Legislature(2007 - 2008)BUTROVICH 205
02/08/2008 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SB245 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 245 | TELECONFERENCED | |
SB 245-HEALTH CARE: PLAN/COMMISSION/FACILITIES
1:36:42 PM
CHAIR DAVIS announced the consideration of SB 245.
JOEL GILBERTSON, Providence Health and Services, Anchorage, AK,
said his organization operates acute and long term care and
behavioral health programs across the state including operations
in Anchorage, Valdez, Kodiak, the Mat-Su Valley and Seward.
Because the issues in this bill are so large, he would suggest
dividing it into multiple bills. He said he will address the
three main pieces of the legislation. He said the Certificate of
Need (CON) program adds tremendous value to the health care
system. He said it has been an invaluable tool in making sure
that there is a full continuum of care. To say that health care
is ever going to be a free marketplace is probably asking a lot.
It is one of the most regulated industries with federal and
state laws requiring mandatory reporting of services and care.
CON helps care givers and hospitals, especially, meet needs for
required care to individuals who are suffering health care
crises and don't have the ability to pay.
He said the outright repeal of CON came as a surprise because
there has been a lot of good faith work between organizations
and the state to reach a compromise.
MR. GILBERTSON said the other large pieces of this bill, a
health information office and a health care commission, sound
good but there needs to be more information sharing, and
consumers need to be empowered to make better decisions. He said
the question to ask regarding a health care information office
is what value new information will add to the consumer. There
already is a large amount of data being reported by health care
facilities.
1:40:39 PM
MR. Gilbertson said to oversimplify is to distort. For example,
to say we can take the top 100 procedures by facility and think
that will represent a clear picture of what it means for a
consumer regarding cost and quality is not accurate because
there are so many things that go into the cost: who your
physician is; how often a physician uses imaging equipment; how
much he or she charges; how often a physician orders labs.
MR. GILBERTSON said he supports a health care commission but
wonders if it can move reform forward. There's a reason no state
has an information office, he said, because not doing it right
would put inaccurate information in front of consumers. If it's
going to work it needs to have key stakeholders, both consumers
and providers, to have a robust dialogue.
SENATOR COWDERY joined the meeting.
SENATOR DYSON asked if it would it be a problem for the state to
collect that data and make it available, since the federal
government is already collecting health care data.
1:44:23 PM
MR. GILBERTSON said he thinks it would be great to start to use
that common data and put into a central repository.
SENATOR DYSON asked if the bill would duplicate that effort.
MR. GILBERTSON said he didn't know yet. The department suggested
looking at the cost and quality of the most common procedures.
That raises additional questions because without the physician
component, it's difficult for a consumer to look at the data and
get accurate information.
SENATOR DYSON said he's not sure that just because it might not
be perfect is a reason not to begin. There's no guarantee that
the process will be effective but any information is better than
no information.
MR. GILBERTSON said he was not suggesting there should not be a
commission. His primary concern is having stake holders at the
table and an evaluation process.
SENATOR DYSON asked who should evaluate the effectiveness of the
commission.
1:47:19 PM
MR. GILBERTSON replied the legislature should provide ongoing
monitoring. He suggested setting five-year strategic measurable
goals and that the commission report back on an annual basis.
KARLEEN JACKSON, Commissioner, Department of Health and Social
Services (DHSS), Juneau, AK, said the certificate of need (CON)
program and what is being done to regulate it has up to now been
seen through the lens of the provider. The reason this is called
a health care transparency bill is because it is designed to
look at health care from the perspective of the consumer and
that is why it is important to consider all three components:
the CON, the information office, and the health commission.
SENATOR ELTON moved to adopt the proposed committee substitute
(CS) for SB 245, labeled 25-GS2050\K, as the working document.
SENATOR DYSON objected for discussion purposes.
1:51:21 PM
MS. JACKSON explained the changes in the committee substitute.
Page 4, lines 7, 18 and 19 address changes in the composition of
the commission. Two more public members are added. She expects
there will be more conversation about composition; the Mental
Health Trust Authority has expressed interest in being at the
table.
MS. JACKSON said the next change, on pages 6-8, relates to Sec.
18.09.110. The information office categorizes data according to
access to health care, cost of health care, and quality. The
idea is to accumulate information that could be posted on a
website so consumers could make informed decisions.
SENATOR ELTON said the original bill talked about licensed
facilities. He asked why it is not mentioned in the CS.
