Legislature(2007 - 2008)CAPITOL 106


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09:04:13 AM Start
09:05:28 AM HB337|| HB345
12:29:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 337-HEALTH CARE: PLAN/COMMISSION/FACILITIES                                                                                
HB 345-MEDICAL FACILITY CERTIFICATE OF NEED                                                                                   
9:05:28 AM                                                                                                                    
CHAIR WILSON announced  that the only order of  business would be                                                               
HOUSE BILL NO.  337, "An Act establishing the  Alaska Health Care                                                               
Commission  and  the  Alaska   health  care  information  office;                                                               
relating to  health care planning and  information; repealing the                                                               
certificate of  need program for  certain health  care facilities                                                               
and  relating  to  the   repeal;  annulling  certain  regulations                                                               
required for  implementation of the  certificate of  need program                                                               
for  certain  health  care  facilities;   and  providing  for  an                                                               
effective date"  and  HOUSE  BILL NO.  345, "An Act  amending the                                                               
certificate  of need  requirements  to  exclude expenditures  for                                                               
diagnostic imaging equipment in certain circumstances."                                                                         
9:07:11 AM                                                                                                                    
CHAIR  WILSON  informed  the committee  that  she  has  re-opened                                                               
public  testimony on  HB 337  and HB  345 to  those who  have not                                                               
previously testified.                                                                                                           
9:07:42 AM                                                                                                                    
EVELYN MOON  said that she would  like to see the  certificate of                                                               
need  (CON)  program  repealed   in  order  to  allow  additional                                                               
surgical  options  for  the  Fairbanks area.    She  related  her                                                               
personal  story  of medical  care  and  expressed her  hope  that                                                               
politics  would be  put aside  in order  to provide  more diverse                                                               
medical choices in Fairbanks.                                                                                                   
9:10:05 AM                                                                                                                    
REPRESENTATIVE  GARDNER  inquired as  to  whether  the clinic  at                                                               
which Ms. Moon received treatment is operating at full capacity.                                                                
MS. MOON  answered that she is  on a waiting list  for a surgical                                                               
procedure that could be performed  at Fairbanks Memorial Hospital                                                               
if her doctor had operating privileges there.                                                                                   
9:11:30 AM                                                                                                                    
LINDA  GARCIA,   Physician,  informed  the  committee   that  the                                                               
difficulty with recruiting physicians to  Fairbanks is due to the                                                               
limited choices  for employment. It  is expensive to  relocate to                                                               
Fairbanks  and risky  to  enter  a medical  system  in which  all                                                               
medical  facilities are  financially linked.   Dr.  Garcia stated                                                               
that the removal  of the CON will allow more  young physicians to                                                               
be attracted to Fairbanks and open private practices there.                                                                     
9:13:20 AM                                                                                                                    
CARONE STURM stated  that she is a mother, a  business owner, and                                                               
a third generation Fairbanksan.   She expressed her support of HB                                                               
337 and  said that  the existing  CON law  creates a  barrier for                                                               
many  health  care providers  and  Alaska  citizens.   Ms.  Sturm                                                               
expressed her  hope that  legislators will  take special  care to                                                               
hear  the problems  of constituents,  patients, and  consumers of                                                               
health care,  that are due  to physicians leaving and  not having                                                               
hospital privileges.  She opined  that competition is vital for a                                                               
community the  size of  Fairbanks and  she urged  the committee's                                                               
support for HB 337.                                                                                                             
9:16:05 AM                                                                                                                    
REPRESENTATIVE   GARDNER  asked   for  the   actual  numbers   of                                                               
physicians  leaving Fairbanks.  She also  inquired as  to whether                                                               
the  problem  could  be solved  if  Fairbanks  Memorial  Hospital                                                               
allowed hospital privileges to all qualified doctors.                                                                           
MS. STURM  expressed her belief that  there is a five  percent to                                                               
six percent  attrition rate  of physicians.   Her concern  is the                                                               
trend of  increased attrition and difficulties  with recruitment.                                                               
Regarding  the  extension  of privileges,  she  opined  that  the                                                               
problem would  continue because  of the  need of  specialists. In                                                               
further  response,  she  said that  she  has  witnessed  repeated                                                               
accounts in which physicians have  closed practices and residents                                                               
are unable to find a specialist in Fairbanks.                                                                                   
9:19:14 AM                                                                                                                    
REPRESENTATIVE   GARDNER  reminded   the   committee  that   many                                                               
physicians are retiring.                                                                                                        
MS. STURM added that for that reason  there is a need to make the                                                               
environment attractive and competitive for new physicians.                                                                      
9:20:18 AM                                                                                                                    
CHAIR WILSON  stated that  many areas  of the  state do  not have                                                               
access  to  physicians.   She  said  that  there are  many  other                                                               
reasons for  the shortage  of doctors, such  as the  physical and                                                               
economic  environment in  Alaska.   In  fact, there  is no  proof                                                               
that  the  CON  law  is   the  problem  and  she  emphasized  the                                                               
committee's need for facts, and not assumptions.                                                                                
9:22:30 AM                                                                                                                    
CHRISTINE SCUTH said that she has  had to travel to Anchorage for                                                               
medical procedures.   Her main  concern is  that there is  a need                                                               
for  competition   because  the  status  of   a  nonprofit,  like                                                               
Fairbanks  Memorial Hospital,  creates a  hold on  the community.                                                               
She opined  that CON  legislation is  archaic and  detrimental to                                                               
the well  being of  Alaskans by   not treating   the  health care                                                               
industry like any  other industry that can bring  jobs to Alaska.                                                               
This legislation is stopping industrial  growth in Fairbanks, she                                                               
9:25:41 AM                                                                                                                    
RICHARD COBDEN,  M. D.,    responded to  Representative Gardner's                                                               
question.  He  said that Fairbanks Memorial  Hospital has eighty-                                                               
five physicians on  staff, and has lost six in  the last year and                                                               
two  during  the  prior  year.   The  positions  lost  were:  two                                                               
urologists,  three internal  medicine doctors,  two orthopedists,                                                               
and  one general  surgeon.   One  position  has been  temporarily                                                               
filled.     He  further  explained   that  there  are   five  new                                                               
applications to fill temporary locum tenens positions.                                                                          
9:27:34 AM                                                                                                                    
REPRESENTATIVE SEATON  clarified that the previous  testimony was                                                               
specific to Fairbanks Memorial Hospital.                                                                                        
9:29:28 AM                                                                                                                    
DOUG ISAACSON, Mayor, City of  North Pole, informed the committee                                                               
that his  community of  North Pole  is near  Fairbanks and  is an                                                               
area of population growth with  an aging population.  He reported                                                               
that there is  interest in opening a needed 100  bed nursing home                                                               
facility in the  borough; however, as the mayor,  he is concerned                                                               
that the present  system restricts the ability  of certain groups                                                               
to open  facilities in  North Pole.   Mr.  Isaacson said  that he                                                               
understands the needs  of the hospital, but there  should also be                                                               
a way  in which  to expand physician's  facilities to  the 30,000                                                               
citizens of the North  Pole area.  He opined that  a group with a                                                               
good business  plan should  be able  to make  investments without                                                               
the  restrictions  of CON  laws.    In conclusion,  Mr.  Isaacson                                                               
pointed out that  KMD Services & Consulting  disclosed that there                                                               
were no  patient consumer groups  represented in  its demographic                                                               
study that was done for the state.                                                                                              
9:33:23 AM                                                                                                                    
GREG  MILLES, Physical  Therapist,  informed  the committee  that                                                               
over the course of time,  free enterprise has been stifled; there                                                               
are no outpatient  surgery centers in Fairbanks.   He stated that                                                               
the smaller community of Wasilla  has a surgery center, but there                                                               
are no other options in Interior  Alaska.  Mr. Milles stated that                                                               
health care in the Interior is compromised.                                                                                     
9:35:19 AM                                                                                                                    
JILL THORVALD  informed the committee  that she is  the executive                                                               
director for  a medical clinic  in Fairbanks.   She spoke  of the                                                               
concept of charity  and said that her clinic  treats everyone who                                                               
enters; in fact, it wrote off  over $100,000 alone last year. She                                                               
opined that  the hospital  is extremely  vital to  the community;                                                               
however,   she  supports   the  governor's   legislation  because                                                               
