Legislature(2021 - 2022)BUTROVICH 205

03/25/2021 01:30 PM HEALTH & SOCIAL SERVICES

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Bills Previously Heard/Scheduled
           SB  26-REPEAL CERTIFICATE OF NEED PROGRAM                                                                        
1:32:00 PM                                                                                                                    
CHAIR WILSON announced the consideration of SENATE BILL NO. 26                                                                  
"An  Act repealing  the certificate  of need  program for  health                                                               
care facilities; making conforming  amendments; and providing for                                                               
an effective date."  He stated his intent to have  an overview of                                                               
the bill and take testimony.                                                                                                    
CHAIR  WILSON   said  that  well-intended  government   laws  and                                                               
regulations have  unintended consequences, especially  upon small                                                               
businesses, that prevent the expansion  of the economy in Alaska.                                                               
Some of  the government's  well-intentioned legislation  have led                                                               
to limited  consumer choice for services  and stifled competition                                                               
and  innovation  and  expansion   among  certain  industries  and                                                               
sectors. This  includes the  transportation sector,  like between                                                               
Uber,  Lyft, and  the taxi  industry. This  has led  to the  same                                                               
situation  with  the  hospitality sector  with  distilleries  vs.                                                               
bars, wineries,  and restaurants, and the  healthcare industry as                                                               
well. These  battles, unfortunately,  were created  by government                                                               
laws and  regulations, which  while well  intended, did  not work                                                               
well  for Alaska  at  times.  Alaskans need  and  deserve a  free                                                               
market with  the law of  supply and demand for  direct production                                                               
of goods  and services.  Competition is  good for  keeping prices                                                               
low. Healthcare  is a complicated  system. People will  hear that                                                               
Alaska  is the  most expensive  healthcare market  in the  world.                                                               
There will  be diverse conversation  on this topic. Some  may not                                                               
be willing to testify on the  record because of the pressure from                                                               
larger players.  His office has  heard from many who  are fearful                                                               
of  losing hospital  privileges and  hurting their  relationships                                                               
with   some  providers   who  are   Certificate  of   Need  (CON)                                                               
recipients. SB 26  provides a window of a couple  of years before                                                               
the repeal  becomes effective.  His office  has examined  some of                                                               
the  historical arguments  for CON  that  don't provide  economic                                                               
justification  for depriving  customers of  the benefits  of more                                                               
freedom of choice.                                                                                                              
1:35:42 PM                                                                                                                    
GARY   ZEPP,   Staff,   Senator  David   Wilson,   Alaska   State                                                               
Legislature, Juneau,  Alaska, said that since  the legislation is                                                               
not  new  to any  senator  in  the  committee, he  shortened  the                                                               
presentation on  the need  to repeal  the state's  Certificate of                                                               
Need  program. He  took a  moment to  thank first  responders for                                                               
their  work  during the  COVID-19  pandemic.  SB 26  provides  an                                                               
opportunity for  Alaskans. If people  believe that a  free market                                                               
economy  benefits   consumers,  if  people  believe   in  private                                                               
ownership and local  control of resources and  property and local                                                               
choice  and  communities know  what  is  best, then  they  should                                                               
support  SB  26  and  repeal  government  control  of  healthcare                                                               
options,  facilities,  and  services.  The  Certificate  of  Need                                                               
program, known  as CON, was  first enacted  in 1964 in  New York.                                                               
The federal  government mandated  that states enact  CON programs                                                               
during the 1970s when inflation  rates were at near record levels                                                               
of about 20  percent. The thought at the time  was that CON would                                                               
restrain  healthcare  costs,  increase  healthcare  quality,  and                                                               
improve access  to care  for the poor  and underserved.  Later in                                                               
the  presentation  the  committee  will see  how  that  has  been                                                               
working nationally and in Alaska.                                                                                               
MR. ZEPP displayed  a map on slide 4 on  the presentation showing                                                               
the current  national status of CON  programs. Thirty-five states                                                               
have  CON programs.  Three states  do  not but  have an  approval                                                               
process similar to  CON. Twelve states have  fully repealed their                                                               
CON  programs. The  federal  law  enacted CON  in  the 1970s  and                                                               
repealed CON as a federal mandate in 1987.                                                                                      
MR. ZEPP  presented Alaska's  Legislative History  of Certificate                                                               
of Need  on slide 5.  In 1976, Alaska  passed its first  CON law.                                                               
Since then,  there have been  a few  minor changes. In  1990, the                                                               
state  started  charging  for   submitting  an  application  when                                                               
seeking approval for a CON.  Currently the fees are structured as                                                               
follows:  for  projects of  $2.5  million  or  less, the  fee  is                                                               
$2,500. For projects over $2.5 million,  the fee is .1 percent of                                                               
the total cost, up to a maximum of $75,000.                                                                                     
MR.  ZEPP presented  slide  6, What  are we  trying  to solve  in                                                               
Alaska by repealing our certificate  of need laws? The Department                                                               
