Legislature(2001 - 2002)
04/09/2002 03:00 PM House HES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 407-CERTIFICATE OF NEED PROGRAM CHAIR DYSON announced that the first order of business would be HOUSE BILL NO. 407, "An Act relating to the certificate of need program." Chair Dyson announced his intention to move HB 407 from committee today. Number 0335 REPRESENTATIVE COGHILL moved to adopt version 22-LS1389\O, Lauterbach, 4/4/02, as the working document. REPRESENTATIVE COGHILL explained that on page 2, lines 30-31, through page 3, line 3, the inserted language clarifies that when a facility changes and transfers its certificate of need (CON), that it stay within the same use and bed type. RYNNIEVA MOSS, Staff to Representative John Coghill, Alaska State Legislature, continued with the changes in Version O. She explained that Version O clarifies that when a person replaces a facility or relocates a facility that was obtained under a CON, a new CON is not required, although the requirements of the CON must be followed. This change is on page 3, lines 6-7. CHAIR DYSON related his understanding that all that is being required with the change on page 3, lines 6-7, is that the [CON] contract be followed. Number 0495 ELMER LINDSTROM, Deputy Commissioner, Office of the Commissioner, Department of Health & Social Services (DHSS), thanked the sponsor's staff for the work on HB 407. Mr. Lindstrom recommended that the committee adopt Version O. REPRESENTATIVE COGHILL restated his motion to adopt version 22- LS1389\O, Lauterbach, 4/4/02, as the working document. There being no objection, Version O was before the committee. Number 0590 REPRESENTATIVE CISSNA moved that the committee adopt Amendment 1, which read [original punctuation provided]: Add new section under temporary law: The State of Alaska Department of Health and Social Services shall develop a comprehensive health plan for the state, making use of, to the maximum extent, existing health care plans and processes employed by the Department of Health and Social Services, other state agencies and local community efforts. A focus of the plan shall be to develop community specific health information to assist the Certificate of Need program in evaluating applications for certificates of need. A report will be submitted to the legislature by January 1, 2004. CHAIR DYSON objected. REPRESENTATIVE CISSNA specified that Amendment 1 is basically a conceptual amendment requiring the department to develop a comprehensive health plan for the state that utilizes what already exists in every community. She noted that the January 1, 2004, date specified in the amendment could be an earlier date. She informed the committee that the state's current health care plan was developed in 1983. She said health care is one of the fastest growing industries in the state. Therefore, Amendment 1 provides the state the chance to review what is currently on the books and [decide] whether the state is going in the right direction. CHAIR DYSON related his understanding that Representative Cissna didn't want the bill to pick up a fiscal note, which is why existing staff are being utilized under existing duties. REPRESENTATIVE CISSNA confirmed that she didn't want a fiscal note. REPRESENTATIVE COGHILL acknowledged that the title of HB 407 is fairly broad, as is [Amendment 1]. However, he indicated the need to ask whether there would be any legal ramifications with the adoption of Amendment 1. He said that the request to develop a plan is outside the scope of HB 407. Number 0850 MR. LINDSTROM remarked that [Amendment 1] in regard to the title is probably a "close call." [Amendment 1] might well fit under HB 407 since one of the focuses of the amendment would be related to assisting the CON program. Mr. Lindstrom recalled his testimony in previous hearings regarding the lack of a comprehensive health care plan. He pointed out that during the course of the hearings, the committee has heard two very different views of what HB 407 will do. Mr. Lindstrom said that he hasn't been very helpful in deciding how to make sense of those arguments because DHSS doesn't have the data to make the determination as to which view is correct. "My guess is they could both well be true and even in the same community, although at different points in time," he said. Therefore, to the extent that a [comprehensive] health plan would provide the data to better evaluate these CONs, [the amendment] would be a good idea. Mr. Lindstrom said that he wasn't sure what the fiscal note would look like, although [there would be one]. Number 0982 REPRESENTATIVE COGHILL announced that he would be voting against the amendment, although he felt some plans should be made by the state. He noted his struggle with regard to whether the government always knows best. Representative Coghill said, "I know we already have comprehensive plans, except for we're asking this one to be a focus now to develop community specific health information that's going to assist the CON. And I'm trying to say we