bringing  a  surgery  center  to   Fairbanks  would  create  more                                                               
business  for  the  local  hospital.  Furthermore,  the  hospital                                                               
provides services that residents can not do without.                                                                            
9:37:07 AM                                                                                                                    
REPRESENTATIVE  GARDNER  asked for  an  explanation  of how  more                                                               
physicians  and   more  medical  facilities  would   create  more                                                               
MS. THORVALD  explained that every  health care  provider relies,                                                               
in  some way,  on  services  that can  only  be  provided at  the                                                               
9:37:56 AM                                                                                                                    
REPRESENTATIVE GARDNER  stated that  the rationale behind  CON is                                                               
partly that if  there is excess capacity for  medical services it                                                               
will be filled.                                                                                                                 
MS. THORVALD  further explained  that many patients are going out                                                               
of town  or out  of state  for services.    Surgery  centers will                                                               
bring  more providers  and more  services will  be needed;  thus,                                                               
there  will be  an increase  of services  that the  hospital will                                                               
9:39:04 AM                                                                                                                    
REPRESENTATIVE GARDNER  said that  she remains puzzled  about why                                                               
more services will be needed.                                                                                                   
MS. THORVALD  gave the  example of a  specialty clinic  that uses                                                               
laboratory, diagnostic,  and emergency services at  the hospital.                                                               
She  opined that  the elimination  of CON  would create  a better                                                               
environment  and  encourage  specialty physicians  to  enter  the                                                               
9:40:25 AM                                                                                                                    
JEANNIE  LONG  stated  that  she  recently  had  an  arthroscopic                                                               
procedure on  her knee  that cost $15,000,  but should  have cost                                                               
$1,500.  She opined that there should not be a CON [law].                                                                       
9:41:07 AM                                                                                                                    
REPRESENTATIVE  GARDNER asked  on what  Ms. Long  based her  cost                                                               
MS. LONG said  that the estimate is based on  a conversation with                                                               
her surgeon.                                                                                                                    
9:42:03 AM                                                                                                                    
CHAIR WILSON asked  for an explanation of the cost  of Ms. Long's                                                               
9:42:18 AM                                                                                                                    
DR.  COBDEN answered  that hospital  costs are  not flexible  and                                                               
cannot be  adjusted down,  but costs can  be adjusted  in private                                                               
9:43:16 AM                                                                                                                    
CHAIR WILSON asked  for clarification of Dr. Cobden's fees.                                                                     
DR.  COBDEN  explained  that  the average  cost  for  Ms.  Long's                                                               
hospital out-patient  procedure is  $16,000: $5,000 walk  in fee;                                                               
anesthesia; medication;  nursing; and hidden  costs.    He opined                                                               
that  in an  ambulatory surgery  center the  cost can  average 30                                                               
percent to 50 percent less.                                                                                                     
9:45:02 AM                                                                                                                    
Public testimony was closed.                                                                                                    
9:45:16 AM                                                                                                                    
CHAIR  WILSON  announced that  the  committee  would discuss  the                                                               
first two  sections of HB  337, Version E.   She stated  that the                                                               
committee's charge  is to do  what is  best for Alaskans.   Chair                                                               
Wilson  pointed  out  that  Section  1,  Version  E,  allows  the                                                               
Department  of  Health  & Social  Services  (DHSS)  to  establish                                                               
health  care information  on  the Internet  for  consumers.   She                                                               
called the committee's  attention to page 1, line  8, that states                                                               
the "department may",  and to the addition of "AS  18.09" on page                                                           
1, line 7.                                                                                                                      
9:49:47 AM                                                                                                                    
REPRESENTATIVE GARDNER opined that  Section 1 is simply including                                                               
the health care commission as one  of the tools that the DHSS can                                                               
use  to  accomplish  the  goals listed  in  the  paragraphs  that                                                               
9:50:27 AM                                                                                                                    
REPRESENTATIVE SEATON  noted that,  under this section,  the bill                                                               
is not adding a health  care commission, but rather the statewide                                                               
health   plan    based   on   the   health    care   commission's                                                               
recommendations.   Furthermore,  he  said that  it  seems that  a                                                               
separate statewide health  plan is to be adopted  as indicated on                                                               
page 2, line  6, subparagraph (A).   Representative Seaton opined                                                               
that the bill allows the DHSS  to create a public health plan and                                                               
add a statewide health plan.                                                                                                    
9:51:20 AM                                                                                                                    
CHAIR  WILSON clarified  that, with  the addition  of the  health                                                               
care commission, the DHSS may take the advice of the commission.                                                                
REPRESENTATIVE SEATON agreed.  He  then stated that he was unsure                                                               
of the difference between a  statewide health plan and the public                                                               
health  plans   and  formal  policies  that   are  identified  in                                                               
subparagraph (B).                                                                                                               
9:52:06 AM                                                                                                                    
STACIE KRALY,  Chief Assistant  Attorney General,  Human Services                                                               
Section,  Civil  Division, Department  of  Law,  stated that  the                                                               
amendment creates the  ability of the state to  adopt a statewide                                                               
health  plan,  if  recommended  by  the  health  care  commission                                                               
created   in  Section   4  of   the  bill.   She  expressed   her                                                               
understanding   that  the   statewide  plan   would  be   a  more                                                               
comprehensive  state health  plan for  all purposes,  as compared                                                               
with a   public  health plan  would be  limited to  public health                                                               
issues that are the specific duties of the DHSS.                                                                                
9:52:54 AM                                                                                                                    
JAY  BUTLER,   M.D.;  Chief  Medical   Officer,  Office   of  the                                                               
Commissioner,  Department of  Health  &  Social Services  (DHSS),                                                               
described the  statewide health plan  as a  plan to take  care of                                                               
the individual citizens  in the state. He  further explained that                                                               
the  public  health  plan  addresses  how to  take  care  of  the                                                               
9:53:40 AM                                                                                                                    
REPRESENTATIVE CISSNA asked  whether the legislation incorporates                                                               
what already  exists in regard  to a comprehensive plan  that has                                                               
not been developed due to the lack of a health care commission.                                                                 
DR.  BUTLER advised  that his  interpretation  is that  it is  in                                                               
addition to  what has  already been done  with the  public health                                                               
MS. KRALY stated that the  DHSS has been working on comprehensive                                                               
issues,  related to  the provision  of health  care, but  has not                                                               
developed a  comprehensive statewide  health plan in  many years.                                                               
She explained  that there are many  reports issued by DHSS,   but                                                               
they do  not comprise a  state health  plan; all of  the programs                                                               
need to be synthesized into one statewide program.                                                                              
DR.  BUTLER gave  an example  of  a public  health plan,  Healthy                                                               
Alaskans 2010, but noted that it  does not  address the issues of                                                               
providing access  to and coverage  for health care  to individual                                                               
9:56:30 AM                                                                                                                    
REPRESENTATIVE CISSNA  observed that the commission  pulls it all                                                               
together.   She then  stated that public  health is  probably the                                                               
most developed  policy and this legislation  addresses the recent                                                               
technological  phase.    State  costs  are  increasing,  in  part                                                               
because of  technology, which has not  been sufficiently studied.                                                               
She  noted  that  her  constituents need  and  want  primary  and                                                               
preventative care and she expressed  concern that the legislature                                                               
is focused  on advanced care.    Representative Cissna  urged the                                                               
committee to make sure that prevention is addressed.                                                                            
10:00:00 AM                                                                                                                   
CHAIR  WILSON  suggested reviewing  the  legislation  to find  an                                                               
appropriate area where that can  be addressed, perhaps on page 2,                                                               
subparagraph  "(B)",  or on  page  5,  where  the duties  of  the                                                           
commission are  itemized.  Her  goal is  to decrease the  cost of                                                               
health  care in  Alaska,  which has  been  accomplished in  other                                                               
states by establishing expected  standards of care accompanied by                                                               
a  set of  presenting symptoms.   This  procedure would  save the                                                               
cost of extra services and  would result in cost savings overall.                                                               
Chair  Wilson urged  the committee  to  consider instructing  the                                                               
health care commission, or the DHSS, to develop these standards.                                                                
10:03:23 AM                                                                                                                   
