Legislature(2007 - 2008)CAPITOL 106


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Heard & Held
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HB 345-MEDICAL FACILITY CERTIFICATE OF NEED                                                                                   
10:29:12 AM                                                                                                                   
CHAIR WILSON announced that the  final order of business would be                                                               
HOUSE  BILL NO.  345, "An  Act amending  the certificate  of need                                                               
requirements  to  exclude  expenditures  for  diagnostic  imaging                                                               
equipment in certain circumstances."                                                                                            
10:29:42 AM                                                                                                                   
REPRESENTATIVE  MIKE KELLY,  Alaska State  Legislature, disclosed                                                               
his  uncompensated service  to  the  Greater Fairbanks  Community                                                               
Hospital Foundation  and to the  Committee on Governance  for the                                                               
American  Hospital  Association.    He,  as  the  prime  sponsor,                                                               
introduced HB 345  and stated that the bill is  a compromise that                                                               
attempts  to  eliminate   the  CON  program  for   a  portion  of                                                               
businesses, thus is  a step in the direction  of more competition                                                               
in the  health care industry.   Representative Kelly  pointed out                                                               
that provisions for a [health  care commission] and a health care                                                               
information office are  not included in HB 345,  and he expressed                                                               
his concerns  that both of these  provisions constitute increased                                                               
government  involvement  in  private business.  In  addition,  he                                                               
opined that  50 percent of  the industry  is not included  in the                                                               
information office data.                                                                                                        
10:3:55 AM                                                                                                                    
CHAIR  WILSON noted  that, page  6,  [paragraph (2)]  of HB  337,                                                               
     The facility cost and provider cost...                                                                                   
10:34:22 AM                                                                                                                   
REPRESENTATIVE  KELLY opined  that  the  requirement to  disclose                                                               
costs by private sector businesses  was an "additional step."  He                                                               
then asked his staff to review HB 345.                                                                                          
10:34:34 AM                                                                                                                   
DEREK MILLER,  Staff to Representative  Mike Kelly,  Alaska State                                                               
Legislature,  presented  the  sectional   analysis  for  HB  345,                                                               
Version  E, on  behalf  of Representative  Kelly,  sponsor.   Mr.                                                               
Miller  informed  the committee  that  Section  1 adds  a  cross-                                                               
reference to an  additional exemption to the  Certificate of Need                                                               
process in existing statute.   Section 2 defines "critical access                                                               
hospital"  as  a  small,  rural,  hospital  that  is  financially                                                               
challenged given the  population that it serves.   Section 3 adds                                                               
an exemption that  permits a person to make an  expenditure of $1                                                               
million  or  more  for   diagnostic  imaging  equipment,  without                                                               
authorization under the terms of the  CON process, as long as the                                                               
equipment is located in a borough  with a population of 60,000 or                                                               
more, in  a city that does  not have a critical  access hospital,                                                               
and  is  at least  50  percent  owned  by  one or  more  licensed                                                               
physicians   who   are   qualified  to   and   actually   perform                                                               
interpretations  of   the  images   produced  at   the  facility.                                                               
Finally, Section  4 provides  applicability standards  for health                                                               
care  facilities in  existence  or proposed  after the  effective                                                               
date of the act.                                                                                                                
10:36:19 AM                                                                                                                   
REPRESENTATIVE   SEATON  asked   for   an   explanation  of   the                                                               
requirement  of  50  percent ownership,  by  physicians,  of  the                                                               
diagnostic imaging facility.                                                                                                    
REPRESENTATIVE KELLY suggested that  the percentage was chosen as                                                               
a compromise between the opposing parties.                                                                                      
10:38:43 AM                                                                                                                   
REPRESENTATIVE   SEATON  further   asked  for   the  purpose   of                                                               
requiring physician  ownership, if the  intent of the bill  is to                                                               
open competition.                                                                                                               
REPRESENTATIVE KELLY  explained that  physician ownership  is not                                                               
prevented,  but  if participation  is  less  than 50  percent  by                                                               
physicians, CON  laws still  apply.  The  intent is  to encourage                                                               