MS. JACKSON replied it is listed on page 6 at the bottom.
There's a complete list organized by region and address of
health facilities in the state.
1:54:05 PM
SENATOR ELTON asked how a health facility is defined.
MS. JACKSON said it is defined on page 3, line 3. A health care
facility means a nursing home or a facility located in a
community in which there is a critical access hospital as
designated by the department.
MS. JACKSON said the repeal of CON is defined in bill sections 2
and 3, page 3, lines 2-26. The CS provides a two-year time delay
of the repeal of CON for nursing homes, residential psychiatric
treatment centers, and for communities with critical access
hospitals. This language was drafted by the Department of Law.
SENATOR ELTON said he still wasn't clear since some facilities
that offer medical care services are not included.
MS. JACKSON said that on page 3, line 18, it states that the
offices of private physicians or dentists are not included.
CHAIR DAVIS asked Ms. Jackson to state her opinion of the
changes.
MS. JACKSON said CON has been the one tool to try to deal with
the costs of health care. She said that with this bill there
will be better tools that will do a better job of keeping health
care costs down while increasing access. It also assures that
the commission will have the correct membership
1:57:45 PM
MS. JACKSON said that data posted with the information office
will be consumer driven. She said the delayed repeal of CON
around nursing homes and critical access hospitals addresses
some of the concerns expressed. It would allow the immediate
repeal around the most contentious issues that have provoked
lawsuits. She supported the CS.
JEAN MISCHEL, Attorney, Legislative Legal & Research Services,
Legislative Affairs, Juneau, AK, said Version K's effect is only
on the CON. On page 3, the definition is significant regarding
health care facility because it brings three categories of
facilities under the CON program for the two year period of
repeal. The previous version only required hospitals that had
the designation critical access. This version of the bill now
protects those hospitals from over competition. What the
definition does is expand the types of health care facilities:
any nursing home; any facility that's located in a community in
which a hospital is designated as critical access; and
residential psychiatric treatment centers (RPTC). The department
wants the latter to be certified statewide. The other changes
are on lines 10 and 11. The phrase "skilled nursing facility"
was pulled out. It was causing confusion because it's an old
fashioned term for a nursing home. Nursing home was defined on
lines 25 and 26 to be consistent with the federal definition
which includes skilled nursing facilities.
2:03:19 PM
MS. MISCHEL said the other difference in this version is an
added transitional provision. Because there are now three
categories of facilities that will still come under the CON,
section 10 is new on page 11. It's like section 11 except it's
modified by the new definition of health care facility. Any
pending appeals for the two-year effective period would be
dismissed only if they don't meet the new definition. Section 11
kicks in in 2010 when CON is repealed and that requires the
department to dismiss all pending court actions.
MS. MISCHEL said there is a substantive problem that's easily
fixed if the intent of the committee is to include RPTC
statewide in the modified two-year period. RPTCs would be
bracketed out on page 3, lines 9 and 10, and give those their
own separate sub paragraph so that they could be applied
statewide if the sponsor chooses.
SENATOR ELTON asked about the definition of health care
facilities on page 3, line 8. The first criterion is a hospital
that is designated by DHSS as a critical access hospital.
Following that a whole group of other conditions apply. He asked
if DHSS chooses not to give that designation, would they then
have created a facility that would not be covered.
MS. MISCHEL said yes, with the proviso that the designation of a
facility as a critical access hospital has some federal
implications so DHSS is constrained by federal law in deciding.
SENATOR ELTON said he'd like to know what the constraints are
under federal law because he doesn't want DHSS to have sole
discretion on whether or not they will include a facility.
2:07:43 PM
BOB URATA, Family Physician, Board of Directors, Bartlett
Hospital, Juneau, AK, said he supports SB 245 except for the
provisions that eliminate CON. Eliminating CON in a small market
like Juneau will be detrimental to local residents. If it
increases competition, it will do so only in services that are
profitable and only for those who have the best health care
coverage. Those with no insurance and even those with Medicare
will need to go to community hospitals that have traditionally
been the safety net of each community. The highly specialized
clinics, such as imaging, will pick the highest paying patients
and cause serious financial injury to the community hospital.
Strong community hospitals are also a major part of a successful
rescue response team. CON is a public process that prevents
excess capacity in small markets. Health care dollars are used
wisely and efficiently. Excess capacity will reduce quality
particularly in surgery where doing a certain number of cases is
required to maintain good outcomes.
