Legislature(2019 - 2020)BUTROVICH 205
04/01/2019 01:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| SB1 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 93 | TELECONFERENCED | |
| += | SB 1 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 1-REPEAL CERTIFICATE OF NEED PROGRAM
1:31:40 PM
CHAIR WILSON announced that the only order of business would be
SENATE BILL NO. 1, "An Act repealing the certificate of need
program for health care facilities; making conforming
amendments; and providing for an effective date."
CHAIR WILSON noted that the committee adopted CSSB 1, Version M
during the previous hearing. The committee also heard an
overview and invited testimony on March 27.
1:32:40 PM
KEITH SMITH, M.D., Medical Director, Surgery Center of Oklahoma,
Oklahoma City, Oklahoma, spoke in favor of repealing the
Certificate of Need (CON). He explained that he does not have
any self-interest because any relaxation of CON in Alaska will
limit the flow of patients from Alaska to his Surgery Center in
Oklahoma City. He has always fought against the Certificate of
Need because he viewed it as raw protectionism for the status
quo and the hospitals in the area. It is still a prevalent
problem, although it is lessening because many patients are
willing to fly for services due to abusive pricing. Most of the
patients receiving operations at his surgery center are from out
of state. Historically, most were from Alaska and Wisconsin,
which reflects abusive pricing in those regions. He would like
to encourage the committee to completely rescind any CON
regulations. However, removing regulations would not be enough,
he said.
DR. SMITH said that if the State of Alaska is interested in
better quality care and lower cost, not only should the CON be
repealed but the state should consider buying only from those
who display their pricing. Price listing would be a positive
move in the marketplace. All the patients from Alaska have been
thrilled with the care and price at his Surgery Center. Patients
know the prices upon arrival. He has previously made
arrangements with the Alaska Health Trust for teachers. The
teachers came in a steady stream for their surgical procedures.
He encouraged the committee to rescind all restrictive language
that prohibits new competitors from entering the marketplace.
Competition typically improves quality and reduces prices.
1:36:42 PM
SENATOR BEGICH asked how many Alaskan patients go to his center
annually.
DR. SMITH answered probably 50. The number of patients has been
higher in the past, but his surgery sees about four or five
patients from Alaska per month.
SENATOR BEGICH asked if patients go to Oklahoma because of a
better price, better service, or both.
DR. SMITH replied that initially patients are attracted to the
center based on the price since patients cannot assess the
quality of the service until after surgery. However, his
patients return to Alaska and refer their friends to his surgery
center. The Surgery Center charges $4,500 for ventral hernia
repair. One patient in Alaska was quoted $60,000 for the same
surgery. A patient scheduled for knee replacement surgery this
month was quoted $90,000 in Alaska, but his center charges
$15,499. He offered his belief that as long as regulations
prevent new competition price gougers have no incentive to
change.
1:38:44 PM
SONYA CONANT, Human Resources Director, Matanuska-Susitna
Borough, Palmer, said the Mat-Su employee health insurance plan
has adopted a program to send employees out of state for surgery
to contain costs. The Mat-Su Borough is a self-funded health
fund that covers about 320 employees and their 600 dependents.
In 2010-2011, the MSB examined options to reduce its health
insurance costs and to provide good employee health care. At the
time, the MSB's medical claims for that plan year were $4.2
million or $1,300 per employee per month. In 2010, the MSB
joined the Pacific Health Coalition consisting of a group of
self-funded plans in Alaska and the Pacific Northwest to
negotiate with providers and pharmacy benefit managers to reduce
costs to the plan. The MSB considered PTO agreements and network
agreements and changed some of its plan requirements. For
example, the MSB requires preauthorization for surgery, and it
also reviewed its pharmacy spend. It determined the MSB was
making good strides in cost containment.
1:41:10 PM
MS CONANT reported the MSB health plan costs per employee per
month went from $1,300 in 2010 to $1,548 in 2018, or a 19
percent cost increase over seven years. Although the MSB has
kept its health care costs below the annual rate of health care
increases, the borough still wanted to save additional money. In
September 2017, the MSB joined the BridgeHealth plan through the
coalition for nonemergency surgery benefits. Third-party data
ranked BridgeHealth providers in the top 25th percentile in the
nation for their surgical specialties. MSB's employees have the
option to use BridgeHealth, their local provider, the preferred
hospital, which is Alaska Regional Hospital, or Providence
hospital for their care, but some costs will apply to members.