REPRESENTATIVE  KELLER  agreed  and  added  his  support  for  an                                                               
efficient commission.                                                                                                           
10:03:44 AM                                                                                                                   
REPRESENTATIVE SEATON cautioned  that a set standard  of care may                                                               
mean that a Bush doctor will  be required to comply; rural Alaska                                                               
may face  a different standard  because of the lack  of services.                                                               
He would not want to say that  the standard of care in a hospital                                                               
would  be  different  than  in  a  single-physician  facility  in                                                               
another area.                                                                                                                   
CHAIR  WILSON  opined  that  the provider  will  make  the  final                                                               
decision and  the standard  of care  would be  used for  a normal                                                               
10:05:57 AM                                                                                                                   
REPRESENTATIVE  CISSNA suggested  that testimony  from physicians                                                               
and  insurance representatives  would  be good  to  hear on  this                                                               
CHAIR WILSON  advised that  the commission  itself would  have to                                                               
determine what expert testimony was necessary.                                                                                  
10:07:09 AM                                                                                                                   
REPRESENTATIVE ROSES stated  his preference is to not  refer to a                                                               
standard  of  care,  but  rather  to  the  proper  protocols  for                                                               
procedures, diagnostics, or further testing.                                                                                    
10:07:55 AM                                                                                                                   
REPRESENTATIVE SEATON  expressed his  hope that any  amendment on                                                               
this  subject  will specify  that  the  standards expire  if  not                                                               
updated in a specific timeframe.   In addition, he cautioned that                                                               
the  requirement   of  certain   procedures  will   increase  the                                                               
liability of  a rural  doctor; the  intent must  be clear  to the                                                               
commission that not everyone has to  go to Anchorage in order for                                                               
the doctor to follow the standard of care.                                                                                      
CHAIR  WILSON  suggested  that the  terminology  could  be  "best                                                               
10:09:40 AM                                                                                                                   
REPRESENTATIVE GARDNER observed that  insurance companies do what                                                               
is  being suggested  in the  "preapproval process."  This process                                                               
eliminates unnecessary testing, but there  is also a risk because                                                               
insurance companies are making medical decisions.                                                                               
10:10:48 AM                                                                                                                   
REPRESENTATIVE ROSES  emphasized that he does  not want insurance                                                               
companies to  make decisions  with regard  to protocols  and care                                                               
practices because they are the money managers.                                                                                  
REPRESENTATIVE GARDNER  agreed and  said that physicians  need to                                                               
use their best judgment.                                                                                                        
REPRESENTATIVE ROSES   explained  that his concern  with protocol                                                               
is that  with more testing  there is  a greater chance  for false                                                               
positives and  unnecessary procedures.    He  referred to  a Utah                                                               
study  that was  done  on  the basis  of  mitigating the  extreme                                                               
increases in  liability insurance.   This study showed that,   by                                                               
approaching  cases  strictly from  a  medical  perspective,   the                                                               
amount  of malpractice  insurance,  the number  of lawsuits,  the                                                               
number  of  false   positives,  and  the  number   of  deaths  in                                                               
hospitals, was  reduced.  He  agreed with  Representative Gardner                                                               
that insurance companies should not be making medical decisions.                                                                
10:13:33 AM                                                                                                                   
CHAIR WILSON called the committee's  attention to the definitions                                                               
on  page  3,  and  page  8,   and  noted  that  there  have  been                                                               
recommendations  to  improve  the   definition  of  "health  care                                                               
facility" in order to prevent litigation.                                                                                       
10:14:49 AM                                                                                                                   
REPRESENTATIVE  ROSES expressed  his  intent to  move forward  to                                                               
create a  better environment with  clearer understandings  and if                                                               
that mitigates  future lawsuits, so  be it.   He referred  to the                                                               
recommendations indicated by the  KMD Services & Consulting study                                                               
in  which  the  majority  of the  participants  articulated  that                                                               
clearer  definitions in  statute were  needed for  the following:                                                               
ambulatory  surgery   centers;  physician's   office  exemptions;                                                               
"excessive"; and  "need."   It was also  suggested that  the bill                                                               
comply with Medicare guidelines.                                                                                                
10:16:32 AM                                                                                                                   
MS. KRALY agreed  and added that there needs to  be  complete and                                                               
accurate definitions  for all facilities  listed in  the statute.                                                               
She  pointed  out  that there  are  technical  difficulties  with                                                               
Version E  to which  the department has  amendments.   She opined                                                               
that  the  legislature  should   use  the  negotiated  rulemaking                                                               
process  as a  starting point  for  the definitions,  such as  "a                                                               
physician's  office."   Ms. Kraly  said  that she  would have  to                                                               
review  the  federal  Medicare  guidelines  and  definitions  for                                                               
possible use;   furthermore, these  guidelines must be  placed in                                                               
statute rather than in regulation.                                                                                              
10:19:18 AM                                                                                                                   
REPRESENTATIVE GARDNER  asked whether HB  337 is the  place where                                                               
the definitions should be put in statute.                                                                                       
MS. KRALY  answered that  the definitions  should be  included if                                                               
the bill contains a CON component.                                                                                              
10:19:44 AM                                                                                                                   
REPRESENTATIVE ROSES  observed that it appears  that the majority                                                               
of  the problems  lie  in the  lack of  clear  definitions.   For                                                               
example, there is also the question  of defining what is meant by                                                               
the  population  in  an  area  and  whether  military  bases  are                                                               
10:20:58 AM                                                                                                                   
CHAIR WILSON commented  that the military has  its own physicians                                                               
and hospitals.                                                                                                                  
MS. KRALY  concurred and  stated that it  is appropriate  for the                                                               
legislature  to   define  what  population  means   in  order  to                                                               
determine current  capacity, future need, the  possible inclusion                                                               
of outlying  areas, rural areas,   and the possible  exclusion of                                                               
military and Indian Health Services components.                                                                                 
10:22:20 AM                                                                                                                   
REPRESENTATIVE  ROSES pointed  out  that those  with the  TRICARE                                                               
Military  Health  System do  have  the  ability to  go  anywhere;                                                               
however, not all physicians accept TRICARE insurance.                                                                           
10:22:44 AM                                                                                                                   
REPRESENTATIVE  CISSNA noted  the  importance  of the  commission                                                               
being  updated on  local  issues  in Alaska.    She related  that                                                               
during  her  visit  to  Akutan she  noticed  that  the  community                                                               
preferred health providers of the same gender.                                                                                  
10:24:14 AM                                                                                                                   
REPRESENTATIVE  GARDNER  asked  whether page  2,  paragraph  (9),                                                               
addresses   Representative  Cissna's   desire  for   preventative                                                               
REPRESENTATIVE CISSNA said yes.                                                                                                 
DR.  BUTLER added  that the  discussion should  also include  the                                                               
fact that  prevention is the  way to balance the  increased costs                                                               
of technology and medication.                                                                                                   
10:25:39 AM                                                                                                                   
REPRESENTATIVE  CISSNA referred  to  the part  of  the bill  that                                                               
relates  to  statewide  updates  from  throughout  Alaska.    For                                                               
example, the  need for area-by-area updates  on population health                                                               
needs and  any changes to  a community due  to the influx  of new                                                               
CHAIR WILSON clarified that these are changes in demographics.                                                                  
10:27:24 AM                                                                                                                   
REPRESENTATIVE  ROSES  advised that  the  committee  may want  to                                                               
include in  the definitions  a mobile  or portable  facility; for                                                               
example, the mobile mammogram van.                                                                                              
10:28:12 AM                                                                                                                   
REPRESENTATIVE SEATON  called the  committee's attention  to page                                                               
3,  line 17  through 19,  that  establishes the  purposes of  the                                                               
health care  commission. He expressed  his desire to  assure that                                                               
the  committee is  not discussing  legislative intent  beyond the                                                               
purposes that  are specified in paragraphs  (1) and (2).   If so,                                                               
there is a need to include the additional purposes in the bill.                                                                 
10:29:18 AM                                                                                                                   