DR. URATA said if there are too many cardiac surgical centers
heart teams would become inefficient. This was demonstrated in a
study of Medicare beneficiaries in 1994-1999 by University of
Iowa, College of Medicine. Mortality was 20 percent lower in
states with CON. Costs of health care per person were 33 percent
to 160 percent lower in states with CON. This study was
conducted by the big three American auto companies. Ford Motor
Company found that inpatient and outpatient Magnetic Resonance
Imaging (MRI) and coronary artery bypass surgery charges were 10
percent to 39 percent lower in states with CON. CON and
community health care planning protects the consumer by
including public input, maintaining accessibility to health
care, and helping to contain costs. The consequence of
unrestricted health care competition in small markets is a
splintering of the provider delivery network, threatening the
viability of safety net facilities by creating high profit niche
markets such as specialty hospitals and surgical clinics. He
said he supports the creation of the health care commission but
he would not eliminate CON in small markets.
2:11:55 PM
TOM PIPER, Director, Missouri Certificate of Need (CON) Program,
Jefferson City, MO, said he has worked in this position for 24
years as well as working with and monitoring national
organizations. He said he would talk about how CON relates to
health care market entry, competition and protecting public
interest. The slide on view shows that two-thirds of the US has
CON, 36 states and the District of Columbia.
2:15:15 PM
MR. PIPER said the next slide shows state ranking according to
the scope of their CON programs. Vermont is the most
comprehensive and Louisiana is the least comprehensive. The next
slide shows that Alaska's services are fairly broad compared to
some other states. The next slide shows where CON started and
where the program is today. The far left of the slide indicates
the beginning of a cooperative public/private model. Business
and insurance leaders in Rochester, New York organized to become
the nation's first community health planning council. For the
next ten years almost 30 states embraced similar a model before
there was a national program mandating it. Sixty percent of the
states voluntarily started health planning and CON to implement
the planning. After the federal mandate ended in 1986 one
quarter of the states deregulated.
In June 2003 Mr. Piper said he was asked to present the case for
CON to the Federal Trade Commission (FTC) and the Department of
Justice (DOJ) as part of hearings on health care competition,
quality and consumer protection. Many were invited to make the
case against regulation. In July 2004, the FTC and DOJ released
a joint report. Many testifiers were disgruntled; private
developers, entrepreneurs, lawyers and consultants didn't
believe their proposals should be subjected to public scrutiny.
Very few public interest groups were invited to participate. One
of the recommendations following the hearings was that states
reconsider whether CON best serves consumers.
2:19:10 PM
MR. PIPER said the FTC was hasty in drawing conclusions about
competition to improve health care. The FTC goals have been
integral to community health planning for a long time. That is
demonstrated by the planning and regulatory processes that are
in most CON states currently. Also, the difference between
states is in the management of the tension between public
benefits and private investment. That's really the difference
between long term and short term investment. He agrees that CON
must be periodically reassessed.
MR. PIPER said that like any business, capital investments are
passed onto the consumer either through charges, premiums or
taxes. Competition in health care is different because providers
control the supply of services, medical practitioners define the
demand for care and consumers have insufficient information.
They are not able to shop especially based on price. Higher
capacity costs create higher charges as is amply demonstrated by
the continuing escalation of health care insurance premiums.
Consumers are insulated from the specific costs of care but they
suffer under increased premium. Even with changing reimbursement
systems incentives for providers are ineffective. Policy makers
must look for new answers.
MR. PIPER said CON has been criticized since its inception. Many
believe that it only tries to restrain market entry. It tries to
lower capital outlays and cap technical innovation. Critics also
believe that CON is more concerned with geography and access
than with social system questions. Critics say quality is the
factor that is left out. The most prevalent claim is that CON
doesn't react to health care forces.
CON is a unique planning and regulatory tool covering a broad
range. It is a planning-based, open-process, market compensator,
quality enhancer, and competition promoter. It's practical
redirecting resources to the areas of greater need and helps
providers to achieve higher and more efficient levels of
performance.
MR. PIPER said that evidence from business experience now shows
how successful CON has been. The big three auto makers monitored
their costs and the next slide shows the results. They undertook
systematic analysis of their health care costs in states where
they had at least 10,000 employees and insured dependents with
comparable health care benefit programs. Daimler Chrysler
Corporation showed that in 2000 their employees in CON states
enjoyed health care costs 164 percent lower than in non CON
states.