However, employees who opt to use the BridgeHealth plan will not
incur any out-of-pocket deductible or copay expenses. The
program prepays the selected provider a negotiated bundled rate
prior to the surgery. Patients would work with a care
coordinator to schedule and coordinate the surgery. The plan
coverage includes coverage for first-class air travel, and meals
and lodging allowances for the patient and an escort. Patients
return to Alaska when medically able, she said. One concern was
that Alaskan providers might not give follow-up care if the
surgeon did not perform the initial surgery. Fortunately, follow
up care has not been an issue, but if it did arise, a coalition
of network providers will provide any needed follow-up care.
1:43:56 PM
SENATOR GIESSEL joined the committee.
MS. CONANT reported that since September 2018, that plan year
had four surgeries performed using the BridgeHealth plan. The
cost of the four surgeries was just over $79,000 with a net
savings of $104,000. The MSB has benefited from BridgeHealth,
with average savings of $25,000 to $30,000 per surgery. During
the three-month period from November 2018 to January 2019, its
employees had three surgeries for a cost of $71,500 and a net
savings of $76,000. The MSB's employees have provided positive
feedback on their experiences. She acknowledged some initial
problems, including delays in obtaining medical record transfers
to providers for review prior to surgery. These issues have been
resolved in most cases by having employees communicate and work
directly with their local providers.
She said the MSB is excited about the program. The MSB wants its
employees to schedule surgeries as soon as possible, be
comfortable, and avoid all out-of-pocket costs, as well as
reduce plan costs for the borough. Since adopting BridgeHealth,
some local providers have approached the coalition to indicate
their willingness to potentially offer the same bundled rate for
surgeries. Although the BridgeHealth plan is only in its second
year, the MSB anticipates its costs will stay at or below the
national health care level.
1:46:27 PM
CHAIR WILSON asked if competition has helped to lower the costs.
MS. CONANT answered that local providers offering the same rate
would be considered a cost-savings measure and provide the MSB
with another negotiation tool.
1:47:03 PM
SENATOR BEGICH asked if she was testifying that elimination of
the Certificate of Need program would create more options and
competition, which could result in competitive medical care in
Alaska so more patients could obtain their care in Alaska.
MS. CONANT responded that she was unsure. She said her
background is with hospitals. She said that numerous for-profit
surgery centers and day surgery centers are being built. She
said that she supports eliminating CON if it will result in
quality care for Alaskans at a reduced price. However, she
thought it went beyond the CON because providers must be candid
about costs and set reasonable rates. She recalled an earlier
speaker suggested that providers should post their rates so
patients can be informed about their medical costs prior to
receiving the services.
1:48:19 PM
SENATOR BEGICH asked, as more local competition occurs, if the
MSB would no longer need to use the BridgeHealth network.
MS. CONANT answered that the BridgeHealth network would be
available as a benefit. She said that if competition increases,
prices are reduced, and the quality of care is at the same level
as BridgeHealth, that many patients would likely prefer to
remain at home. However, BridgeHealth providers are ranked in
the top 25th percentile. The MSB would not want their employees
seeking surgical care solely based on lowest cost, since it
could potentially result in additional services or surgical
procedures, she said.
1:49:28 PM
SENATOR BEGICH asked what criteria would be used to determine
high quality for new surgery centers and new providers.
MS. CONANT answered that some indicators can be gleaned from
agencies who review services during the accreditation and
reaccreditation process. Other indicators would be physician
quality ratings and patient outcomes, and third-party surgeon
ratings.
CHAIR WILSON asked for the MSB's annual health insurance costs.
MS. CONANT answered that the MSB's annual cost is about $8
million for medical, dental, vision, and administrative fees.
CHAIR WILSON asked if she knew what annual mill rate that
equated to.
MS. CONANT said she was unsure.
1:52:06 PM
CHAIR WILSON opened public testimony on SB 1.
1:52:21 PM
At ease.
1:53:12 PM
CHAIR WILSON reconvened the meeting.