competition, as long as the two parties are working together.                                                                   
10:40:53 AM                                                                                                                   
REPRESENTATIVE  GARDNER  asked  whether  this  was  a  compromise                                                               
between the hospitals and the physicians.                                                                                       
REPRESENTATIVE  KELLY  said  that  the  bill  was  a  significant                                                               
compromise,  but the  dispute is  not entirely  between hospitals                                                               
and physicians.  House Bill 345  was a solution based on what has                                                               
been done in other states that have improved their CON laws.                                                                    
10:42:04 AM                                                                                                                   
REPRESENTATIVE GARDNER  asked for  the position of  the consumers                                                               
in the division between the hospitals and the doctors.                                                                          
REPRESENTATIVE KELLY opined that it  depends on where the federal                                                               
government  leads  this  debate.   Unlike  fire,  car,  and  life                                                               
insurance,  the consumer  is  a  small part  of  health care  and                                                               
remains uninformed,  uninvolved, and under served.   In Anchorage                                                               
and Fairbanks,  physicians are  not accepting  Medicare patients;                                                               
this will soon  be a crisis as the number  of seniors will double                                                               
in Alaska  by 2030.   Representative Kelly  pointed out  that all                                                               
three aspects  of HB 337 would  not solve the issues  that HB 345                                                               
would solve by compromise.                                                                                                      
10:45:50 AM                                                                                                                   
REPRESENTATIVE GARDNER  asked whether  HB 345 would  resolve any,                                                               
or all, of the pending lawsuits.                                                                                                
REPRESENTATIVE KELLY  expressed his understanding that  this bill                                                               
would settle from  75 percent to 90 percent of  the lawsuits.  He                                                               
blamed  weak  regulations for  the  legal  problems and  provided                                                               
analogies   to   the   California  power   system   deregulation.                                                               
Representative Kelly  predicted that a  sudden change in  the CON                                                               
system would cause a similar situation.                                                                                         
10:49:49 AM                                                                                                                   
REPRESENTATIVE  CISSNA opined  that  one's health  is 80  percent                                                               
based on  personal choices and  learned habits.  She acknowledged                                                               
that the CON program needs  work, but expressed her concern about                                                               
the health of the hospitals  that are needed to provide emergency                                                               
care.   She  asked how  HB  345 will  safeguard the  health of  a                                                               
REPRESENTATIVE  KELLY  observed  that  HB  345  was  a  carefully                                                               
crafted  compromise.   He suggested  that, if  it is  not passed,                                                               
this struggle  will continue.   Furthermore, HB 345  is supported                                                               
by a large sector of the health care system.                                                                                    
10:53:13 AM                                                                                                                   
REPRESENTATIVE ROSES  expressed his  concern that  the limitation                                                               
on the cost of equipment may affect the quality of care.                                                                        
REPRESENTATIVE  KELLY   agreed  and  pointed  out   that  HB  345                                                               
eliminates this possibility.                                                                                                    
10:54:39 AM                                                                                                                   
REPRESENTATIVE ROSES clarified his question.                                                                                    
10:54:59 AM                                                                                                                   
REPRESENTATIVE KELLY  confirmed that  the exemptions  provided by                                                               
HB 345 negate  the applicability of the CON  under the conditions                                                               
described by Representative Roses.                                                                                              
10:55:21 AM                                                                                                                   
REPRESENTATIVE  ROSES  further  asked   whether  the  50  percent                                                               
ownership  requirement  was  supported  by  the  negotiated  rule                                                               
making committee.                                                                                                               
REPRESENTATIVE KELLY  assured the  committee that the  support of                                                               
the  negotiated  rule  making committee  was  considered  in  the                                                               
drafting of HB 345.                                                                                                             
10:56:34 AM                                                                                                                   
CHAIR WILSON announced  that further testimony would  be heard on                                                               
the nineteenth of February, 2008.                                                                                               
[HB 345 was held over.]                                                                                                         

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