2:23:08 PM
MR. PIPER said General Motors spent almost one third less in CON
states. The Ford study was broader in that it distinguished
between outpatient and inpatient hospital costs and found that
CON states came in 20 percent lower than non-CON states.
Unlimited competition raises serious concerns. If the current
version of SB 245 passes unrestricted health care competition
that results will splinter the provider delivery network which
would cause staffing shortages and lower quality. It would
fragment the health care support system and threaten the safety
net facilities, medical education institutions, and low-income
neighborhood facilities. It would create high profit niche
markets like specialty hospitals and ambulatory surgery.
According to the publication Hospitals and Health Networks,
supply drives demand putting traditional economic theory on its
head. Areas with more hospitals and doctors spent more on health
care services per person.
2:26:19 PM
MR. PIPER said public oversight is an effective tool to help
balance the heavy weight of health care costs on the public.
Health service pricing is rising at over eight percent annually.
Family health spending is over $12,000 per year. Premium costs
are rising and there's more stress on the resources of the
elderly. A balance can be established between regulation and
competition by: promoting the development of community-oriented
health service and facility plans which involve consumers,
providers, businesses, and researchers; providing pricing and
quality information to consumers so they have an educated
choice; and providing a public forum to insure that the
community has a voice.
SENATOR DYSON said the public needs access to all the cost data
including discounts that are provided to different groups.
Third-party payers often get a significant discount as does the
government. The only people that pay list price are those that
pay their own bills. He asked if the discount rates should be
published.
MR. PIPER replied it should be available and that a lot of it
already is available through hospitals, but in free-standing
centers like radiation therapy centers, for example, it's
difficult to get. He said that SB 245 has the potential to
reveal a lot of that information, but there will be a lot of
resistance.
SENATOR DYSON asked if there are any groups or any jurisdictions
that are asking the providers to tell what portion of the bill
is cost sharing.
MR. PIPER replied the best example is in Maine where they do it
in cooperation with CON.
2:31:02 PM
ROD BETIT, CEO, Alaska State Hospital and Nursing Home
Association (ASHNHA), Juneau, AK, delineated his association's
position on SB 245. His association supports adoption of a
statewide health plan. He said if that were implemented in
conjunction with CON there would have been far fewer headaches.
His association supports establishment of the Alaska Health Care
Commission. The association does have some issues regarding the
membership in terms of who is on it and who gets to pick.
SENATOR DYSON asked if Mr. Betit had seen Version K.
MR. BETIT said he had and it does not specify who the new public
members would represent. He would like to see those slots
earmarked and he has some suggestions on how it can be more
representative.
SENATOR DYSON asked if Mr. Betit was prepared to tell the
committee how to fix this portion now.
2:35:14 PM
MR. BETIT said he has some ideas but thought it would be better
to sit down and discuss them.
CHAIR DAVIS asked that people who have suggestions for changes
in the bill present them to her office.
MR. BETIT said that with regard to establishing a health care
information office and mandatory reporting, his association has
been voluntarily reporting information from the hospital side.
He is, however, not clear how the bill will accomplish what it
is intending to do. He asked who is expected to report the data.
The original bill defined who was to report differently than
Version K. It can now be found on page 9, line 25. The earlier
definition pertained to which facilities would be under CON.
Page 9 pertains to who would have to report. According to the
statute, that would include ambulatory surgical centers,
assisted living homes, child care facilities, child placement
agencies, foster homes, free-standing birth centers, home health
agencies, hospices, hospitals, centers for mentally retarded,
maternity homes, residential child care facilities, nursing
homes, residential psychiatric treatment centers, rural health
clinics, runaway shelters, independent diagnostic testing
facilities, etcetera. That is who would be expected to report
under the bill as he understands it. The only ones reporting now
are hospitals. He does not understand how a system including all
these could be pulled together in three or four months to meet
the July 2008 deadline. Doctors are also missing from the list.
There is language in the bill regarding pharmacies and some drug
prices. There is nothing in the bill that gives authority to
DHSS to require pharmacists to report prices. His association
wants the bill to move forward. They are giving all in-patient
data to the state now including diagnosis, treatment, charges,
reimbursement receipts, third-party insurers, length of stay,
gender, age and residency. It was expanded this year to include
all out patient and emergency department data.