have people doing business plans that do that. I just struggle with it." He mentioned that perhaps it's different debate, which he didn't want to include in this bill. REPRESENTATIVE STEVENS related that he would be more comfortable if more people were involved in deciding on this matter. Representative Stevens turned to the timeline in Amendment 1 and asked why it couldn't be accomplished by January 1, 2003. REPRESENTATIVE CISSNA responded, "I think that's better than ... what's happening now, personally." There is huge pressure to deliver affordable health care. In response to Chair Dyson, Representative Cissna said that she would accept Representative Stevens' suggestion to change the date in the amendment to January 1, 2003, as a friendly amendment. Number 1175 CHAIR DYSON related that there is a lot of frustration in the provider community. Therefore, he felt there should be a specific task force with resources. Although HB 407 is fairly important, it will have a fairly tough time moving through this session. Amendment 1 will generate some support for HB 407, but will also contribute to HB 407 not passing this session. Chair Dyson announced that he would vote against Amendment 1. A roll call vote was taken. Representatives Wilson, Stevens, Cissna, and Joule voted for Amendment 1 [as amended]. Representatives Coghill, Kohring, and Dyson voted against Amendment 1. Therefore, Amendment 1, as amended, passed by a vote of 4-3. Number 1328 JOE FAULHABER testified via teleconference. He announced that he is an unpaid volunteer representing the people of Fairbanks, who own the local hospital. Mr. Faulhaber stated that HB 407 isn't about free enterprise and competition. He explained that Fairbanks residents support the local hospital with hundreds of thousands of dollars of cash donations. Despite community support, [the hospital] enjoys nominal excess revenue of approximately a million dollars, which is scant in the context of a $100-million budget. "As a practical matter, patients seldom choose where procedures are to be performed, doctors do," he said. Therefore, without CON protection, doctors could perform profitable procedures in their [office] while performing money-losing procedures in the community hospital. Furthermore, if there was a complication during a procedure performed in the doctor's office, where would that critically ill patient be taken? Mr. Faulhaber stated, "If our community loses CON protection, expect to see us in Juneau next year. We'll be asking for an increase in Medicaid rates and money for capital projects because you gave away our ability to self-fund." Number 1453 GEORGE LARSON testified via teleconference. Mr. Larson turned to the population delimiter, which will impact only three communities in the state: Anchorage, Fairbanks, and the Matanuska-Susitna ("Mat-Su") Borough. Mr. Larson stressed the need for the committee to consider how vastly different the Mat- Su Borough is from Anchorage and Fairbanks, since it is a second-class borough that covers an area of 24,000 square miles, about the size of West Virginia. He further informed the committee that this size of borough, with an estimated population of 62,000, results in a population density of about 2.6 persons per square mile. The most heavily developed portion, the core area, encompasses Palmer and Wasilla and the developed areas between and around these two communities, which accounts for approximately 42,000 people. Therefore, the core area falls well under the 55,000-population delimiter in HB 407. However, most of the services provided in the borough are located within this core area. Mr. Larson pointed out that there is an acute-care facility in Palmer, an outpatient center in Wasilla, as well as a history of collaboration with the rural primary-care providers throughout the borough. This collaboration has assisted in the improvement of the quality of care and access to remote areas outside the core area. In summary, Mr. Larson requested that the committee consider the demography and geography of the Mat-Su Borough. Number 1580 DEE SKRIPS, Registered Nurse; Administrator, Health South Alaska, testified via teleconference in support of HB 407. Ms. Skrips said that Health South Alaska, as a provider of ambulatory services in all 50 states and internationally, is very aware of the rising costs of health care as well as the importance of getting a handle on these costs. As a national corporation, Health South has an extensive background working in this state with and without the CON. Ms. Skrips pointed out that to date, no states have been on record as seeing a negative effect as a result of the CON. If there have been no adverse effects to other states without the CON, then it would be difficult to imagine that it's different in Alaska. She informed the committee that there is no credible evidence that the CON has ever increased the cost of health care to those states without it. MS. SKRIPS highlighted that ambulatory care, such as Health South Alaska, is not on a cost-reported