1:53:37 PM
JEANNIE MONK, Senior Vice President, Alaska State Hospital and
Nursing Home Association (ASHNHA), Juneau, spoke in opposition
to SB 1 for four main reasons. She offered to provide a summary
of her concerns in writing since time is limited and she has
raised these concerns numerous times. Instead, she offered to
focus on one issue she heard at last week's hearing related to a
delayed implementation until 2024 to allow the Department of
Health and Social Services (DHSS) time to develop its
regulations. ASHNHA agree that problems exist with the current
CON program and the organization supports improving CON through
regulation. However, ASHNHA is concerned whether after a full
repeal, the DHSS will have authority to draft regulations
concerning CON-like activities. If the CON is repealed the
regulations would also be repealed since the statutory authority
that permitted them will also be revoked. She asked how the
department will know what to regulate without the statute.
She said that if the goal is to improve CON through regulation,
which ASHNHA strongly supports, she questioned the need to
repeal the statute. ASHNHA believes that repealing the statute
is not necessary and may hamper the effort to improve
regulation.
1:55:04 PM
MS. MONK offered to respond to the analogies comparing health
care to coffee shops or fast food restaurants. She provided
comparisons that illustrated health care is subject to laws and
regulations that prevent it from functioning as a free market.
Hospitals are subject to EMTALA [Emergency Medical Treatment and
Active Labor Act], which requires that anyone coming to an
emergency department must be stabilized and treated, regardless
of their insurance status or ability to pay. Hospital facilities
run 24/7, must abide by certain regulations, treat difficult
patients, and be prepared in case of an earthquake or other
emergency. Further, Medicaid or Medicare rates are fixed and
cannot be cut without warning. None of these things apply to
coffee shops or fast food restaurants because these businesses
are subject to different rules and expectations.
She offered her belief that creating a free market for health
care and repealing CON are two separate issues. The Alaska State
Hospital and Nursing Home Association (ASHNHA) would like to see
DHSS work with providers to improve the regulations. Repealing
CON would be destabilizing during an uncertain time in health
care.
1:57:10 PM
SENATOR COGHILL asked if ASHNHA has provided the department with
suggestions or changes to the CON process.
MS. MONK answered yes. She explained that ASHNHA's working group
worked over six months to develop a series of recommendations
for regulatory changes that were shared with the department.
SENATOR BEGICH asked if that those recommendations were
available to the public.
MS. MONK answered that the recommendations are very technical,
but ASHNHA would share them with the committee.
1:57:51 PM
SENATOR STEVENS said that his district has three small community
hospitals in Homer, Cordova, and Kodiak. These small hospitals
have expressed concern about CON being repealed, how this will
effect emergency room services and if business could be "cherry
picked" from the hospitals. He asked whether the CON repeal
would affect smaller communities differently than larger ones.
MS MONK answered yes, that the smaller communities such as
Fairbanks, Soldotna, Homer, and Juneau would have a much greater
reason for concern. The Anchorage market consists of numerous
surgery centers, but it still has not resulted in lower prices
to patients. However, if a surgery center was built in Homer, it
could place the hospital at extreme risk.
1:59:10 PM
MIKE POWERS, Chief Operating Officer, Foundation Health Partners
(FHP), Fairbanks, spoke in opposition to SB 1. He said that FHP
is a small health system, including Fairbanks Memorial Hospital,
Tanana Valley Clinic, and Denali Center, which is a skilled
long-term care facility. He has participated in the effort to
defend the Certificate of Need (CON) over the last 30 years. In
his experience, opponents of CON laws are solely limited to
profitable services, typically surgery and imaging centers.
Opponents of CON typically cite improved quality and reduced
costs as justification for doing away with this public process.
He pointed out that physicians in imaging and surgery centers
perform a high volume of a narrow range of procedures.
MR. POWERS said that advocates of the CON and meaningful and
regulatory and public review of these redundant health care
services agree that niche providers can theoretically create
efficiencies, but typically at the expense of the greater
community good and the community hospitals. First, these
providers can cherry-pick the most profitable patients from the
general hospitals, which creates unfair competition. Second, it
threatens the cross-subsidization of profitable services and
places Medicare/Medicaid, behavioral health, primary care, and
pediatric care at risk. The Alaska market lacks meaningful
regulatory review to consider the community's needs as a whole.
Niche providers also deprive general hospitals of the scale and
scope and profits hospitals need for the unprofitable
departments, such as burn programs, emergency rooms, and
behavioral health secure units that operate 24/7.