REPRESENTATIVE GARDNER  asked whether  it is appropriate  for the                                                               
committee to review HB 407 due to its parallels with HB 337.                                                                    
CHAIR WILSON announced that the  committee will hear HB 403 prior                                                               
to its final  consideration of HB 337.   She said that  it is her                                                               
intention  to consolidate  all three  pieces  of legislation  and                                                               
urged the committee to review HB 407 before the hearing.                                                                        
10:30:55 AM                                                                                                                   
REPRESENTATIVE KELLER  opined that it  is the committee's  job to                                                               
establish a  quality commission to make  recommendations to DHSS.                                                               
He  warned  that   detailed  decisions  on  the   charge  of  the                                                               
commission  will  not lead  to  the  obvious problem  before  the                                                               
committee, and that is whether to repeal CON.                                                                                   
10:32:22 AM                                                                                                                   
REPRESENTATIVE  CISSNA  related  that her  staff  has  reconciled                                                               
parts of CSHB 337, Version E, and HB 407.                                                                                       
CHAIR  WILSON  stated  that  there  are copies  of  that  in  the                                                               
committee packet.   She then  opined that the committee  needs to                                                               
review  the  composition of  the  commission  and determine  what                                                               
Alaskans and the  legislature will accept.  She  pointed out that                                                               
the bill establishes a commission  appointed by the commissioner,                                                               
and thereby, influenced by the  governor.  Chair Wilson expressed                                                               
the need  for legislators to  be part of the  commission, similar                                                               
to  the appointees  on the  Joint  Legislative Education  Funding                                                               
Task Force.                                                                                                                     
10:35:13 AM                                                                                                                   
REPRESENTATIVE GARDNER  noted her agreement  and  added  that the                                                               
governor's  proposal includes  commissioners and  their designees                                                               
that certainly  have a role  in the process,  but do not  have to                                                               
sit on the commission.                                                                                                          
10:35:51 AM                                                                                                                   
REPRESENTATIVE   ROSES  affirmed   that  the   Joint  Legislative                                                               
Education Funding Task Force was  a legislative task force; thus,                                                               
the  inclusion  of  legislative  members.   He  opined  that  the                                                               
commission should have less  legislative participation;  however,                                                               
the current list  sounds like a cabinet  meeting.  Representative                                                               
Roses recommended  that there should be  representatives from the                                                               
health care industry, the insurance industry, and consumers.                                                                    
10:37:05 AM                                                                                                                   
REPRESENTATIVE SEATON agreed that  the legislative task force had                                                               
a legislative  purpose to develop  legislation, which is  not the                                                               
duty of the  commission.  He expressed his hope  that the members                                                               
of the commission  are knowledgeable, in regard  to achieving the                                                               
duties of  the commission,  such as rural  and urban  health care                                                               
providers, and consumers.                                                                                                       
10:38:44 AM                                                                                                                   
REPRESENTATIVE  KELLER  supported  the   way  the  commission  is                                                               
presented in HB  337.  He warned  of the danger of  having all of                                                               
the stakeholders represented and said  that this will result in a                                                               
problem  in making  decisions.   Representative Keller  suggested                                                               
compiling  a   list  of  expert witnesses,  but  opined that  the                                                               
proposed  commission  [consists   of]  commissioners,  department                                                               
heads, and six public employees who do represent the state.                                                                     
10:40:11 AM                                                                                                                   
REPRESENTATIVE CISSNA commented on  the available benchmarks that                                                               
compare Alaska  with the rest  of the  nation in terms  of health                                                               
care costs  and conditions.   She pointed  out that Alaska  is at                                                               
the top  of numerous negative  health care indicators  which lead                                                               
to the assumption  that there is a need for  [participation] by a                                                               
broad group  of stakeholders.   If insurance  representatives and                                                               
consumers are  left out, there  are holes  that cost in  the end.                                                               
She explained  that the negative  indicators support a  change in                                                               
policy and  legislative work would  need to be included  in order                                                               
to  understand why  and  how to  begin  changes.   Representative                                                               
Cissna advised that legislators on  the commission will provide a                                                               
broader view.                                                                                                                   
10:43:05 AM                                                                                                                   
REPRESENTATIVE  SEATON  commented  on   the  composition  of  the                                                               
commission.   He  stated that  on  page 4,  line 5,  there is  no                                                               
diversity  specified for  the six  public  members and  suggested                                                               
that the DHSS could come forward  with specifics on how to ensure                                                               
representation  from  all  areas  of the  state  and  Native  and                                                               
federal health care systems.                                                                                                    
10:44:22 AM                                                                                                                   
REPRESENTATIVE  ROSES stressed  that it  is important  to specify                                                               
that  the  small business  representation  should  not come  from                                                               
those who provide medical services.                                                                                             
10:45:17 AM                                                                                                                   
CHAIR WILSON  asked the committee  to consider  the contradiction                                                               
regarding commission staff  on page 4, line 22,  that states that                                                               
"the  department  may"  with  line  23,  that  states  that  "the                                                               
commission shall."                                                                                                              
10:46:01 AM                                                                                                                   
REPRESENTATIVE  KELLER  suggested   that  individual  legislators                                                               
could  assign  staff to assist the commission and  provide a link                                                               
between legislators and the commission.                                                                                         
10:46:54 AM                                                                                                                   
CHAIR  WILSON referred  to  page 4,  line 30,    that states  the                                                               
duties  of the  commission and  suggested  that this  could be  a                                                               
location to  insert "best  practices" or  "protocols."   She then                                                               
referred to  page 5, line 22,  and asked for the  standard amount                                                               
of per diem allowed for a commission.                                                                                           
MS. KRALY responded that she  will provide that information.  She                                                               
assumed that  the per  diem would  be similar  to the  state rate                                                               
that is about $60 per day for food.                                                                                             
10:48:07 AM                                                                                                                   
REPRESENTATIVE   SEATON   advised   that  there   are   different                                                               
commission rates of per diem.                                                                                                   
10:48:31 AM                                                                                                                   
CHAIR  WILSON turned  to page  5, line  26, that  establishes the                                                               
Alaska  health care  information  office in  the  DHSS. She  then                                                               
asked  whether  a person  would  be  hired,  or a  DHSS  employee                                                               
assigned, to staff the office.                                                                                                  
DR.  BUTLER  answered that  the  fiscal  note includes  staff  to                                                               
operate  the  information  office.   In  further  response  to  a                                                               
question, he said that there will be two staff members.                                                                         
10:49:24 AM                                                                                                                   
REPRESENTATIVE CISSNA  recalled previous discussion that  some of                                                               
Alaska does not  have access to the Internet, yet  there is often                                                               
a  connection available  through a  satellite phone.  She related                                                               
that there is an effort by the  United Way in Anchorage to make a                                                               
health care phone connection by  calling 211, and it is important                                                               
for  the  state to  cooperate  and  use overlapping  information.                                                               
Representative Cissna  brought up the possibility  that the state                                                               
could  make  sure   that  the  211  phone   number  is  available                                                               
throughout the state, just as is 911 for emergencies.                                                                           
10:51:18 AM                                                                                                                   
DR.  BUTLER  expressed  his  concern  that the  addition    of  a                                                               
different medium to the project  increases costs.  He opined that                                                               
the satellite connection is an  excellent goal, but providing all                                                               
of the health  care information via telephone  would be difficult                                                               
due  to the  large amount  of information.  Dr. Butler  suggested                                                               
that this could be an issue explored by the committee.                                                                          
10:52:22 AM                                                                                                                   
CHAIR WILSON  said that  Alaska has  better Internet  access than                                                               
any other state.                                                                                                                
10:52:40 AM                                                                                                                   
REPRESENTATIVE  CISSNA emphasized  that  United  Way has  already                                                               
invested  money and time into  the 211 technology and an overlap,                                                               