schedule like that of the larger acute-care hospitals. Furthermore, ambulatory-care facilities don't have the ability to shift costs as acute-care facilities do. Ambulatory care facilities do have tax liabilities, and as a for-profit organization taxes are paid on all aspects of the business. However, nonprofit acute-care facilities don't pay taxes. "There is a great misunderstanding that the ambulatory or freestanding surgical centers cherry pick hand-picked surgical cases," she noted. In conclusion, Ms. Skrips reiterated her support of HB 407 due to the choice provided to the patients. Number 1697 JOSHUA JENSEN, Finance Director, Heritage Place Nursing Home, testified via teleconference in opposition to HB 407 because the current CON requirements serve the state's best interest. He characterized the revisions of HB 407 as confusing. He related his belief that this issue deserves more review given the complexities and impact of the legislative action this year. Therefore, Mr. Jensen urged the committee to not pass HB 407 without careful and considerate review of all the impacts. Mr. Jensen relayed his knowledge that committee members and the House leadership are concerned with any legislation that requires a mandated increase in the cost of state government, which is illustrated in the fiscal note for HB 407. Number 1750 MICHAEL KELLY testified via teleconference. Mr. Kelly announced that he strongly opposes HB 407 because it will harm the system in Fairbanks. Furthermore, elimination of the CON is risky experimentation. Because of Fairbanks's size and location, it has a limited and fragile health care market. Thirty years ago the health care market in Fairbanks was an absolute mess, and thus the community organized to form a nonprofit health care foundation to provide the infrastructure that was necessary. That organization, under the rules of the CON, has worked superbly relative to access, cost, and the provision of a broad range of excellent health care services. Mr. Kelly said HB 407 is about a few doctors who make "six figures" and want to add a bit more to that. Although that doesn't make those doctors bad, "you owe a lot more to the 90,000 folks who live here in Interior Alaska than to be just listening to a few docs," he said. Furthermore, there is the [push] to build a surgery facility in order to take the more profitable procedures from the Fairbanks Memorial Campus. Although the current CON process isn't perfect, it helps to protect against cherry picking and profiteering in the limited health care market. Moreover, the CON process helps to continue the excellent service that has taken 30 years to build up in Fairbanks. Mr. Kelly concluded by saying HB 407 is bad law. Number 1854 HARRY PORTER testified via teleconference. He informed the committee that he helped create the Fairbanks Memorial Hospital board. He noted that he has noticed Fairbanks's failure to change even though there was open competition; he related this comment to all types of business. (Indiscernible.) He remarked that in the minutes that it will take to vote on HB 407, "you could put the skids under the hospital that it took 30 years to create." Number 1935 SUSAN McLANE, Registered Nurse, Fairbanks Memorial Hospital, testified via teleconference in opposition to HB 407. Although she said she understood the many concerns with the existing CON program, she agreed it could be difficult. However, she said she didn't understand the sizable leap from problems with the process to its complete elimination in three areas of the state. She indicated the need to double the tax (indisc.) in order to evaluate the effectiveness of the program and make recommendations for improvement. She mentioned nationwide and statewide shortage of nurses, and that the emergence of new surgery centers in Alaska would further dilute the labor pool. Ms. McLane closed by suggesting that a task force be appointed to review this important issue. Number 2000 JENNIFER HOUSE, Employee, Fairbanks Memorial Hospital, testified via teleconference in opposition to HB 407. Ms. House began by saying that HB 407 is based on the erroneous assumption that health care is a free market and that this legislation will lead to increased competition and thus result in lower costs to consumers. However, consumers of health care aren't informed consumers and have little or no control over the services they receive. Physicians have the control, which is why there won't be a decrease in the cost of outpatient services to consumers. She charged that there are no incentives for physicians to provide these services at lower prices. However, she suggested that physicians are likely to charge more than the hospital because the physician is in a unique position to influence the patient. Cost is rarely an important factor for a patient determining where to obtain health care services. Furthermore, Ms. House said that this competition won't cause the hospital to lower its prices. She charged that it would have little to no impact in retaining patient