of Justice,  the Mercatus  Center, and  many others  have studied                                                               
this  issue for  over four  decades. Some  have testified  in the                                                               
Alaska  legislature  in support  of  repealing  CON. He  directed                                                               
attention  to the  points on  slide 6  showing why  Alaska should                                                               
repeal CON. CON programs limit  the introduction and expansion of                                                               
medical services  and equipment, rehabilitation  centers, nursing                                                               
home beds,  and medical imaging  technologies. Data  and research                                                               
on closures of rural hospitals show  that they are related to low                                                               
patient  volume, challenging  payer  mix  (Medicare and  Medicaid                                                               
patients,  who pay  less), geographical  isolation and  workforce                                                               
shortages. None  of this has to  do with whether states  have CON                                                               
programs. Proponents  will say that high-quality  healthcare is a                                                               
reason for CON. Data and  research indicate that outcomes are not                                                               
better with  CON. CON programs  are supposed to  increase charity                                                               
care,  but no  evidence exists  that  charity care  is higher  in                                                               
states with  CON. Racial disparities  seem to increase  in states                                                               
with CON.  CON decisions  are not  approved by  nonbiased medical                                                               
professionals.  CONs are  approved  by Department  of Health  and                                                               
Social  Services (DHSS)  staff and  elevated to  the commissioner                                                               
for approval. CON programs  grant a government-protected monopoly                                                               
to  incumbent providers.  According to  the 2016  Alaska Milliman                                                               
report, which was done on  half of the Premera Insurance Company,                                                               
hospital margins in  Alaska can be up to 223  percent higher than                                                               
states in the lower 48.                                                                                                         
MR. ZEPP  said that  the CON is  designed to  restrain healthcare                                                               
costs. Evidence and studies show  that CON regulations' effect on                                                               
cost  has been  inconsistent. CON  regulations tends  to increase                                                               
the cost of healthcare services.  Alaska's general cost of living                                                               
ranks  seventh among  the states,  so  why does  Alaska have  the                                                               
highest  healthcare costs  in the  world. Healthcare  premiums in                                                               
Alaska  are 130  percent higher  than the  states of  Washington,                                                               
Oregon, Idaho, Wyoming, and North  Dakota. Average hospital costs                                                               
in Alaska  are 138 percent  higher than those  comparison states.                                                               
Physician payment  levels are 148 percent  higher than nationally                                                               
and  hospital payments  are 56  percent  higher than  nationally.                                                               
Alaska  hospital  margins  can  run 15.6  percent  and  Anchorage                                                               
hospital  margins  average 20.6  percent.  That  is five  percent                                                               
higher  than San  Francisco, which  is  the next  highest in  the                                                               
country.  Alaskans should  have choice,  competition, and  Alaska                                                               
should allow new  entrants and new technologies when  it comes to                                                               
1:43:45 PM                                                                                                                    
MR.  ZEPP presented  slide 7,  What  happened to  CON during  the                                                               
COVID  pandemic?  Nationally,  24  states  temporarily  suspended                                                               
their CON  laws and regulations.  This gave  healthcare providers                                                               
flexibility  regarding capacity  and equipment.  Alaska suspended                                                               
CON  for 10  months. One  application was  submitted during  this                                                               
period.  The  CON laws  and  regulations  are promoted  as  being                                                               
necessary  for  health  and   safety.  The  suspensions  provided                                                               
flexibility  and  seemed  to  work   out  just  fine  during  the                                                               
pandemic.  If CON  regulations  can be  suspended  for 10  months                                                               
during a pandemic, he asked then why is CON needed in Alaska.                                                                   
MR. ZEPP presented  slide 9, How is Alaska's  Certificate of Need                                                               
program  working today?  He asked  if  CON is  working to  reduce                                                               
healthcare  costs to  consumers, then  why does  Alaska have  the                                                               
highest healthcare  costs in the  world. Alaska's  Certificate of                                                               
Need laws have led healthcare  providers to sell state-of-the-art                                                               
medical equipment  and buy  lesser quality,  lower-priced medical                                                               
equipment to  remain under the  Certificate of Need  $1.5 million                                                               
threshold. He asked wouldn't those  dollars better serve Alaskans                                                               
if they  were invested in healthcare  facilities, innovation, and                                                               
allowing new entrants who provide  additional quality health care                                                               
services.   Alaska's  Certificate   of   Need   laws  result   in                                                               
territorial   disputes  and   legal   costs  between   healthcare                                                               
providers,  because one  healthcare provider  objects to  another                                                               
healthcare provider's plans to add  healthcare services. He asked                                                               
does  this  improve  or  provide  better  quality  healthcare  to                                                               
Alaskans. Presidents George W. Bush,  Obama, and Trump are on the                                                               
record  for  supporting  the repeal  of  CON  programs.  Governor                                                               
Walker  supports  repealing  CON  programs in  Alaska.  The  data                                                               
supporting the repeal of CON is voluminous.                                                                                     
MR. ZEPP  said that SB  26 provides an opportunity  for Alaskans.                                                               
He asked for support for SB  26 from those who believe in private                                                               
ownership and local  control of resources and  property and local                                                               