by the state,  with that work will save money  and duplication of                                                               
health costs.                                                                                                                   
10:53:40 AM                                                                                                                   
CHAIR WILSON  agreed that the  committee may want to  review what                                                               
United Way  is doing.  She  observed that the Alaska  health care                                                               
information  office will  be  on the  Internet  and will  provide                                                               
health care provider costs for consumers across the state.                                                                      
DR.  BUTLER stated  that there  are two  major components  to the                                                               
health  information  office:  information   on  health  care  and                                                               
information  on prevention  measures and  personal responsibility                                                               
for  good  health.  He  described   the  Michigan  chief  medical                                                               
officer's    website  that  starts with  information  on  how  to                                                               
improve  physical activity,  diet,  and  information on  specific                                                               
diseases.  In addition,   there will be consumer information that                                                               
will focus on health care and facilities.                                                                                       
10:56:32 AM                                                                                                                   
REPRESENTATIVE KELLER  expressed his  interest in  tightening the                                                               
language to include the actual costs of specific procedures.                                                                    
CHAIR  WILSON   re-stated  the  need  to   know  each  individual                                                               
providers' charge.                                                                                                              
REPRESENTATIVE KELLER  added that hospitals also  have negotiated                                                               
contracts for the reimbursement of procedures.                                                                                  
10:58:21 AM                                                                                                                   
REPRESENTATIVE GARDNER asked  whether the state has  a solid cost                                                               
estimate for the health care information database and software.                                                                 
DR. BUTLER affirmed that he  has received a round figure estimate                                                               
of  $200,000  for  compiling  the  data  that  is  already  being                                                               
collected.     This  estimate  includes  posting   the  data  and                                                               
maintaining the  web site; he  acknowledged that costs  in Alaska                                                               
may differ from those in other states.                                                                                          
REPRESENTATIVE  GARDNER   suggested  providing   the  information                                                               
incrementally as it becomes available.                                                                                          
DR. BUTLER agreed,  and added that the DHSS  does already collect                                                               
hospital discharge data including  length of stay, total charges,                                                               
diagnosis,  basic  patient  demographics, and  discharge  status.                                                               
Currently,  the database  does not  include  charges by  specific                                                               
services and procedures; however, that  data could be added along                                                               
with emergency room and hospital out-patient visits.                                                                            
11:02:00 AM                                                                                                                   
REPRESENTATIVE  ROSES asked  whether  insurance companies'  usual                                                               
and customary fees   are posted.  The consumer  will need to know                                                               
what is charged and what is covered in order to shop around.                                                                    
DR. BUTLER answered  that all the data collected at  this time is                                                               
from the hospitals, not the insurance payers.                                                                                   
REPRESENTATIVE  ROSES expressed  his  interest  in expanding  the                                                               
MS. KRALY pointed out that the  premise of Sec. 18.09.130  was to                                                               
work with various departments to  gather and provide information,                                                               
including   insurance   information.       She   confirmed   that                                                               
establishing  the authority  to obtain  information on  insurance                                                               
allowances and coverage is a step in the right direction.                                                                       
11:03:57 AM                                                                                                                   
REPRESENTATIVE  ROSES   opined  that  this  information   is  not                                                               
11:04:50 AM                                                                                                                   
CHAIR  WILSON recalled  that Ms.  Kraly said  that the  committee                                                               
should use the regulatory rulemaking authority.                                                                                 
MS.  KRALY  clarified  that,  if  there  remains  a  limited  CON                                                               
program, the DHSS  will  look at the negotiated rulemaking report                                                               
in developing definitions for the CON program.                                                                                  
11:05:53 AM                                                                                                                   
REPRESENTATIVE   SEATON  asked   whether   customary  and   usual                                                               
Medicare and Medicaid reimbursements are public information.                                                                    
DR. BUTLER confirmed that that  information could be part of what                                                               
is under discussion.                                                                                                            
REPRESENTATIVE SEATON  observed that  there are  several sectors;                                                               
Medicare and  Medicaid, independent  insurance, cash  payers, and                                                               
workers'  compensation.   He opined  that  information should  be                                                               
from the  major insurance  providers from  the previous  year and                                                               
relevant  to  the facility.    This  may  be a  consolidation  of                                                               
insurance reporting.                                                                                                            
11:08:13 AM                                                                                                                   
CHAIR WILSON  announced that there  would be a discussion  of CON                                                               
issues and that both bills are before the committee.                                                                            
11:08:57 AM                                                                                                                   
REPRESENTATIVE SEATON asked for the source of Amendment 25G-2.                                                                  
11:09:30 AM                                                                                                                   
CHAIR  WILSON stated  that  this amendment  was  prepared by  the                                                               
governor's office to eliminate CON during a two-year transition.                                                                
MS. KRALY  explained that Amendment  25G-2 was drafted  on behalf                                                               
of  the governor's  office  to clarify  the  certificate of  need                                                               
components of Version E.                                                                                                        
11:10:05 AM                                                                                                                   
REPRESENTATIVE  SEATON  asked  whether  the  definitions  in  the                                                               
amendment are to be considered.                                                                                                 
CHAIR  WILSON said  yes, and  urged the  committee to  review the                                                               
11:11:34 AM                                                                                                                   
CHAIR WILSON invited comments on the CON process.                                                                               
11:11:46 AM                                                                                                                   
REPRESENTATIVE ROSES expressed his  desire to study the amendment                                                               
and to  look for an  adequate compromise  that will serve  to end                                                               
the discussion on  CON so that the committee can  move on to more                                                               
meaningful topics.                                                                                                              
11:13:01 AM                                                                                                                   
CHAIR WILSON  asked whether  the committee  wished to  review her                                                               
list of concerns or to review the governor's amendment.                                                                         
11:13:28 AM                                                                                                                   
REPRESENTATIVE  KELLER reiterated  Representative Roses'  request                                                               
for time to review the amendment.                                                                                               
11:13:59 AM                                                                                                                   
REPRESENTATIVE SEATON  asked whether the issues  addressed in the                                                               
letter dated  the twenty-second of  February, are  also addressed                                                               
in the amendment.                                                                                                               
MS. KRALY  expressed her understanding  that the  letter outlines                                                               
the  core concepts  that are  included  in Amendment  25G-2.   In                                                               
addition, there is further  information on Representative Kelly's                                                               
bill in the letter.                                                                                                             
11:15:12 AM                                                                                                                   
CHAIR  WILSON  listed  concerns as  follows:    grandfathering-in                                                               
existing centers;  definitions; which  entities would  still need                                                               
CON; the physician ownership percentage  of exempt facilities; no                                                               
self-referrals;  a  change in  the  amount  of the  threshold  of                                                               
investment; and language to exempt all tribal health entities.                                                                  
11:16:59 AM                                                                                                                   
MS. KRALY  stated that  it was important  to note  that Amendment                                                               
25G-2  is a  change to  Version E,  that includes  a limited  CON                                                               
program,  as  opposed  to  the   original  bill  that  completely                                                               
repealed CON  law.   The premise of  the committee  substitute is                                                               
that there  will be  a CON required  when building  a residential                                                               
psychiatric treatment facility or  a nursing facility anywhere in                                                               
the state.   These exceptions were made  because these facilities                                                               
are primarily  paid for by  federal and  state funds.   The third                                                               
type of  facility that is subject  to the limited CON  program is                                                               
any  health care  facility that  would  attempt to  compete in  a                                                               
community  with a  critical access  hospital.   She noted  that a                                                               
critical  access   hospital  is   designated  by  the   DHSS  and                                                               
constitutes a  small, rural hospital with  25 beds or less.   Ms.                                                               
Kraly explained  that page  1, Sec. 2,  of the  amendment clearly                                                               
identifies that  a CON  is needed in  a critical  access hospital                                                               
community  and that  a CON  is needed  if building  a residential                                                               