volume, but would most likely result in increased charges that will impact consumers across the state. Ms. House explained that the CON process is critical in ensuring that under- and over-capacity in our communities (indisc.). [Elimination] of the CON process will only benefit physicians and specialty providers, not the majority of the population "you" represent. Number 2090 DR. DAVID McGUIRE, Orthopedic Surgeon, testified via teleconference in support of HB 407. He said, "The problem with change is always that everybody who has to suffer change is opposed to it." Dr. McGuire remarked that the CON was a bad law to begin with, which the federal government realized in 1987 when it eliminated it. The CON hasn't controlled costs, but rather has created another bureaucracy and the opportunity to maintain a monopoly. Dr. McGuire said Fairbanks is an example of how a good law is applied badly. He pointed out that the Fairbanks Memorial Hospital was given permission to build its oncology center without a CON. Dr. McGuire stated that if the CON process is to work, everyone should have to apply [and be treated equally under the process]. DR. McGUIRE turned to the assertion that patients are uninformed health care consumers. He said those aren't the patients that he sees. "I think, if the hospitals are as good as they say they are, then a surgery center comes to town, nobody's going to use it because they recognize the hospitals are better. There really shouldn't be a problem," he said. Dr. McGuire reiterated that the CON process is a bad law that hasn't worked in Alaska and hasn't amounted to anything positive. Furthermore, the way in which the CON process is applied is unfair. In conclusion, Dr. McGuire urged the committee to vote for HB 407. Number 2204 ROBERT GOULD testified via teleconference in opposition to HB 407. Mr. Gould informed the committee that in 2001 the gross patient revenue of Fairbanks Memorial Hospital was approximately $147 million and that the net income was approximately $1.4 million, about 1 percent. Mr. Gould said he would begin by reviewing two reasons why competition won't decrease costs in Alaska. He recalled that three years ago when the CON discussions began, Fairbanks Memorial Hospital had the lowest charges for the most common outpatient surgery. In those three years, those charges haven't changed. However, during that same three years, charges [for the most common outpatient surgery] has increased 22 percent. Mr. Gould noted that Anchorage has three [ambulatory] surgery centers and thus is the most competitive market in the state, and yet the prices are higher than in Fairbanks. MR. GOULD turned to MRI (magnetic resonance imaging) charges. Recently in Fairbanks a clinic has opened a good clinic MRI, although it isn't a hospital-quality MRI. Those clinic MRIs don't produce the same images nor are those images as clear or similar quality to that of the hospital MRI. However, the clinic's charges are 43 percent higher than the hospital charges. Therefore, it's an example of when physicians control patient referrals and thus it doesn't matter what is charged. MR. GOULD suggested that if HB 407 passes, the hospital should immediately raise its prices 22 percent plus the cost of a plane ticket to Anchorage in order to compete with Anchorage. "We won't need to compete with the physicians if they have their own surgery center because all you're going to do is divide the market between who does their surgeries at which facility," he explained. Patients will choose which physician not which facility. "Immediately, my prices don't matter because the surgeon that has the share in their own surgery center is not going to send the profitable surgeries, the ones where we still get fair reimbursement, over to the hospital; they're going to do them in their own shop. That's the problem with this bill," he said. Mr. Gould concluded by urging the committee to not throw away 30 years of community planning all for the sake of increasing revenue to a few individual shareholders. "The reimbursement system is what's broken, and you're trying to fix it by eliminating the CON legislation," he stated. Number 2333 JIM LYNCH, Director, Human Resources, Fairbanks Memorial Hospital, testified via teleconference in opposition to HB 407. Mr. Lynch urged the committee to take time to study this issue thoroughly. He turned to the workforce challenges in geographically remote locations such as those in Alaska, specifically, the nursing shortage. TAPE 02-28, SIDE B MR. LYNCH stated that individuals such as nurses and radiologists are hard to find, and their salaries are increasing. If additional institutions are created without being able to apply the in-state labor that is necessary, [the state] will fail miserably at meeting its health care needs at any reasonable cost. He requested that the committee consider that factor when considering HB 407. Number 2330 BRIAN SLOCUM, Administrator, Tanana Valley Clinic, began by informing the committee that the Tanana Valley Clinic is the