2:39:00 PM
MR. BETIT said these reports are being handled by the Missouri
Hospital Association. It compiles, edits and purges the raw data
of confidential information, and then sends it back to the
members and the department. All the financial data on the
operations of every hospital is also reported to another
company. Data on quality measures is reported to the federal
Department of Health and Human Services, to the American
Hospital Association and to the Institute of Health Improvement.
That information is all available on the Internet. The
association also reports on hospital and health care acquired
infections. The legislature passed a bill last session that
created a task force to define what the state should ask for.
Fourteen other states have already done this. Only two have
produced a report. It is wise to go slowly and learn from what
other states are doing.
He noted that the Alaska Hospital Community Benefits Report was
included in the bill packet to show how much is going back into
the community from hospitals. The number is $150 million across
the state. The amount is also available by facility.
MR. BETIT questioned how the data will be collected, validated
and kept current. He suggested one way would be to send the raw
data that is sent to other expert data agencies. DHSS could then
edit, purge confidential information, format and post it to its
own data website. It would be a herculean effort and replicate
costs that are already being invested. DHSS could likewise enter
into an agreement with little or no cost to obtain the data from
all the data agencies already producing reports and populate
their own website with that data. That would be more
expeditious. DHSS could do an online consumer inquiry system
from that information. Another option would be to provide links
to the already existing data sites. That would be the simplest,
least costly way.
2:43:18 PM
MR. BETIT questioned when data would begin to be reported. The
healthcare commission piece of the bill says that it is in
charge of data, not just cost, quality and access. He said it
should be permissive rather than prescriptive. He said the bill
also needs to state who needs to report. The way the bill is now
written there is a very long list of people that need to report.
He said timelines need to be extended.
MR. BETIT said the ASHNHA is opposed to repealing CON. He said
it would have serious consequences and proposed deleting all the
CON sections from the bill.
MR. BETIT said the bill packet has a rebuttal to the Federal
Trade Commission report. It includes a critique of the federal
report by the American Health Planning Association and a paper
on why the ASHNHA thinks CON is an important tool for the state
to keep.
2:46:04 PM
SENATOR ELTON thanked Mr. Betit for pointing out that pharmacies
are missing from the list of entities that provide data. He
asked if it's true that any hospital with a pharmacy would have
to report the charges even though a pharmacy at Fred Meyers, for
example, wouldn't have to report.
2:47:27 PM
MR. BETIT replied the way the bill's currently written, you
could argue that could be the case. If you say all prices in a
hospital, then all those prices would be available to the public
even though others don't have to report.
PAUL FUHS, Lobbyist, Alaska Open Imaging Center, LLC, (AOIC),
said AOIC believes that competition in the large medical markets
in Alaska can benefit consumers. It supports representation of
stakeholders on the commission. He said personal responsibility
in leading healthy lifestyles is key to keeping the medical
system from failing. Many things don't easily compare in terms
of pricing. Information needs to be clearly defined. The
previous legislation that passed created a compromised legal
situation regarding how and where to install imaging equipment.
Definitions regarding independent diagnostic testing facilities
were not included. In one of AOIC's facilities in Fairbanks, the
commissioner said that under the rules of Medicaid and Medicare,
it was a diagnostic radiology physicians' office. But a lawsuit
was filed and the court ruled that due to the lack of
definition, the office had to close. After considering a related
case in Juneau, the Fairbanks office was able to reopen as 100
percent physician owned. Other cases have come up. He predicted
that any decisions made will be appealed.
2:51:31 PM
MR. FUHS said AOIC was admonished by the legislature to figure
this out and the administration actually sponsored negotiated
rule making. Under those rules, everyone must agree 100 percent
to move forward and that didn't happen. AOIC decided to adopt
the solution Commissioner Jackson forged, which was to use
Medicaid definitions. That required that offices be 50 percent
owned by radiologists who would read the images.
MR. FUHS said critical access hospitals are reimbursed 100
percent by Medicaid because they are financially strapped. They
have other subsidies as well because they are the only
facilities in those communities.
Page 3, line 6, says that the definition of a facility is that
it is located in a community. He questioned what that means: a
city, a city within a borough, a village. He approved of the
section of the bill that states that eventually all the lawsuits
will be dismissed, but said that without definitions the
situation can only get worse. Currently, people are looking for
the oldest most dilapidated technology in order to comply. If
they can buy it for less than $1.2 million they can come in
under the threshold.
