representative Eaves. Representative Ladyman, you're recognized. No. Representative Achor, you're recognized.
Representative Brandon Achor Thank you, Mr. Chairman. I appreciate you helping close some loopholes here. I do think there is a concern here where you're using the term in network and out of network as far as being a price differentiator. All of these providers are in-network. You are differentiating them. They've signed a contract to be a provider, and then they're tied to a separate incentive that involves purchasing certain products.
And that's how those people are being. So they've agreed to offer your members a service. They're held to a quality standard. They can be kicked out of network, and yet they are under recognized for not purchasing a separate line of services that is owned by the insurance company. So this is not an in network, out of network issue. They're all in network. And they're being ranked on a separate non quality based issue. It is not a quality based issue for the consumer to know that provider X bought more of the product than provider Y.
Lisa Ann Forsythe I would agree with you if that was actually correct, except that that is not the basis for the differentiation. That's convenient.
Representative Brandon Achor What is the basis for the differentiation?
Lisa Ann Forsythe Some providers are willing to offer a lower contracted rate to see folks than other providers. That is the bottom line. Especially newer practices are more likely to charge less money for folks who come in, and they're willing to charge less to see that same patient than another provider. So, like I said, if we offer transparency in terms of the differentiation, I believe that addresses the issue that you're mentioning.
Representative Brandon Achor So you're saying there are in-network providers who have agreed to be a more further in-network provider?
Lisa Ann Forsythe I guess you could look at it that way. Sort of, yes.
Representative Brandon Achor And those opportunities are not offered universally? Or they are offered universally to all the current network providers?
Lisa Ann Forsythe I don't know, every company does things differently, and that's proprietary. I could I can find out. I don't know about all the specifics of the contracting, but to your point about the product purchasing that you mentioned a minute ago, I believe that that is something that we could easily handle to provide differentiation in the directory on that basis. So if that's where disclosure would be helpful, then I think we should talk about that as I mentioned before.
Representative Brandon Achor Again, and I'll just reiterate that the concern is that these are not quality based metrics that you're ranking these providers on, that your members don't receive a higher quality of service.
Lisa Ann Forsythe So, okay. Let me ask a question in response then. When you go and look at a directory today for commercial health and you're looking at, I don't know, I'm trying to think of an example. Orthopedist, for example. In your estimation, how would one create a differentiation amongst those providers?
Representative Brandon Achor Well, we use the in network and out of network that they've agreed to those contracted terms in the rates. So the cost sharing of 20/40/60 or the cost sharing percentages 10/20/30. It's in network and it's out of network. I've never seen a chart that shows a flow of, here are the in networks that play ball in a whole different arena, here are the in networks that don't. I mean you either are in network or you're not.
And so to hear that you have in network providers and then you have you them competing against each other in the network they've agreed, it seems counterintuitive to the consumer actually, that this isn't quality based, that you're talking about metrics where they've agreed to take things cheaper or they've agreed possibly, we don't know, are they buying from a certain product line that's owned by the insurance company? I mean, you're ranking providers, which is a, I would say, direct way to steer patients to a higher ranked provider that is not based on a higher quality of care.
Lisa Ann Forsythe Okay. So then I guess my question to you would be how would this bill address that issue? Because I don't feel that in any way it would address that issue.
Representative Brandon Achor If you removing the ranking process altogether, then you're just informing your members that here the people who have agreed to participate in our network.
Lisa Ann Forsythe With no differentiation whatsoever for something that the consumer will ultimately have to purchase. I don't see that makes any sense.
Representative Brandon Achor The differentiator is probably the address, the hours, the location.
Lisa Ann Forsythe There's a lot more differentiation in health care than hours and location, with all due respect.
Representative Brandon Achor And you all have offered zero of differentiators. The only differentiator you've offered is, I guess, that they are willing to do stuff cheaper. Which differentiators are your members willing to offer?
Lisa Ann Forsythe Perhaps what would be best would be to have a discussion about how to address that issue. If you feel that that is truly the issue, and we could amend the bill language to accomplish that goal, because nothing in this bill would improve the issue that you are raising.
Representative Brandon Achor I respectfully disagree.
Representative John Maddox Thank you, Representative Achor. Representative Wooten, you're recognized.