MR. POWERS said he has learned from his 30 years of experience
in Alaska that physician-owned surgical centers tend to treat
patients with better insurance coverage and those with lower
clinical risk. This leaves the community hospitals like
Fairbanks Memorial to treat the uninsured and the highest
clinical risk patients. Those who oppose CON regulations argue
that niche competitors who are not subject to regulatory
approval foster competition, lower charges, and increase
quality. However, he has not seen any evidence of that occurring
in Fairbanks, he said.
MR. POWERS said that the public policy challenge is to
facilitate development of a responsible marketplace, one in
which the desired benefits of competition and real value in
health care are realized. Meeting community needs, not
individual investor needs, is the key to maintaining a
responsible marketplace in the solo community hospital
environments of Alaska. Through a balance of market forces,
community planning, and CON regulation, it is possible to shape
a responsible marketplace.
MR. POWERS said that even though the current market structure is
not a classic competitive one, it achieves the desired goal of
competition and greater access, lower costs, and higher quality
health care. The CON helps create a responsible marketplace and
outweighs the classic model of supply and demand by
understanding the cost to the community of providers who cherry-
pick patients, and by understanding who treats their fair share
of indigent and Medicare/Medicaid patients. In closing, he said
the CON doesn't limit competition, rather it promotes good
community planning.
2:03:26 PM
FRED BROWN, Executive Director, Pacific Health Coalition,
Anchorage, spoke in support of SB 1. He said the coalition is a
nonprofit, parent company that was formed nearly 25 years by
four Alaska health plans. It now comprises over 45 member health
plans in Alaska and the Pacific Northwest. These funds consist
of employer-sponsored health plans, including the state, borough
and municipal and school-district sponsored plans, as well as
private employers and Taft-Hartley health plans. Their member
funds represent over 100,000 employees and their dependents in
Alaska and 150,000 employees in the Pacific Northwest. He said
that the Mat-Su Borough is a member, and Ms. Conant summarized
what PHC does. The PHC's mission is to ensure that Alaska and
Northwest workers and their families have access to value and
quality-based health care, benefits, and services. The PHC
broadly encourages competition and open access to health care
markets.
2:04:32 PM
MR. BROWN said that ten years ago the PHC testified in support
of granting the Certificate of Need to the Surgery Center of
Fairbanks. However, the PHC now believes that more competition
is needed in Fairbanks and in Alaska. As the committee knows,
Alaska has the highest health care costs in the United States.
The PHC has tried for many years to reduce medical costs in
Alaska by contracting with orthopedists and other specialists in
Fairbanks and other parts of the state to add them to the PHC's
preferred provider network. Only recently, after PHC's member
plans began contracting with BridgeHealth for travel benefits,
and patients began traveling outside Alaska for treatment, did
local providers recognize the need to compete. PHC now has
orthopedists in its network. He offered his belief that
repealing the CON statutes is the next logical step to encourage
competition. The Alaska health care market should move forward
toward free market operations. He said that better ways exist to
subsidize providers and address issues related to "cherry-
picking" the most profitable surgeries and the cost of indigent
care.
2:06:06 PM
WARD HINGER, Chief Executive Officer, Imaging Associates,
Anchorage, spoke in opposition to repealing the CON in SB 1. He
said more than half of the states have some sort of CON. He
attested that nothing about the CON prevents competition. It
merely provides a mechanism to the state to determine what kind
of health care investment is needed and allow it to go forward
in a planned, thoughtful, and hopefully safe manner. Alaska
requiring CON does not allow one business or provider to create
a monopoly or prevent competition. The decision to issue or not
issue lies with the state, specifically the DHSS. He offered his
belief that removing the checks and balances would negatively
impact patient safety and quality of care.
MR. HINGER offered his belief that the state has been
inconsistent and even negligent in administering the CON. He
said that the state has shirked the responsibility given to it
by the CON to demand quality and successful investments that
benefit all of Alaskans. Based on his 20 years of health care
administrative experience, eliminating the CON would do two
things. First, it would encourage the worst type of health care
investment, which is the kind that only makes money at the
highest margins with no need to demonstrate quality, safety, or
necessity. Second, it would cause quality centers, such as
Imaging Associates, that hold the CON to compete with others
that do not share their community-minded view of service and
quality. In a sense, Imaging Associates would be economically
forced to match the "other" model.
He said that Imagining Associates, like the local hospitals,
currently provide an all-modality service, offering all imaging
services for comprehensive and quality care. A number of those
important services are at low-to-no margin, alongside some of
the highest margins CTs and MRIs. Their state-of-the-art imaging
services are offered to all patients, regardless of payer
status. Imaging Associates provides significant financial
support to charity organizations in Alaska.