psychiatric treatment center or a nursing home.                                                                                 
11:20:01 AM                                                                                                                   
REPRESENTATIVE  ROSES  asked how  the  amendment  would affect  a                                                               
community such as North Pole.                                                                                                   
MS. KRALY answered that a  100 bed nursing facility would require                                                               
a CON; however, a 100 bed  assisted living home would not require                                                               
a CON.                                                                                                                          
CHAIR WILSON  recalled disparate  testimony about  the population                                                               
in North Pole.                                                                                                                  
11:21:24 AM                                                                                                                   
REPRESENTATIVE SEATON  related his  understanding that  the North                                                               
Pole  facility  would  provide   a  wide  diversity  of  services                                                               
including nursing and  assisted living services.   He inquired as                                                               
to the rationale behind making  CON a requirement for residential                                                               
psychiatric treatment centers and nursing homes.                                                                                
MS. KRALY  explained that for  a nursing facility, there  are the                                                               
facility  costs that  are considered  capital costs  by Medicaid.                                                               
The  daily rates  of  residential  psychiatric treatment  centers                                                               
include the  cost of care  and capital expenditures.   Therefore,                                                               
the  capital expenditures  and the  cost of  care are  all rolled                                                               
into the rate.                                                                                                                  
11:23:49 AM                                                                                                                   
REPRESENTATIVE SEATON  surmised that the rate  is different based                                                               
upon how much capital is put  into the facility, or whether there                                                               
is a blanket rate that includes  the operational cost of care and                                                               
an amount  to support the  basic construction and  maintenance of                                                               
the facility.                                                                                                                   
MS. KRALY  responded that  capital costs  and expenditures  are a                                                               
consideration of  rates.  More  importantly, the cost of  care is                                                               
fully paid for through the  Medicaid program; therefore, if there                                                               
is a  need to  generate capacity  with regard  to Bring  the Kids                                                               
Home initiative,  the state must  consider how  the reimbursement                                                               
scheme plays into the number of  beds.  She stressed that capital                                                               
costs  are  part of  the  consideration,  although they  are  not                                                               
rolled in.                                                                                                                      
11:25:39 AM                                                                                                                   
REPRESENTATIVE  SEATON asked  for  a further  explanation of  the                                                               
cost reimbursement rate and facility capitalization.                                                                            
11:27:20 AM                                                                                                                   
REPRESENTATIVE KELLER remarked:                                                                                                 
      If we overbuild nursing homes, for example, skilled                                                                       
     care nursing homes, I don't see what the downside is,                                                                      
     and I think that may be similar to what you're asking.                                                                     
CHAIR WILSON said  that the downside would be that  there are not                                                               
enough nurses to staff them.                                                                                                    
11:28:23 AM                                                                                                                   
KARLEEN  JACKSON, Commissioner,  Department  of  Health &  Social                                                               
Services  (DHSS), explained  that nursing  homes  and residential                                                               
psychiatric treatment centers are useful  to keep patients at the                                                               
lowest possible  level of care, as  opposed to the care  level of                                                               
surgery  centers and  hospitals.   Nursing homes  and residential                                                               
psychiatric  treatment  centers  also  have  different  rates  of                                                               
reimbursement.  Commissioner Jackson  related that states without                                                               
general CON  laws usually  retain these  exceptions and  that the                                                               
DHSS suggested a two-year repeal.                                                                                               
11:29:15 AM                                                                                                                   
REPRESENTATIVE KELLER asked for clarification.                                                                                  
COMMISSIONER JACKSON remarked:                                                                                                  
     What   we  have   done   now,   with  the   residential                                                                    
     psychiatric treatment,  a, beds  in particular,  is try                                                                    
     to keep those high end  beds under control, through the                                                                    
     CON process.   So that we don't overbuild  those and so                                                                    
     that we're  making certain that  those lower  levels of                                                                    
     care are available, available instead.                                                                                     
11:30:04 AM                                                                                                                   
CHAIR WILSON  surmised that placement  in a nursing home  is more                                                               
expensive  for the  state than  home service  by a  personal care                                                               
COMMISSIONER JACKSON  agreed, and  added that  the DHSS  wants to                                                               
ensure that it is using the lowest level of care.                                                                               
11:30:23 AM                                                                                                                   
REPRESENTATIVE CISSNA  observed that health  care is often  not a                                                               
choice  issue when  individuals are  referred to  an institution.                                                               
In the case of available bed  space in a large institution, there                                                               
is  a lot  of pressure  to  fill those  beds by  referrals.   She                                                               
encouraged  the committee  to hear  testimony from  a variety  of                                                               
11:31:49 AM                                                                                                                   
MS. KRALY  turned to  page 2, of  Amendment 25-G,  concerning the                                                               
definition  of  a  "health  care  facility,"  and  clarified  two                                                               
important components:  exclusions of physician's office,  and the                                                               
exemption of facilities  owned by the federal  government and the                                                               
Indian Health  Service.  In  addition, under existing  statute AS                                                               
18.07.111(15), there  were two exemptions, a  physician's office,                                                               
and the Alaska  Pioneer Homes; however, the  Alaska Pioneer Homes                                                               
are now  assisted living  facilities so  that exemption  has been                                                               
11:33:49 AM                                                                                                                   
CHAIR WILSON asked for a definition of "acute care hospital."                                                                   
MS. KRALY  said that an acute  care hospital is a  major facility                                                               
that is not  a critical access hospital.  To  clarify, she stated                                                               
that a major  hospital that wanted to compete  against a critical                                                               
access hospital would need to have a CON.                                                                                       
11:34:47 AM                                                                                                                   
MS. KRALY  advised that on page  2, line 25, and  through page 3,                                                               
line 24, the specific definitions  for health care facilities are                                                               
listed, as well as what constitutes a physician's office.                                                                       
11:35:17 AM                                                                                                                   
CHAIR  WILSON pointed  out the  inclusion  of "mobile  outpatient                                                               
facility" on page 3, line 1.                                                                                                    
MS. KRALY  noted that  many facilities  are defined  elsewhere in                                                               
statute and those definitions were  used; however, for facilities                                                               
not previously  defined, framework  language from  the negotiated                                                               
rulemaking report was used.                                                                                                     
11:36:41 AM                                                                                                                   
CHAIR WILSON inquired as to the new definitions.                                                                                
MS. KRALY  said that facilities  that were not defined  under the                                                               
previous  CON  statute  are  the   following:    critical  access                                                               
hospital; independent  diagnostic testing  facility; intermediate                                                               
care facility;  kidney dialysis; nursing home;  office of private                                                               
physicians or dentists; and  psychiatric hospital.                                                                              
11:38:41 AM                                                                                                                   
REPRESENTATIVE  SEATON   pointed  out  a  conflict   between  the                                                               
definition of physician's  office on page 2, line 20  and 21, and                                                               
the definition on page 3, lines 19 through 21.                                                                                  
MS.  KRALY confirmed  that  the intent  is  that the  definitions                                                               
would  be the  same to  define the  individual or  group practice                                                               
component  discussed by  the negotiated  rulemaking report.   She                                                               
indicated that the definitions would be reviewed.                                                                               
11:40:32 AM                                                                                                                   
REPRESENTATIVE  ROSES clarified  that the  new definitions  could                                                               
have been in  regulations before, but were not  found in statute.                                                               
He  then  asked  whether  the  definitions  align  with  Medicare                                                               
MS.  KRALY  agreed  that  the  definitions  could  have  been  in                                                               
regulation.   She  said that  some of  the definitions  contain a                                                               
component of Medicare language.                                                                                                 
REPRESENTATIVE ROSES  expressed his concern that  the definitions                                                               
MS. KRALY concurred.                                                                                                            
11:42:10 AM                                                                                                                   
REPRESENTATIVE SEATON asked  whether "ambulatory surgical center"                                                               
is incorporated  under mobile facilities  and whether  that would                                                               
