Legislature(1999 - 2000)

04/22/1999 06:05 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 106                                                                                                             
"An Act relating to decisions by the commissioner of                                                                            
health and social services to remand certain health                                                                             
facility payment decisions back to the hearing                                                                                  
officers; and amending Rule 602, Alaska Rules of                                                                                
Appellate Procedure."                                                                                                           
SENATE BILL NO. 106                                                                                                             
"An Act relating to decisions by the commissioner of                                                                            
health and social services to remand certain health                                                                             
facility payment decisions back to the hearing                                                                                  
officers; and amending Rule 602, Alaska Rules of                                                                                
Appellate Procedure."                                                                                                           
SENATOR ROBIN TAYLOR requested that the bill be moved to the                                                                    
amendment process.                                                                                                              
Senator Wilken noted that Rick Solie was on teleconference                                                                      
and had a limited time to testify.                                                                                              
RICK SOLIE, Representing Fairbanks Memorial Hospital,                                                                           
Fairbanks, (Testified via Teleconference), voiced his                                                                           
concern with SB 106.  He noted that it was the intent of the                                                                    
Alaska State Hospital and Nurses Association (ASHNA) to work                                                                    
in a dual track with the legislation, which would move the                                                                      
legislation, but at the same time work with the departments                                                                     
to discuss the appeal process and timing.  Mr. Solie stated                                                                     
that Fairbanks Memorial Hospital's concern is that issues                                                                       
can be resolved within the working group in a timely                                                                            
fashion.  Mr. Solie suggested that it would make more sense                                                                     
to focus on efforts outside of the Legislative process, such                                                                    
as addressing the backlog of appeals.                                                                                           
Mr. Solie advised that ASHNA has concerns with the                                                                              
amendments, particularly Amendment #1.  [Copy on File].  He                                                                     
referenced the report submitted to Committee members from                                                                       
Donna Herbert, a consultant, identifying the difficulty in                                                                      
establishing a flat rate.  [Copy on File].                                                                                      
Mr. Solie continued that Amendment #2 was reasonable and not                                                                    
of great concern to his organization.  [Copy on File].                                                                          
Additionally, Amendment #3 addresses the backlog of appeals.                                                                    
He reiterated that his comments were in opposition to                                                                           
Amendment #1.                                                                                                                   
DAN HOUGHTON, Alaska Regional Hospital, Anchorage,                                                                              
(Testified via Teleconference), stated that he was available                                                                    
to answer questions.  He stated that he would support                                                                           
passage of SB 106 in its present format.                                                                                        
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,                                                                      
Department of Health and Social Services, stated that the                                                                       
Department is opposed to the proposed legislation.  He noted                                                                    
that the rate appeals process is cumbersome and costly.  The                                                                    
Department believes that the reasons for those problems is                                                                      
that the appeals process is "lost" because the underline                                                                        
rate setting system is obsolete.  The existing rate setting                                                                     
system is expensive and those costs are largely based on a                                                                      
federal mandate which has since been appealed.  He noted                                                                        
that there are budget negotiations still in process                                                                             
requiring $15 million dollar reductions to the Medicaid                                                                         
budget.  Mr. Lindstrom concluded that the existing system                                                                       
preserves the status quo and the existing system insulates a                                                                    
portion of the budget more entirely than anything else he is                                                                    
aware of.                                                                                                                       
TAPE SFC-99 #107 Side A                                                                                                         
Mr. Lindstrom stated that the bottom line is that if the                                                                        
State is concerned about reforming the system, the issue                                                                        
should not be distracted.  He referenced the letter in                                                                          
members packet dated April 19th by Commissioner Perdue                                                                          
regarding the appeals issue at Bartlett Regional Hospital.                                                                      
He reiterated that the Department could not accept the                                                                          
underlining premise of SB 106.                                                                                                  