He expressed concern that if the state were to allow a high-
margin only site, such as an MRI or CT center to open on every
street corner, it would bleed away the modalities. Imaging
Associates would be forced to scale back to the same level of
exclusive or limited services and would likely be forced to stop
offering low-margin services and ultimately cap the number of
Medicaid and Medicare patients or not participate in either. He
said that in the end, Alaskans will lose. He urged members to
seek ways to strengthen the CON and make it work better rather
than to eliminate it.
MR. HINGER offered three suggestions to make the CON statutes
and regulations meaningful. First, the state should require each
certificate seeker to document how the provider will demonstrate
and maintain quality. Second, payers should pay the same whether
equipment is old or new. Finally, the provider with the CON
should take all-payer status, Medicare, and Medicaid patients.
In closing he said that the CON does not limit competition. If
the state determines a lack of competition in some areas of the
state, it can remedy it by approving more Certificates of Need.
SENATOR STEVENS asked Mr. Hinger to submit his three suggestions
in writing.
2:10:53 PM
PATRICK SHIER, Alaska Membership Representative, Pacific Health
Coalition (PHC), Wasilla, supported SB 1. He said that
introducing more competition has been instrumental in helping
PHC. The introduction of BridgeHealth, in particular, helped to
reduce some of the world-class high costs. The PHC supports the
introduction of more competition to lower the cost of high-
quality care, he said.
2:12:06 PM
MIKE PRAX, representing self, Fairbanks, spoke in support of SB
1. He said that he has been following this issue for about 30
years and little has changed. He agreed that hospitals in some
communities subsidize medical services, which provides some
community benefits. And as earlier testifiers mentioned, when
services are too costly people will seek alternatives, including
traveling to the Lower 48 for their medical services. He
expressed concern that the CON process has skewed the market.
The fiscal notes indicate that Medicaid services will increase,
which just creates other problems, he said. He offered his
support to repeal the CON and allow the market to resolve the
issues.
2:13:57 PM
JARED KOSIN, Associate Administrator, Mat-Su Regional Medical
Center (MSRMC), Palmer, spoke in opposition to SB 1. The premise
of the bill calls for competition and the free market to resolve
costs. However, hospitals do not operate under the free market
or fair competition models. As previous testifiers mentioned,
hospitals are the only entities required by the federal EMTALA
laws to treat all patients who come to emergency departments for
treatment. Emergency departments are costly for patients.
Emergency departments (ERs) lose money since ERs have high
physical overhead costs, expensive equipment, and operate 24
hours a day. Highly specialized services like imaging and
surgery subsidize ERs, such as the Mat-Su Regional Medical
Center, so these hospitals can exist. He expressed concern that
if SB 1 passes, imaging centers, ambulatory surgery centers, or
freestanding emergency departments will flood the market. He has
heard anecdotally that in Texas so many freestanding emergency
departments seek to cater to patients with higher cost of care
that these centers are on almost every street corner. These
types of entities are not mandated to see patients 24 hours a
day, year round, regardless of payer status, he said. He urged
members to fix the CON, update its formulas, but not to repeal
it.
He said that the Mat-Su Regional Medical Center commits to
working with the legislature to find practical solutions. He
expressed concern that the existing regulations will not be in
place if this bill passes. New statutory authority will be
necessary in order to promulgate new regulations, so a full
repeal makes no sense.
2:16:47 PM
DAVID HYMAN, M.D., representing self, Law Professor, Georgetown
University, Washington, D.C., supported SB 1. In 2004, he
reviewed the CON laws, working with the Federal Trade Commission
(FTC) and Department of Justice (DOJ). The final report reached
some conclusions about the CON statutes. In 2017, 2018, and 2019
the FTC and DOJ submitted comments to the state of Alaska that
reached similar conclusions. One conclusion is that CON laws
create barriers to entry that deprive consumers of the benefits
of health care competition. Substantial research shows the
benefits of competition. Of course, the state needs to be
realistic about the benefits of potential competition, such that
it will not be feasible in some areas of Alaska, but it will
work in many areas, he said.