include a facility traveling in a vessel or on an aircraft.                                                                     
MS. KRALY  confirmed that mobile  facilities are not  included in                                                               
the  ambulatory   surgical  center   definition,  as   those  are                                                               
generally fixed facilities due to  the complexity of the services                                                               
provided.    However,  if  this  service  exists,  it  should  be                                                               
REPRESENTATIVE  SEATON opined  that this  service exists  in many                                                               
parts of  the world and  its presence  in remote areas  of Alaska                                                               
should be anticipated.                                                                                                          
11:45:16 AM                                                                                                                   
COMMISSIONER  JACKSON  affirmed that  the  DHSS  can review  this                                                               
service.    She  then  suggested   that  the  committee  consider                                                               
inserting language that  will allow the addition  of new services                                                               
that become available.                                                                                                          
11:45:52 AM                                                                                                                   
MS. KRALY  called the committee's  attention to page 3,  line 27,                                                               
through  page 5,  line  26  and advised  that  this  part of  the                                                               
amendment  is  a change  from  Version  E  that provides  a  more                                                               
clearly defined scope  of what will be placed in  the database on                                                               
the  web  site.    This  language  provides  more  direction  and                                                               
clarification  in  an  attempt   to  be  comprehensive,  but  not                                                               
overwhelming.   She offered  that the committee  may want  to add                                                               
additional information.                                                                                                         
11:47:20 AM                                                                                                                   
CHAIR WILSON  pointed out  that the  language specifies  that the                                                               
database "must include" all of  the information and asked whether                                                               
there should be some flexibility.                                                                                               
MS. KRALY acknowledged that this  same question was brought forth                                                               
during the  Senate hearing and by  Dr. Butler.  The  issue is the                                                               
mandatory,  versus  discretionary,  role about  what  information                                                               
will  be included.   The  DHSS  is assuming  that information  is                                                               
available to be readily downloaded,  and is transferrable for use                                                               
on  the  web.    However,  it   may  be  advisable  to  use  more                                                               
discretionary  language  so  information   can  be  reviewed  and                                                               
withheld  if it  is  deemed to  be confusing  to  consumers.   In                                                               
addition, the health  care office provision needs  to be reviewed                                                               
to  ensure  that  it  is   consistent  with  the  permissive  and                                                               
mandatory language.   Ms. Kraly assured the  committee that these                                                               
reviews will be completed prior to the next hearing.                                                                            
11:49:22 AM                                                                                                                   
REPRESENTATIVE SEATON  noted that on  page 3, [paragraph]  2, the                                                               
list  of facilities  does  not include  any  private doctor's  or                                                               
dentist's offices, as those are  excluded under the definition of                                                               
health care  facilities, as well  as tribal  health organizations                                                               
health  facilities.    He  asked  whether  these  exclusions  are                                                               
COMMISSIONER  JACKSON explained  that it  is difficult  to obtain                                                               
the information from these facilities;  however, if the committee                                                               
wishes  to include  this  information, it  can  be included  with                                                               
additional cost and time.                                                                                                       
CHAIR WILSON related  hearing from someone in  another state that                                                               
indicated  that  perhaps   two  years  is  not   enough  time  to                                                               
accomplish  the goal.   If  more time  is allowed,  more complete                                                               
information could be provided.                                                                                                  
11:51:56 AM                                                                                                                   
COMMISSIONER JACKSON  suggested that language should  be included                                                               
that   allows  the   commission   to   periodically  update   the                                                               
information provided on the Internet.                                                                                           
MS.  KRALY stated  that  the bill  contains  three components  of                                                               
legislation  that  are  interrelated.   She  explained  that  the                                                               
concept is, if the CON is  replaced with the limited CON program,                                                               
the  health   information  will  be  the   "substitute"  for  the                                                               
certificate of review.  This  concept will replace the process of                                                               
facility  review with  the report  to the  database.   Therefore,                                                               
this  is  the information  that  is  currently being  vetted  and                                                               
controlled through the CON process.                                                                                             
11:53:37 AM                                                                                                                   
REPRESENTATIVE  SEATON  referred  to   the  requirements  of  the                                                               
database  and asked  whether there  is a  need for  two different                                                               
levels of information.  He opined  that, if the DHSS is trying to                                                               
disseminate what facilities are  available, but then excludes all                                                               
of the  physician's and dental  offices and the  tribal community                                                               
health care clinics,  it seems like it is missing  a big piece of                                                               
what the database is  there to do.  The database  is of one level                                                               
for consumer costs, and something  else for the access of medical                                                               
services.   Consumers at  least need to  know where  the services                                                               
can be found.                                                                                                                   
11:55:39 AM                                                                                                                   
REPRESENTATIVE  ROSES  agreed  that reporting  the  location  and                                                               
availability  of independent  health services  is not  a problem,                                                               
whereas reporting  costs would be  a considerable amount  of work                                                               
that could result in less access to health care.                                                                                
11:56:46 AM                                                                                                                   
REPRESENTATIVE CISSNA agreed  that access is a large  issue and a                                                               
priority goal  is getting out  the basic information of  what may                                                               
be available to citizens quite close to home.                                                                                   
11:57:46 AM                                                                                                                   
REPRESENTATIVE  SEATON  expressed his  belief  that  part of  the                                                               
information in  the database that  consumers really need  to know                                                               
is  whether physicians  take new  Medicaid or  Medicare patients.                                                               
Just that information would be extremely helpful to residents.                                                                  
The committee took an at-ease from 11:57 to 11:59 p.m.                                                                          
11:59:32 AM                                                                                                                   
MS. KRALY clarified  that in definitions under  AS 18.07.111, the                                                               
"health care facility" for purposes  of certificate of need, also                                                               
includes  information from  assisted living  homes; rural  health                                                               
clinics;   urgent  care   facilities;  providers   of  home   and                                                               
community-based  waiver services,  and personal  care attendants.                                                               
This language is  a more broadly stated  definition section about                                                               
who needs to report financial data.                                                                                             
12:00:40 PM                                                                                                                   
REPRESENTATIVE  ROSES asked  for  clarification  of the  two-year                                                               
concept for the limited CON program.                                                                                            
MS. KRALY explained that the  original change under Version E was                                                               
that  there  would  be  a  limited CON  for  the  three  entities                                                               
mentioned  previously,  with a  sunset  provision  in two  years;                                                               
however, the  two-year repeal  is not  currently included  in the                                                               
amendment, although  the repeal is  supported by the  governor at                                                               
this point.                                                                                                                     
REPRESENTATIVE ROSES further asked about the partial repeal.                                                                    
MS.  KRALY continued  to explain  that  the additional  amendment                                                               
will address  a  two-year repeal  and a sunset provision  for the                                                               
three  entities  affected by  the  limited  CON; critical  access                                                               
hospitals,   residential  psychiatric   treatment  centers,   and                                                               
nursing homes.                                                                                                                  
12:02:15 PM                                                                                                                   
CHAIR WILSON  turned the  committee's attention to  HB 345.   She                                                               
then noted that the only change was  to add "(f)" on page 2, line                                                           
5  through  7, that  ensures  that  facilities that  will  affect                                                               
critical access  hospitals   are required  to have   a CON.   She                                                               
then asked Ms. Kraly to address the new Section 3.                                                                              
MS. KRALY explained  that the current CON statute  has a monetary                                                               
threshold of  $1,100,050 that is  increased by $50,000  each year                                                               
to  an  ultimate  limit  of $1,500,000.    Currently,  the  basic                                                               
consumer price  index inflation rate  would put the  threshold at                                                               
$2.1 million and the rate of  health care inflation would put the                                                               
threshold at $7 million.                                                                                                        
12:06:37 PM                                                                                                                   
REPRESENTATIVE ROSES  asked whether  there have been  issues with                                                               
regard to what  is included in the $1 million  cost, for example,                                                               
