Legislature(2019 - 2020)BUTROVICH 205

04/01/2019 01:30 PM HEALTH & SOCIAL SERVICES

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Audio Topic
01:31:09 PM Start
01:31:40 PM SB1
02:44:07 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 93 MEDICAL PROVIDER INCENTIVES/LOAN REPAYM'T TELECONFERENCED
<Bill Hearing Canceled>
+= SB 1 REPEAL CERTIFICATE OF NEED PROGRAM TELECONFERENCED
Heard & Held
-Invited Testimony Followed by Public Testimony-
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
      SENATE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                    
                         April 1, 2019                                                                                          
                           1:31 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator David Wilson, Chair                                                                                                     
Senator John Coghill, Vice Chair                                                                                                
Senator Gary Stevens                                                                                                            
Senator Cathy Giessel                                                                                                           
Senator Tom Begich                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
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."                                                                                                             
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 93                                                                                                              
"An Act relating to a workforce enhancement program for health                                                                  
care professionals employed in the state; and providing for an                                                                  
effective date."                                                                                                                
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 1                                                                                                                    
SHORT TITLE: REPEAL CERTIFICATE OF NEED PROGRAM                                                                                 
SPONSOR(s): SENATOR(s) WILSON                                                                                                   
                                                                                                                                
01/16/19       (S)       PREFILE RELEASED 1/7/19                                                                                
01/16/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/19       (S)       HSS, FIN                                                                                               
03/27/19       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
03/27/19       (S)       Heard & Held                                                                                           
03/27/19       (S)       MINUTE(HSS)                                                                                            
03/29/19       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
03/29/19       (S)       -- MEETING CANCELED --                                                                                 
04/01/19       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KEITH SMITH, M.D., Medical Director                                                                                             
Surgery Center of Oklahoma                                                                                                      
Oklahoma City, Oklahoma                                                                                                         
POSITION STATEMENT: Testified on reasons Alaskans seek care at                                                                
his center during the hearing on SB 1.                                                                                          
                                                                                                                                
SONYA CONANT, Human Resources Director                                                                                          
Matanuska-Susitna Borough                                                                                                       
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Testified on cost savings from sending                                                                    
employees out of state for surgery during the hearing on SB 1.                                                                  
                                                                                                                                
JEANNIE MONK, Senior Vice President                                                                                             
Alaska State Hospital and Nursing Home Association (ASHNHA)                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Opposed SB 1.                                                                                             
                                                                                                                                
MIKE POWERS, Chief Operating Officer                                                                                            
Foundation Health Partners                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Opposed SB 1.                                                                                             
                                                                                                                                
FRED BROWN, Executive Director                                                                                                  
Pacific Health Coalition                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 1.                                                                                           
                                                                                                                                
WARD HINGER, Chief Executive Officer                                                                                            
Imaging Associates                                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Opposed SB 1.                                                                                             
                                                                                                                                
PATRICK SHIER, Alaska Membership Representative                                                                                 
Pacific Health Coalition                                                                                                        
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Supported SB 1.                                                                                           
                                                                                                                                
MIKE PRAX, representing self                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 1.                                                                                           
                                                                                                                                
JARED KOSIN, Associate Administrator                                                                                            
Mat-Su Regional Medical Center                                                                                                  
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Opposed SB 1.                                                                                             
                                                                                                                                
DAVID HYMAN, M.D., representing self                                                                                            
Co-author of Overcharged:  Why Americans Pay Too  Much for Health                                                               
Care; Law Professor                                                                                                             
Georgetown University                                                                                                           
Washington, D.C.                                                                                                                
POSITION STATEMENT: Supported SB 1.                                                                                           
                                                                                                                                
MONIQUE MARTIN, Director                                                                                                        
Government Relations and Regulatory Navigation                                                                                  
Alaska Regional Hospital                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Opposed SB 1.                                                                                             
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:31:09 PM                                                                                                                    
CHAIR DAVID WILSON  called the Senate Health  and Social Services                                                             
Standing Committee meeting  to order at 1:31 p.m.  Present at the                                                               
call to order  were Senators Coghill, Stevens,  Begich, and Chair                                                               
Wilson.                                                                                                                         
                                                                                                                                
                                                                                                                                
            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 made  opening remarks.  The  committee adopted  the                                                               
proposed  committee  substitute  (CS)   for  SB  1,  Version  31-                                                               
LS0001\M,  referred  to as  Version  M.  The committee  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  patients come to his  center from                                                               
Alaska annually.                                                                                                                
                                                                                                                                
DR. SMITH answered  probably 50. The number of  patients has been                                                               
higher in  the past,  but his  surgery cents  sees about  four or                                                               
five patients from Alaska per month.                                                                                            
                                                                                                                                
SENATOR BEGICH asked if patients  come to Oklahoma because of the                                                               
price, or the service is better 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 for clarification  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   that  the  smaller  communities,                                                               
including  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  expressed   an   interest   in  Mr.   Hinger's                                                               
suggestions.  He asked  him 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  a 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 answered yes.                                                                                                      
                                                                                                                                
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  said she  appreciates  him  bringing this  bill                                                               
forward.  In  about   2006,  she  was  an   observer  during  the                                                               
negotiated  rule making  on CON.  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 before the  committee] that depicted                                                               
a map showing the evolution of the  CON in the U.S. for 2017. She                                                               
found out  that it is hard  to get current information  on health                                                               
care costs. That  map 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.  However, its  reimbursement                                                               
rates were similar  to Idaho and North  Dakota, but 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. He said he                                                               
appreciated  the  Chair's  willingness to  request  clarity  from                                                               
Legislative  Legal  Services.  The  second area  relates  to  the                                                               
accreditation process for surgery  centers. 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  does  not  know  the  answers.  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 was  encouraged that the BridgeHealth network is                                                               
helping to drive provider costs down.                                                                                           
                                                                                                                                
He 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 that he  understood the legislative process.                                                               
He related that  that it invited testimony from  people who agree                                                               
on the topic. He said he  is surprised that the committee did not                                                               
invite  smaller  hospitals  to testify,  [which  would  bring  an                                                               
important perspective to the debate.]                                                                                           
                                                                                                                                
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.                                                                                                                    
                                                                                                                                
He 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                                                               
them 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 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.]                                                                                          
                                                                                                                                
2:44:07 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair  Wilson adjourned  the Senate  Health  and Social  Services                                                               
Standing Committee at 2:44 p.m.                                                                                                 

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