DR. HYMAN said another conclusion is that incumbent providers
can take advantage of the CON process to protect their current
market position and revenues. Alaska courts have heard pleadings
on behalf of incumbent providers of services. For example, the
Alaska Supreme Court case Alaska Spine Center v. Mat-Su Valley
Medical Center provides a case study. Finally, the CON has not
achieved its goals. The subsidies used to cross-subsidize less
profitable services are obtained by overcharging everyone else.
Incumbent providers do not want market entry because it makes it
more difficult for them to make those adjustments. If the state
would like to encourage people to provide certain kinds of
treatment, it could subsidize it directly rather than give
incumbent providers a license to overcharge some people and
offer cut-rate pricing to others.
2:19:06 PM
MONIQUE MARTIN, Director, Government Relations and Regulatory
Navigation, Alaska Regional Hospital (ARH), Anchorage, spoke in
opposition to SB 1. She said that meaningful analysis to show
the effect on Alaska's hospitals by repealing the CON has not
been done. Alaska Regional Hospital encourages the state to
conduct a study to understand potential impacts before
considering such a bill. The state needs to avoid unintended
negative consequences, including cherry-picking patients, by
reviewing the CON regulatory process. She expressed concern that
the repeal of the CON program could dramatically increase
Medicaid general fund costs at a time when the state seeks to
reduce them. The governor's budget includes over $700 million in
Medicaid reductions, she said. Many of the reductions to
Medicaid are unallocated, which creates a lot of uncertainty in
the provider community. She explained that in 2017, Alaska
Regional Hospital went through the CON process to create a 24-
bed, acute adult psychiatric unit, but the hospital put the
project on hold until the health care delivery system in Alaska
is more stable. After going through that process, the ARH
believes that the CON process could be improved. In closing, she
suggested that the DHSS should move forward with to review the
program using the ASHNHA's suggestions on ways to improve that
program.
2:21:05 PM
CHAIR WILSON closed public testimony on SB 1.
CHAIR WILSON directed attention to information in members'
packets on the recent Alaska Supreme Court decision that Dr.
Hyman referenced. The case illustrated that the state's CON laws
are complex and difficult. The Department of Health and Social
Services (DHSS) determined that an ambulatory surgical facility
seeking to relocate from Anchorage to Wasilla did not need to
submit such documentation because it was moving within the same
community as defined by the relevant statute. He said that the
[parties and the state] spent several years trying to get a
clear definition of the applicability of regionality in CON
laws. The department reversed its position, he said. He said the
issue surrounding the lawsuit is a huge issue in his district.
The lawsuit has caused headaches to all entities involved,
including the state, the Alaska Spine Center, the Mat-Su Surgery
Center, and the Mat-Su Regional Hospital. The state incurred
substantial legal costs because it was a codefendant.
CHAIR WILSON said that since he anticipates further judicial
appeal, the committee will not discuss the merits of the case,
but will share the court case summary, including facts and
disclosures that is part of the public record.
2:23:22 PM
SENATOR BEGICH said he was not aware that DHSS had reversed its
position. He recalled that in 2016 the department said CON
wasn't necessary. He asked when the department changed its
interpretation.
CHAIR WILSON replied that he was referring to the rule
determining whether Wasilla is included in the community of
Anchorage. He said that at one time it was, but now it is not.
SENATOR BEGICH clarified that was sometime before 2016.
CHAIR WILSON agreed.
2:24:00 PM
CHAIR WILSON informed members that he asked the Legislative
Legal Services to address Senator Begich's question, but the
committee has not yet received a response. He related his
understanding that the CON regulations would still be in effect
for five years after the passage of this bill, which would allow
the department substantial time to meet with stakeholders to
develop new regulations and to identify any new statutes
required.
He said that the department has been working on this issue for
30 years. He referred to Tab 2 in members' packets to the
economic research that spans 40 years and addresses the indigent
care and rural health care questions. Federal EMTALA requires
three percent of hospital care as charity care in Alaska, which
is not a huge percentage, he said. As sponsor of SB 1, he did
not believe that it would not be hurtful to allow other entities
to come into Alaska, and the committee has heard testimony from
the FTC and DOJ in terms of competition. He referred to another
article in members' packets in Tab 3, related to competition and
health care. The committee understands that health care is
complex. While he is not saying that the free market applies,
the FTC and DOJ gave testimony in Georgia that included many
empirical references to demonstrate the importance of
competition in health care.