SENATOR THOMAS joined the meeting.
2:55:00 PM
SHAWN MORROW, CEO, Bartlett Regional Hospital, Juneau, AK, said
Bartlett is opposed to a repeal of CON, but supports the other
elements of the bill. He said he came here from the state of
Oklahoma which has no CON except for nursing homes and long term
hospitals. He said that from 1992-2005, thirteen hospitals in
Oklahoma closed. CON was not the sole cause of the closures but
it was the cause of leaving those hospitals financially
weakened. When HMOs came in the early 1990s, when the Balanced
Budget Act of 1997 was instituted, the hospitals were not
sufficiently financially stable to survive because of the
siphoning off of so many high profit services.
MR. MORROW said population threshold is critical and has to do
with the vulnerability of hospitals in certain markets. The
population threshold is higher in those communities that have
critical access hospitals. Petersburg, for example, with a
population of 3,500 is a critical access hospital. Wrangell has
a critical access hospital. He said he's glad to see language in
the bill that protects those hospitals. Markets that are in
10,000 to 60,000 population range are large enough and have high
enough volumes in surgery, diagnostic imaging, and orthopedics
that they are very attractive to private investors, but
hospitals in that market are limited. They only have two or
three services that generate a profit so if those go away the
hospitals is in a weakened state. There's a big difference
between the vulnerability of a critical access hospital and a
hospital in a community of 15,000 to 60,000. He doesn't think a
repeal of CON would benefit anyone in the state.
2:58:08 PM
SENATOR DYSON asked if the Balanced Budget Act of 1997 was state
or federal.
MR. MORROW replied that was a federal bill and it involved
Medicare reimbursement.
SENATOR ELTON said he is still struggling with the definition of
health care facility on page 3. He read, "A facility that is
located in a community in which a hospital is designated by the
department as a critical access hospital and…." It goes on to
list different types of facilities. He asked if a diagnostic
testing facility can be designated as a critical care hospital
even if it is not a hospital.
MR. MORROW replied he understands that in order to receive
critical access hospital designation you must be an acute care
hospital. You cannot operate more than 25 beds and you cannot be
within 15 miles of the next closest hospital under the
exception. The general rule is within 25 or 35 miles of the next
closest hospital.
SENATOR ELTON said he was still struggling with the definition
as it reads. He said DHSS needs to clarify that because it
sounds that if you want to call a kidney disease treatment
center a health facility, you can't do it unless it's part of a
critical access hospital.
3:00:21 PM
JAMES SHILL, CEO, North Star Behavioral Health, Anchorage, AK,
said his organization has facilities in Anchorage and MatSu.
They have 500 employees and 1100 admissions per year. They
provide psychiatric acute care hospitalization and residential
care to children and youth. He said he is opposed to the bill,
specifically the CON portion. The state needs a balanced
approach for mental health delivery. Mental health care is a
continuum with once a week outpatient care on one side and
psychiatric hospitals on the other side. Many studies have
demonstrated that all the types of services along the continuum
need to be funded and supported.
MR. SHILL was a member of the negotiating committee debating
CON. Eighty-nine percent of the members voted to keep CON and he
said the bill does not reflect that.
3:05:20 PM
RYAN SMITH, CEO, Central Peninsula Hospital (CPH), Soldotna, AK,
said he's opposed to SB 245 and the repeal of CON. Although it
is not a critical access hospital, CPH is the sole community
provider located on the Kenai Peninsula. If the state does not
insure there's a need for more health care infrastructure before
it is introduced into the community, there's a risk of financial
instability and harm to the community. The community has
approved a $49.9 million bond project for hospital expansion
that is scheduled to be completed this summer. Since 1974
community taxpayers have contributed over $43 million to the
hospital with the protection of CON. The repeal of CON threatens
the hospital/community relationship which has been demonstrably
strong. At the invitation of Commissioner Jackson, Mr. Shill
participated in the CON negotiating committee. The committee
spent 5 days in Anchorage negotiating in good faith to reach a
consensus on the issues identified by DHSS related to CON. The
committee voted on 49 questions and voted 16 to 2 not to
eliminate CON. It reached consensus on imaging ownership issues
that would eliminate the litigation surrounding CON. He was
surprised to receive a message from Commissioner Jackson
thanking him for his participation on the committee accompanied
by an announcement that the bill would call for the repeal of
CON. This indicates a disconnect between the efforts of the CON
negotiating committee and this bill. Since this bill was
presented as giving the consumer perspective more weight, he
questioned why there were 21 providers on the negotiating
committee rather than 21 consumers. He said he would like the
recommendations he and the other members of the negotiating
committee made to be taken into account.