largest entity in the state, with 36 health care providers. Tanana Valley Clinic has been providing patient care since 1959, which is ten years prior to the existence of Fairbanks Memorial Hospital. Mr. Slocum said that there have been some very concerning claims. The hospitals across the state have been raising the issue of cherry picking. With respect to the Tanana Valley Clinic, everyone who shows up for care is served. Due to that [policy], the clinic has lost 11 of its 28 doctors in less than two years. Those physicians have left, in part, because they can't make the living at the clinic that they could at the hospital. MR. SLOCUM said 24 percent of the clinic's patients are Medicare/Medicaid patients, and 9 percent have no insurance at all; combined, this is one-third of the patients. He mentioned that over the past three years, the clinic has provided over $17.7 million in charity care. "To the extent that the other docs in the community are doing the same thing, then I'll think you'll find that the charity care provided ... by the doctors exceeds the free care provided by the hospital, if you add it up," he said. The clinic can't continue to provide that much free care and remain a taxpaying for profit business. Furthermore, such free care can't continue in the face of the 4.5 percent Medicare reduction that occurred in January. MR. SLOCUM turned to the charge that in those states without the CON, the patients receive worse care. The only study that he recalled from testimony was a Florida study that dealt with cardiac surgery. Mr. Slocum said there is probably some legitimacy to that because cardiac surgery shouldn't be done by centers that only do a few each year. Therefore, Mr. Slocum announced that no cardiac surgery would be performed in [the clinic's] ambulatory care center. The center only performs those procedures on the federal government's approved list. Mr. Slocum informed the committee that there are studies that [refute the notion] of higher mortality rates in non-CON states. He noted that the committee packet should include three such studies illustrating that those states with CON laws or other regulations limiting the care delivered have significantly higher mortality and morbidity rates. MR. SLOCUM pointed out that one of the letters sent to the [committee] says, "If the CON law is modified, this could very likely lead to catastrophic increases in cost statewide, and perhaps even to the closure of some Alaska's most vulnerable hospitals." However, Mr. Slocum said that he has provided the committee with two studies proving that there is no increase in statewide health care costs and no decrease in hospital profits in all of the states that have eliminated the CON laws. In regard to the assertion that the elimination of the CON will result in hospitals being unable to provide charity care, the studies prove that there is no decrease in hospital profits and no discernible decrease in the amount of charity care provided in the 15 states which have eliminated the CON. Therefore, Mr. Slocum urged the committee to support and pass HB 407. Number 2054 REPRESENTATIVE WILSON inquired as to the number of doctors and nurses that the Tanana Valley Clinic employees. She also asked whether the clinic intends to employ more. MR. SLOCUM answered that the clinic has a total of 28 doctors and 10 mid-level providers who are nurse practitioners or physicians assistances. The clinic is losing two doctors next week who will be replaced. The clinic recruited four doctors last year and will recruit five more this year. He informed the committee that it costs about $50,000 per new doctor brought into the community. Without the clinic providing these costs, the state would be faced with them. He explained that there are about 1.5 to 2 nurses per physician. Those nurses are often brought in through out-of-state recruitment and nursing magazines, and locals who come as part of the Fort Wainwright or Eielson Air Force Base contingent. In further response to Representative Wilson, Mr. Slocum said, "We continue to grow ... because we seem to be the only entity other than the hospital in Fairbanks that continues to be able to step up to the plate and deal with these issues." He mentioned that nurses assistants, medical assistants, LPNs, RNs, et cetera are utilized as well. REPRESENTATIVE WILSON pointed out that the nursing shortage is the biggest workforce shortage in the state now. Therefore, [the nursing shortage] might dilute the situation as well. Representative Wilson indicated that she is conflicted on this issue. MR. SLOCUM acknowledged that he has often heard that the [clinic] shouldn't offer new services to the patient population in the community because of a lack of technical clinical people. At its simplest the [question] becomes whether doctors should be brought in to provide health care services to the community [even though there is a] struggle to find nurses. To that question, the answer is yes; the doctors need to be brought in to serve the needs of those leaving