2:26:24 PM
SENATOR GIESSEL related that in about 2006 she was an observer
during the negotiated rule making on CON. She agreed that Alaska
has the highest health care costs in the U.S, which has the
highest health care costs in the world. She said she supports
the CON repeal, but this alone will not reduce the cost of
health care in Alaska. She acknowledged that Alaska has unique
situations. The biggest one is the 80th percentile rule, which
requires insurers to base their payments for out-of-network
claims on the amount at or above 80 percent of what all the
providers charge for a specific service in a given area of the
state.
SENATOR GIESSEL said she was interested in the slide [from the
March 27, 2019 presentation] that depicted a map showing the
evolution of the CON in the U.S. for 2017. It showed states
without any CON regulations, including Idaho and North Dakota.
She worked with Lori Wing-Heier, Director of the Division of
Insurance, Department of Commerce, Community and Economic
Development (DCCED), who researched reimbursement issues and
discovered Idaho and North Dakota had lower reimbursement rates
than Alaska. She pointed out that Montana requires a CON and its
reimbursement rates were similar to Idaho and North Dakota. They
were significantly lower than Alaska. She argued that while she
supports repealing the CON, prior testimony indicates that
without statutory authority to replace the CON, regulations
cannot be written. While the department must have that
foundation piece to write regulations, it is only one piece of
health care costs. Further, the 80th percentile is a significant
driver of health care costs. She said that the [state] cannot
address the 80th percentile without addressing balance billing,
otherwise known as surprise billing. [Per the American Medical
Association, Balance billing happens when a patient's health
insurance company pays an out-of-network physician or other
health care provider less than the amount the physician charges
for the care. So-called "surprise billing" can also refer to
emergency care provided by an out-of-network provider.] She
offered to provide the research information to the committee
CHAIR WILSON said that the committee would request an answer to
Senator Begich's question from Legislative Legal Services.
SENATOR BEGICH highlighted four areas that were raised during
testimony on SB 1. First, was to address regulations. The second
area relates to the accreditation process for surgery centers.
He said he was unsure whether an accreditation process exists,
but that seemed to be a means to ensure quality care. The third
area was raised by Senator Stevens, in terms the difference in
areas covered by a CON and areas not covered by a CON and how
that affects hospitals in small communities. He expressed
concern that smaller communities might lose their only hospital.
The final question was what could be addressed by regulation as
opposed to statutory changes. He echoed Senator Giessel's
comments about the need to comprehensively examine health care.
He highlighted questions to address health care costs, including
figuring ways to build a larger pool to reduce risk, examining
the 80th percentile rule, and working to achieve meaningful
transparency to drive costs down. He recalled two people with
opposing views testified on the transparency issue, which
Senator Giessel and Representative Spohnholz took a lead in last
year. He said he was encouraged that the BridgeHealth network is
helping to drive provider costs down.
SENATOR BEGICH said he understands reasons for supporting [SB 1]
and why it makes sense. However, he would like the committee to
explore some of these questions before he is fully on board. He
offered his belief that the debate has raised questions, which
he hoped the committee could address in a meaningful way. At
this point, he was unsure of how to craft amendments.
CHAIR WILSON requested that Senator Begich contact his office
with any amendments or [conceptual amendments].
SENATOR BEGICH referred to a question he previously asked, which
was whether any rural hospitals in Idaho and North Dakota had
closed.
SENATOR STEVENS said he was surprised that the committee did not
invite smaller hospitals to testify. He would like to have heard
from small hospitals.
CHAIR WILSON reminded members that this topic has been discussed
for many years and it was part of a recent ASHNHA conference as
well. He pointed out that some hospitals are members of ASHNHA.
The issue has also been discussed in the Journal of Commerce and
some newspapers. He indicated that it is hard trying to make
sure all stakeholders are involved, but the committee works to
ensure that the public is involved. He welcomed the smaller
hospitals to submit their written comments, which can be
considered as the bill moves through the process.
2:36:52 PM
SENATOR COGHILL said he supports the concept in SB 1. He
acknowledged that this bill will not solve all of the health
care problems in Alaska, but it is a good start. He said he
hoped the hospitals understand the legislature is trying to
solve a conundrum and does not seek to destroy hospitals.
Hospitals are a vital part of health care. He related his
understanding that cost shifting is their highest concern, since
hospitals bill the highest rate for patients [with insurance
coverage]. The big issue is to figure out how [hospitals] can
provide services to indigent population without subsidizing
those costs.