3:09:06 PM
MIKE MCNAMARA, Orthopedic Surgeon, President, Advisory Board,
Alaska Surgical Center (ASC), Anchorage, AK, said the ASC has 26
partners and does about 5,500 cases a year, with 16 specialties.
It does about 20 percent that is Medicare/Medicaid and Project
Access. He is opposed to the repeal of CON. The original purpose
of CON in Alaska was to prevent excessive, unnecessary
duplication and development. He also expressed disappointment
that more attention was not accorded the negotiating committee.
In Anchorage, the primary surgical centers are rarely at full
capacity. The Alaska Surgical Center operated at only about 55
to 60 percent last year. Allowing additional surgical centers to
develop when present centers are not full capacity will likely
reduce vital peer oversight. There's a national shortage of
operating room nurses. All the centers are understaffed with
respect to specialized nursing and staff. Removing the CON would
create undue competition for these staff where there is already
a critical shortage. Competition does not lower costs but
creates greater costs and overhead. The larger centers have the
power to negotiate contracts with insurance companies, unions
and third-party payers that allow reduced costs to the public.
Unchecked development would reduce the negotiating power of
these centers.
Mr.MCNAMAMRA agreed that in health care, supply generates
demand. He encouraged the committee not to repeal CON and risk
losing standards of care and a system that has been working well
in Alaska. Not many years ago a patient was sent outside to the
Mayo Clinic or Seattle for excellence of care that is now
available here.
3:13:21 PM
WES CLEVELAND, Attorney, American Medical Association,
Department of State Legislation, Chicago, IL, said that the
weight of the peer-reviewed academic research evidence over
three decades showed that CON has failed to achieve its reported
purpose to restrain health care costs. In some studies CON has
increased health care costs. In the Journal of Health Politics,
Policy and Law, 1998, an article entitled, "Removal of CON",
says, "There's no evidence of a surge in acquisitions of
facilities or in costs following removal of CON." He said a
number of states have reached similar findings. In February
2007, a CON study requested by the Illinois legislature
concluded that "a review of the evidence indicates that CON
rarely reduces health care costs and on occasion increases costs
in some states."
CHAIR DAVIS asked him to send his written testimony to her
office.
3:17:42 PM
PAULA EASLEY, Alaska Mental Health Trust Authority, Anchorage,
AK, said the trust requests an amendment to the CS that would
authorize including a trust representative on the Alaska Health
Care Commission. In addition to the trust's statutory
responsibility, the trust and the DHSS develop a comprehensive
five year mental health plan and advise the state on mental
health program funding. This year the trust will provide funding
of more than $27 million. The trust experience and knowledge
from years of improving beneficiary health safety and quality of
life would be invaluable to the new commission's work.
MS. EASLEY said a health care information office and the need to
connect Alaskans with available services is evident. United Way
has a statewide referral service. Similar to 911, people can
dial 211 for general health care information, counseling, mental
health services, crisis intervention, shelters, heating
assistance, food banks, child and elder care, etcetera. Alaska
211 was recently granted an additional $100,000 to continue
adding and updating service provider information. This is an
opportunity to reduce costs associated with establishing
referral services in the Alaska health care information office.
Rather than duplicating services it would be cost effective to
link the state site to Alaska 211 for referrals. Each agency
listed must provide extensive information which can be
downloaded from the 211 site. Alaska 211 does not provide
medical advice, hospital ratings, or comparison of prescription
costs.
3:23:14 PM
WARD HINGER, Administrator, Diagnostic Health, Anchorage, AK,
said that he served on the CON negotiating committee. He has
been a health care administrator for more than 15 years. In
addition to voting to continue CON in Alaska, 71 percent of the
committee members saw the need to define physician offices as
100 percent physician-owned. His colleagues at Diagnostic Health
share his perspective in supporting the continuation of CON. He
said he would send additional supportive information.
CHAIR DAVIS asked committee members to submit questions or
concerns to her office. She has additional amendments she would
like the committee to consider. SB 245 was held in committee.
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