Representative Jim Wooten Yes, sir, Mr. chairman. Thank you. Would you give me an another definition of why a vision benefit manager is inadequate or not?
Lisa Ann Forsythe Yes I will. I didn't discuss this before, but I will. Vision care plans are not VBMs and bear no resemblance to pharmacy benefit managers or PBMs. Firstly, vision care is a voluntary benefit, meaning that people opt in or out if they would like to participate in the plan. If you have a health plan and your health plan uses a PBM, you don't get a vote as to whether the PBM will be utilized for that health plan or not. Completely different business model.
Vision care can be purchased with or without a medical plan on your own. No one goes and buys anything from a PBM directly. It is a B2B model. It is not a B2C model. Vision insurance can also be purchased independently by consumers on the open market. So you can go out today and buy a standalone plan yourself. I have not met a person yet who bought anything directly from a PBM. I don't think that's a real thing. Negotiated discounts are passed on to consumers with the vision plan, whereas the PBM savings are the black box they referenced before that are opaque and opt in.
Those savings flow back to the PBM itself, or possibly the underlying insurer. Vision plans have simple or no formularies, whereas vision plans have simple or no formularies, and we offer patients choices based on different tiers, whereas PBMs have complicated and nontransparent formularies. And the PBMs will dictate the medication choices that the consumer has to abide by if they're participating in that plan. Vision plans provide specified annual benefits. I mentioned that before. You usually get a frame and allowance, and you usually get something towards your vision exam.
It helps to lower the out-of-pocket costs for the patient. Whereas one of the largest criticisms leveled at PBMs is that they are cost drivers as opposed to driving the cost down for the consumer, and health care members do not always benefit from PBM negotiated prices. That's been all over the news. Quite often the opposite is true. Rebates can serve as a cost driver on the PBM side and in the drug space. None of that is applicable in our space at all. So really we have nothing in common with pharmacy benefit managers. We don't operate similar to them in any way, shape or form.
Representative Jim Wooten Thank you.
Representative John Maddox Thank you, Representative Wooten. Seeing no further questions, ma'am, we appreciate your testimony. Thank you for being here today. Mr. Smith, you came to the table. Do you have anything you'd like to testify to since you're here?
Derrick Smith Since I'm here, I'll only say briefly that the discussion that's happened in the last few minutes, especially involving Representative Dalby, I think, highlights the point of really wanting an opportunity to discuss real concerns and real issues. Not all vision care plans own materials providers or facilities. Yet this bill, as written, would prevent all of those plans from disclosing discount information and things of the sort that would be beneficial to a consumer.
If the concern is integrated offerings, certainly happy to have a conversation about that. We think a conversation would be helpful to the committee. We think the conversation will be helpful to the sponsor and the proponents of the bill. And that's what we're asking for is an opportunity to do that, rather than passing a bill that does way more than it's been described. Thank you.
Representative John Maddox Thank you, Mr. Smith. Any questions for Mr. Smith? Okay. Thank you for your testimony. Representative Eubanks, you are recognized to close for your bill.
Representative Jon Eubanks Thank you, Mr. Chair. Tort reform is easier than this. My gosh. Members, I live in a rural community. I have one optometrist in one town and one optometrist in another town, and they provide services to people that cannot travel to larger metropolitan areas, whether it be Fort Smith, Russellville or Little Rock. So my goal here is to try to make sure that my local optometrists, my local providers, are in business to serve my constituents. And that is the sole purpose of me running this bill. I am very familiar with vertical integration, not in the health care arena, but in the farming arena. And I know that there is no possibility that you ever have an opportunity to really negotiate. It is take it or leave it situation. And with that, I would make a motion do pass.
Representative Jon Eubanks Okay. We have a motion to pass from Representative Eubanks. That is a proper motion. At this time members we've had a lot of debate, but is there any discussion on the motion? Okay. Seeing none, all in favor of motion do pass, aye. Any opposed, say no. Congratulations, Representative Eubanks, you have passed your bill. Members, we are not leaving just yet.
We have some announcements. Do not forget the picture. 9:45 next Wednesday. And we're going to hear HB 1177 on special order next Wednesday. So that's going to be the bill we hear first. And if and only if we get through that are we going to hear other bills subsequent to that HB 1177. And again the photo is on the House steps for clarification on that. Any other business before the committee today? Thank you. We are adjourned.