Senator Phillips asked if Providence Hospital had any                                                                           
appeals current at this time.  Mr. Lindstrom replied that                                                                       
there are a number of facilities that have appeals every                                                                        
rate every year.  Of the forty appeals that are outstanding,                                                                    
one issue accounts for twenty of the appeals.  Senator                                                                          
Phillips voiced a conflict of interest as he is employed by                                                                     
the Providence Health Care System.  He asked to refrain from                                                                    
voting on the amendments and the bill.                                                                                          
Senator Leman asked if the Department could recommend any                                                                       
changes for the current "archaic" system in place.  He                                                                          
questioned the opinion of Commissioner Perdue on an                                                                             
amendment that he had recommended.  Mr. Lindstrom agreed                                                                        
that there was need for legislation to change the current                                                                       
system.  A big portion of the problems is imbedded in State                                                                     
laws resulting from federal mandates.  He deferred the                                                                          
question regarding the amendments to Mr. Lively, Deputy                                                                         
Senator P. Kelly pointed out that some of the ASHNA                                                                             
Hospitals are in support of the legislation.  Mr. Lindstrom                                                                     
replied that he could not speak for all the facilities,                                                                         
however, there have been some facilities that have never                                                                        
appealed a rate.  He believed that Fairbanks would fall into                                                                    
that category.                                                                                                                  
Mr. Lindstrom spoke to the problems with the proposed                                                                           
legislation.  On the facilities side of the Medicaid budget,                                                                    
the ability to actively manage the cost control is very                                                                         
limited.  There are only two elements, one on the front end                                                                     
and the certificate of need process and the second is the                                                                       
ability to some degree to oppose policy and issues reflected                                                                    
in the appeals payments process.  Those are the only tools                                                                      
that the State has.  He emphasized that this bill would                                                                         
essentially remove one of those tools.                                                                                          
JAY LIVELY, Deputy Commissioner, Department of Health and                                                                       
Social Services commented on Amendment #1 in response to                                                                        
questions from Senator P. Kelly.  Mr. Lively pointed out                                                                        
that the Department has focused mostly on the details of the                                                                    
appeal process.  He commented that the amendment would                                                                          
charge the Department to go back to determine how current                                                                       
rates are set and then create an alternate system that would                                                                    
be less cumbersome.                                                                                                             
Senator Wilken referenced Page 2, Line 16 and asked the                                                                         
recommendation of the Department regarding the most                                                                             
reasonable amount of time.  Mr. Lively responded that the                                                                       
Department would like to see between 120 and 180 days.  Co-                                                                     
Chair Torgerson interjected that 120 days was not a                                                                             
reasonable number.  He acknowledged that 30 days might be                                                                       
too "tight".                                                                                                                    
LORAINE DERR, Representing the Alaska State Hospital and                                                                        
Nursing Association (ASHNA), Juneau, spoke in support of the                                                                    
legislation and stated that the problem is that in the                                                                          
appeals process, there is no finality.  The basis of the                                                                        
bill puts finality to the process.  ASHNA would like to see                                                                     
the process have some sort of completion.                                                                                       
Co-Chair Torgerson explained that he agreed with the bill                                                                       
and the way it was written, however, he believed that the                                                                       
legislation does not address the heart of the problem.  The                                                                     
legislation does solve the problem in how quickly it could                                                                      
move to court, however, the underlining problem is that                                                                         
there is no agreement on what qualifies an eligible                                                                             
Senator Donley MOVED to adopt Amendment #1.  Senator Wilken                                                                     
OBJECTED.  Senator Wilken pointed out that there are many                                                                       
hospital officials that are uncomfortable with Amendment #1.                                                                    
Co-Chair Torgerson stated that the bill would not be moved                                                                      
out of Committee if Amendment #1 failed.  Senator Adams                                                                         
commented that it was his preference to work on the bill in                                                                     
Senator Taylor disagreed with comments made by the                                                                              