SENATOR COGHILL highlighted two areas that got his attention.
First, is that patients already leave the state for medical
services when the costs are lower, and the state or other health
plans cover it. While he understood local providers want the
legislature to support local hire, people will seek less
expensive care. The second area relates to overcharging and
undercharging at hospital emergency rooms due to the federal
rule that requires hospitals to take indigent patients. He said
he would be a little less sympathetic to hospitals if emergency
centers opened and hospitals closed. He described the community
hospital in his hometown, which is small enough to be a
monopoly, but it has grown enough to be competitive, which he
found to be an interesting balance. By removing the CON, Alaska
would allow [competition], so the question will be whether the
[community] hospital will be able to retain its competitive
edge, he said. He suggested that Medicaid and ER care will need
to be discussed. He highlighted that the state has tried
multiple ways to address "frequent fliers" who frequent ERs
because of their drug and alcohol abuse. He said, "? in
Fairbanks, I tip my hat to the hospital who has picked up those
services where the state just can't seem to get its feet under
it."
2:40:48 PM
SENATOR COGHILL offered his support for SB 1, which will repeal
the Certificate of Need (CON) because the process needs to be
addressed and it is based on good economic principles. He
expressed an interest in the Department of Health and Social
Services (DHSS) and Alaska State Hospital and Nursing Home
Association (ASHNHA)'s suggestions. He said he would like to
know how Alaska can make improvements and what can be done
better. He emphasized that Alaska must change the way health
care operates because patients will go elsewhere. He questioned
the model of care for indigents if [hospitals] must subsidize
indigent care. He expressed an interest in the department's
feedback from hospitals. He related his understanding that
larger hospitals often have a smaller hospital that is
subsidized. For example, Providence Hospital subsidizes the
[Providence Valdez Medical Center (PVMC)] in Valdez. He offered
his belief that without a good profit base in Anchorage, the
PVMC Valdez would probably not make it. He said that hospitals
will need to face the realities.
SENATOR COGHILL asked about the [effective] date of 2024. He
understood that it would allow time to plan regulations and
address economic concerns.
CHAIR WILSON agreed that was the intent. In further response, he
said that the committee will ask the department to share any
data from the working group meetings with the Alaska State
Hospital and Nursing Home Association (ASHNHA).
[CHAIR WILSON held SB 1 in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 93 LoS 3.29.19.pdf |
SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB 1 - Federal Rpt - Reforming Americas Healthcare System Through Choice and Competition - 2018.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - John Locke Foundation - Spotlight-468-The-Case-Against-CON-A-law-that-prevents-health-care-innovation.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - National Institute for Health Care_Research_Brief_No._4.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - Mercatus Center - Do Certificate-of-Need Laws Increase Indigent Care.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - News Story - Florida lawmakers lurch ahead with certificate-of-need repeal.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - Reforming Americas Healthcare System Through Choice and Competition - NOvember 2018.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - Repealing CON - 31-LS0001 A.PDF |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - US Department of Justice - Competition in Healthcare and Certificates of Need.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 Fiscal Note DHSS Health Care Services.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 Repealing Alaska's CON - Sectional Analysis.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| Senate Bill 1 - Sponsor Statement.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - Work Draft 31-LS0001_M - 3.11.19.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 - CON Power Point - SHSS 3.27.19.pdf |
SHSS 3/27/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 93 Letters of Support 3.21.19.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB 93 v A Sectional Analysis.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SHARP-AKJournal-article.pdf |
SFIN 4/9/2019 9:00:00 AM SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| AAC 7. 24 Health and Social Services HCPLRand IP.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SHARP-IRS TAX EXEMPTION.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| Final Report to Leg 2018 SHARP III.pdf |
SFIN 4/9/2019 9:00:00 AM SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB 93 DHSS Fiscal Note.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB 93 DCCED fiscal note.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB093 DHSS Slides.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB 93 LoS T Hunt MD.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| ANTHC SB93 LOS 3-21-19.pdf |
SHSS 3/25/2019 1:30:00 PM SHSS 4/1/2019 1:30:00 PM |
SB 93 |
| SB 1 MSB Health Flyer.pdf |
SHSS 4/1/2019 1:30:00 PM |
SB 1 |
| SB 1 Ak Spine Clinic CON.pdf |
SHSS 4/1/2019 1:30:00 PM |
SB 1 |