doctors. Number 1930 MIKE POWERS, Fairbanks Memorial Hospital, testified via teleconference. Mr. Powers commented on the difficulty with this issue in that professional friends are on opposite sides of this economic issue. This is tearing apart the community, he said. Mr. Powers acknowledged that the Tanana Valley Clinic is a good neighbor in that it takes Medicare and Medicaid patients, which not every physician in Fairbanks does. However, the Tanana Valley Clinic isn't the largest property taxpayer but rather the Greater Fairbanks Community Hospital Foundation is with its physician office building. He stressed that there is no profit in the foundation as there are considerable capital costs associated. MR. POWERS turned to the testimony regarding the Tanana Valley Clinic's mention of a 4.5-percent reduction in Medicare, while the hospital faces a 17-percent reduction this year. In regard to the Florida study, Mr. Powers explained that the study is important relative to the CON because in states that with CONs there is higher efficiency, efficacy, and equality. With regard to unreimbursed care, Fairbanks Memorial Hospital provided $34.5 million in unreimbursed care. He pointed out that of the 37 states that have CONs, two of those states that have repealed the CONs brought them back due to a proliferation of ambulatory surgery centers and cherry picking. MR. POWERS concluded by saying that this is a very divisive issue and that the community needs to work together to develop a health plan and recruit physicians. This is all an effort to eliminate barriers so that physicians can do what they do best while [allowing] hospitals to provide technical components of services that no one else provides. Mr. Powers stressed that [Alaska] is in a fragile state because every community, save Anchorage, has one hospital. The numbers alone don't substantiate the need for fundamental changes to the CON law. Therefore, Mr. Powers urged the committee give this much study in order to develop a CON law that addresses the needs of a rural state. Number 1757 MR. LINDSTROM commented that Version O is an improvement over the previous [versions]. Mr. Lindstrom noted his appreciation of the changes in Section 1 relative to conversion. However, he continued to express reservations about the basic notion of dividing the state into communities larger than 55,000 or smaller. There is no data to determine whether such makes sense. He referred to page 2, lines 3-10, subsection (e), and said he didn't understand the language. He related his belief that subsection (e) appears to be contradictory or subsumed within subsection (d). Section 2 regarding the ability to replace a facility without going through a CON is still cause for concern, particularly in smaller communities. MR. LINDSTROM indicated he also didn't understand the language on page 2, lines 30-31, and page 3, lines 1-2. Although he wasn't sure it would allay all of the [department's] concerns, Mr. Lindstrom suggested that the language could say that nursing home or psychiatric beds couldn't be replaced without a CON. That language would get at the department's issue with the department being the primary payer of those two types of facilities. MR. LINDSTROM informed the committee that he had a draft fiscal note to Version J, which he believes remains relevant to Version O. He noted that some of the verbiage would require change, and thus those changes would be made and the fiscal note resubmitted. The estimated costs are significant. He directed attention to page 3 of the fiscal note, which identifies those facilities that the department believes might generate those additional costs. Mr. Lindstrom said, "I cannot stand before you and say that I have any high degree of confidence that this is the exact number for a fiscal note, because on all of these, it assumes that we know what a Providence or a Fairbanks Memorial ... are ultimately going to do as their own business decisions." However, Mr. Lindstrom related his belief that HB 407 will have a significant impact as has been related throughout the testimony. Number 1555 REPRESENTATIVE WILSON asked if the bill will proceed to the House Finance Committee since a fiscal note has been attached. CHAIR DYSON informed the committee that the committee can accept the department's fiscal note or zero it out, or can forward the bill with several fiscal notes. In regard to the latter case, the Speaker of the House has the authority to decide which fiscal note the legislation has. Chair Dyson related his understanding that legislation with a fiscal note mandates a Finance Committee referral. The committee took an at-ease from 4:10 p.m. to 4:12 p.m. CHAIR DYSON announced that the vote on HB 407 would be delayed until Thursday, per the request of the bill sponsor. He further informed the committee that there will be discussions with those carrying the companion bill to HB 407, in order to develop some congruence between the bills. [HB 407 was held over.]
| Document Name | Date/Time | Subjects |
|---|