MS. KRALY  answered that the  current statute under  AS 18.07.031                                                               
defines expenditures  and provides legislative direction  on what                                                               
should be included.  The  statute references the present value of                                                               
a  lease   and  regulations  have   expanded  upon  that.     She                                                               
acknowledged  that  not  everything considered  in  the  monetary                                                               
threshold is a true medical cost.                                                                                               
12:07:52 PM                                                                                                                   
REPRESENTATIVE   ROSES  further   asked  whether   the  amendment                                                               
discussed  today includes  in its  $1 million  threshold the  old                                                               
regulations on lease space and depreciation.                                                                                    
MS.  KRALY  responded that  the  amendment  does not  impact  the                                                               
definition of expenditure in AS 18.07.031.                                                                                      
REPRESENTATIVE ROSES  observed that  discussion of  the inflation                                                               
rate  of the  $1  million should  include a  review  of what  has                                                               
occurred  in  regulation  as  to   cost,  and  what  the  current                                                               
standards are.                                                                                                                  
12:09:32 PM                                                                                                                   
CHAIR  WILSON  opined that  the  largest  difference between  the                                                               
bills is  the 50 percent ownership  in HB 345 versus  100 percent                                                               
ownership in HB 337.                                                                                                            
12:10:08 PM                                                                                                                   
REPRESENTATIVE  SEATON  stated that  a  group  practice may  have                                                               
physician  investors who  do not  practice in  the facility.   He                                                               
asked for clarification of the governor's bill on that point.                                                                   
MS. KRALY said  that [HB 337] attempts to maintain  a 100 percent                                                               
physician ownership, whether physician  investors practice in the                                                               
facility  or not;  this  definition tracks  with  the Center  for                                                               
Medicare Services (CMS) definitions.                                                                                            
REPRESENTATIVE SEATON asked  for the reasoning behind  the use of                                                               
the CMS definition.                                                                                                             
MS.  KRALY explained  that,  when the  DHSS  attempted to  define                                                               
imaging facilities  the public preferred  the CMS  known concepts                                                               
However; a  legal ruling found  that the  DHSS could not  use CMS                                                               
definitions  because   the  legislature  had  not   approved  the                                                               
concept.  Writing the core  concepts in statute will comport with                                                               
the rulemaking committee's suggestions.                                                                                         
REPRESENTATIVE SEATON further asked  for the reasoning behind the                                                               
requirement  of 100  percent ownership  by physicians,  even when                                                               
the investors  may not  be attending.   If  CMS allows  that, the                                                               
bill allows 50 percent.                                                                                                         
MS. KRALY asked for the  opportunity to provide a more thoughtful                                                               
response and comparison at a later time.                                                                                        
12:14:41 PM                                                                                                                   
REPRESENTATIVE SEATON  expressed his  appreciation for  her later                                                               
response on  that issue.   He  then said that  HB 345  only deals                                                               
with imaging  centers and,  due to  the testimony  from consumers                                                               
about  the  lack of  ambulatory  outpatient  surgery centers,  he                                                               
would  like   to  see   ambulatory  outpatient   surgery  centers                                                               
addressed, also.                                                                                                                
12:15:51 PM                                                                                                                   
DERECK MILLER,  Staff to Representative Mike  Kelly, Alaska State                                                               
Legislature, opined that many  hospitals have existing facilities                                                               
that  can provide  services in  a better  manner than  an imaging                                                               
facility  100   percent  owned  and   operated  by  a   group  of                                                               
physicians.    Hospitals prefer  the  exemption  without the  CON                                                               
process and will not have that opportunity.                                                                                     
12:17:06 PM                                                                                                                   
CHAIR WILSON asked  whether a grandfather clause  would solve the                                                               
MR. MILLER said that he is not sure.                                                                                            
CHAIR  WILSON  surmised that  this  proposal  has arisen  because                                                               
hospitals have monopolies.                                                                                                      
12:17:56 PM                                                                                                                   
REPRESENTATIVE ROSES  opined that  many physicians will  not have                                                               
the capacity  to make  the large  capital investment  required to                                                               
start  a  health center  without  forming  a partnership  with  a                                                               
hospital.    Limiting  the ownership  to  100  percent  physician                                                               
ownership may prevent new businesses;  however, this proposal may                                                               
also prevent monopolies from occurring.                                                                                         
12:19:39 PM                                                                                                                   
REPRESENTATIVE   SEATON  asked   for  clarification   on  whether                                                               
hospitals  can finance,  with physicians,  an  imaging center  or                                                               
whether hospitals  can have 50  percent physician ownership  of a                                                               
facility located in a hospital.                                                                                                 
MR. MILLER related  his understanding that a hospital  would be a                                                               
minority partner,  up to 50  percent, in the  equipment installed                                                               
in  the space  that  is being  leased from  the  hospital by  the                                                               
REPRESENTATIVE SEATON described two  different models.  The first                                                               
is  a  separate  imaging  center with  physicians  on  staff  and                                                               
outside investors  of up to  50 percent.   The second model  is a                                                               
hospital with physicians  who may be able to  leverage 50 percent                                                               
ownership  in the  hospital.   He asked  whether both  models are                                                               
allowed by the bill.                                                                                                            
MR. MILLER said that he would have to clear that up.                                                                            
12:21:44 PM                                                                                                                   
CHAIR WILSON asked Mr. Miller to explain Section 4.                                                                             
12:22:16 PM                                                                                                                   
MR. MILLER explained that line  23 through 26 is an applicability                                                               
clause  that attempts  to  move away  from  pending lawsuits  and                                                               
equals legal language for "grandfathering in."                                                                                  
12:23:25 PM                                                                                                                   
REPRESENTATIVE  SEATON referred  to the  60,000 population  limit                                                               
and  asked  whether  exclusions or  inclusions  for  military  or                                                               
Native health care recipients are a worry.                                                                                      
MR.  MILLER   said  that   the  language   does  not   take  into                                                               
consideration the  military population  in an  area.   He further                                                               
stated that he would provide that information to the committee.                                                                 
12:24:29 PM                                                                                                                   
REPRESENTATIVE SEATON  further asked whether the  sponsor has any                                                               
recommendations  or changes  on  the net  present  value and  the                                                               
duration of that value to determine the threshold amount.                                                                       
MR. MILLER  said that, during  the drafting  of the bill,  the $1                                                               
million  threshold was  allowed with  the understanding  that the                                                               
$50,000 escalator  would continue.   He  re-stated his  intent to                                                               
work with  the DOL and  the DHSS and  to update the  committee on                                                               
the issue.                                                                                                                      
12:26:20 PM                                                                                                                   
REPRESENTATIVE  ROSES  assured  the   committee  that,  from  the                                                               
standpoint  of  commercial  lending,  no one  will  make  a  loan                                                               
secured by equipment if the life  of the loan is greater than the                                                               
lease on the facility.                                                                                                          
12:26:55 PM                                                                                                                   
CHAIR WILSON  called for new  amendments to be considered  at the                                                               
next meeting.                                                                                                                   
12:27:32 PM                                                                                                                   
REPRESENTATIVE  SEATON asked  whether  amendments should  address                                                               
the basic bill or Amendment 25-G2.                                                                                              
12:27:55 PM                                                                                                                   
CHAIR WILSON  asked the DHSS  to break down Amendment  25-G2 into                                                               
individual amendments.                                                                                                          
12:28:21 PM                                                                                                                   
REPRESENTATIVE ROSES proposed amending the amendments.                                                                          
12:28:32 PM                                                                                                                   
CHAIR WILSON gave a deadline for the submission of amendments.                                                                  
12:28:44 PM                                                                                                                   
REPRESENTATIVE CISSNA asked whether  there would still be further                                                               
CHAIR WILSON said yes.                                                                                                          
[HB 337 and HB 345 were held over.]                                                                                             

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