Department regarding the legislation and the amendments.  He                                                                    
commented that he would not object to Amendment #1 which                                                                        
would allow the benefit of finality for legislative                                                                             
Co-Chair Torgerson urged the various factions to come to the                                                                    
table and create a working document.  He acknowledged that                                                                      
the Legislature does not have the expertise to undertake the                                                                    
challenge at this time.                                                                                                         
Senator Wilken asked if the new rates would be included in                                                                      
the report.  Co-Chair Torgerson commented that there would                                                                      
be a report provided with the rates, subject to appeal.  He                                                                     
advised that it was his intent to create language, which                                                                        
would remove all the appeals.                                                                                                   
Senator P. Kelly commented that Amendment #1 should be made                                                                     
into a separate bill rather than incorporated into the                                                                          
legislation.  Co-Chair Torgerson stated that he was not                                                                         
willing to make that change.                                                                                                    
A roll call vote was taken on the motion.                                                                                       
IN FAVOR:  Donley, Green, Leman, Parnell, Torgerson                                                                             
OPPOSED:  Adams, P. Kelly, Wilken, Phillips                                                                                     
The MOTION PASSED (5-4).                                                                                                        
Co-Chair Parnell MOVED to adopt Amendment #2 which would                                                                        
insert language on Page 2, Line 17, "unless the facility                                                                        
requests a delay", and Page 2, following Line 25, inserting                                                                     
a new subsection: "At the request of any party, the                                                                             
department may offer a process of voluntary mediation".                                                                         
There being NO OBJECTION, it was adopted.                                                                                       
Senator Leman questioned if Amendment #3, 1-LS424\G.7,                                                                          
Bannister, 4/21/99, would be beneficial to the proposed                                                                         
legislation.  [Copy on File].  Senator Leman MOVED to adopt                                                                     
Amendment #3 and asked to hear from the Department.                                                                             
Mr. Livey responded that Amendment #3 would provide any                                                                         
appeal that is remanded back to the hearing officer by the                                                                      
Commissioner after April 20th but before the effective date,                                                                    
would also be subject to the 30-day rule.                                                                                       
Senator Taylor questioned the retroactive date and the                                                                          
effect that the amendment would have on the legislation.  He                                                                    
commented that he was not concerned with passage of the                                                                         
Senator Leman WITHDREW Amendment #3 with the understanding                                                                      
provided by Commissioner Perdue from an earlier conversation                                                                    
that the Department would work diligently to achieve                                                                            
finality.  There being NO OBJECTION, it was withdrawn.                                                                          
Co-Chair Torgerson commented that the bill would be HELD in                                                                     
Committee in order to work in more detail with the                                                                              
Department on the fiscal notes.                                                                                                 
Co-Chair Parnell requested a brief discussion on the fiscal                                                                     
notes.  He noted the three temporary positions requested in                                                                     
the fiscal statement.                                                                                                           
Mr. Lindstrom commented that new hearing officers would be                                                                      
needed to deal with the backlog of outstanding appeals.  He                                                                     
emphasized that the most effective way to resolve the                                                                           
backlog of appeals would be to grant an additional hearing                                                                      
officer position and the additional resources for the                                                                           
Department of Law and the Department of Health and Social                                                                       
Services Commissioner Office to address the concern.                                                                            
Co-Chair Torgerson requested a check of the length of time                                                                      
between the 30-60-90-day comparison and the fiscal impacts                                                                      
that each would bear.  Senator Taylor commented that he                                                                         
would oppose any additional changes to the fiscal note.                                                                         
Mr. Lively responded that 120 days would be a more                                                                              
acceptable amount of time.                                                                                                      
SB 106 was HELD in Committee for further clarification on                                                                       
the fiscal notes.                                                                                                               
TAPE SFC-99 #107 Side B                                                                                                         
The meeting adjourned at 8:45 P.M.                                                                                              
SFC-99 14 4/22/99 p.m.                                                                                                          

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