choice. Alaskans deserve  choice when it comes  to healthcare and                                                               
healthcare services.                                                                                                            
1:47:11 PM                                                                                                                    
SENATOR COSTELLO asked  what companies or business pay  to have a                                                               
CON  application prepared,  how many  CON applications  the state                                                               
has in  any given year,  and once  a company or  business applies                                                               
for a CON, is that information public.                                                                                          
MR. ZEPP  said that  in 2018  and 2019,  Delta Junction  tried to                                                               
establish a higher level of  healthcare facility. The folks there                                                               
did not  have the expertise  to provide the application,  so this                                                               
presents a  challenge to  people who are  just trying  to improve                                                               
their communities. He deferred to DHSS to answer her questions.                                                                 
1:48:58 PM                                                                                                                    
ALEXANDRIA  HICKS,  Program   Coordinator,  Certificate  of  Need                                                               
Program,  Department  of  Health   and  Social  Services  (DHSS),                                                               
Anchorage, Alaska, said that regarding  the cost of preparing the                                                               
application,  in  her  tenure,   applicants  have  employed  many                                                               
different methods to  go through application process.  Some do it                                                               
in-house.  Some  have  hired  consultants   to  assist  with  the                                                               
preparation  of an  application.  She is  unaware  of the  costs.                                                               
Excluding the year  2020, the last five years  the department has                                                               
had  an average  two  CON  applications a  year.  Some years  are                                                               
busier than others, but that  is the average. The department also                                                               
processes RFDs,  requests for determination.  When a  facility is                                                               
unsure of  the necessity  of filing  for a  CON or  has questions                                                               
about  the  monetary  threshold  or whether  the  service  is  an                                                               
addition, expansion,  or alternation of services,  it will submit                                                               
a  request for  determination to  the department.  The department                                                               
has gotten between five and six  a year over the past five years.                                                               
There is a timeline and  protocol when the department receives an                                                               
application and  notifies the public  of receipt  of application.                                                               
Anyone  interested in  providing  an application  to be  reviewed                                                               
concurrently may  submit a  letter of  intent or  application. No                                                               
information is  shared at this  point. Once the window  for other                                                               
applications  has  closed  and  no  letter  of  intent  or  other                                                               
application has been received, then  the department will post the                                                               
application and  the public  notice with  the particulars  of the                                                               
project. At  that point,  it is  publicly accessible  through the                                                               
department web page.                                                                                                            
SENATOR COSTELLO said  she that would like to know  at least from                                                               
one entity what it cost to  prepare an application for a CON. Her                                                               
understanding is that a CON  application is expensive to prepare.                                                               
She has heard concerns that once  the data is public, it can help                                                               
competitors  in  the   future.  She  would  like   to  have  more                                                               
information about cost of application.                                                                                          
CHAIR WILSON  suggested that maybe  a testifier, who is  a former                                                               
program  coordinator  for CON  and  is  the director  of  ASHNAHA                                                               
(Alaska  State  Hospital  and  Nursing  Home  Association)  could                                                               
answer that.                                                                                                                    
1:55:59 PM                                                                                                                    
SENATOR  BEGICH  said  that  his issue  is  always  the  conflict                                                               
between  the  free  market and  the  state's  responsibility  for                                                               
health and  safety matters. Mr. Zepp  said the free market  is an                                                               
issue and  cited the  higher returns from  hospitals that  have a                                                               
CON. In  order words, they are  making more money because  of the                                                               
CON. He  asked whether free market  operating principles wouldn't                                                               
discourage operators to stay in  the state without the incentives                                                               
that brought them to a fairly-difficult place to operate.                                                                       
MR. ZEPP  replied that in his  research and in talking  to people                                                               
in states  that have repealed  the CON, there  is not a  flood of                                                               
change  in  those states  when  repealing  CON removes  barriers,                                                               
which enables new entrants and new technology.                                                                                  
CHAIR  WILSON clarified  that now  14 states  have repealed  CON,                                                               
including Florida and Georgia, and Tennessee is in the process.                                                                 
SENATOR BEGICH  asked if  Mr. Zepp  knows why  racial disparities                                                               
increase with CON and can that data be found.                                                                                   
MR. ZEPP answered that he will provide that information.                                                                        
SENATOR  BEGICH said  that he  asked last  year how  removing CON                                                               
would impact  rural communities whose facilities  are provided by                                                               
the Indian Health Service (IHS).                                                                                                
MR.  ZEPP responded  that there  are  a couple  of exemptions  in                                                               
Alaska's  CON  regulations.  They  are  the  IHS,  Native  health                                                               
corporations, and a physician-owned facility.                                                                                   
SENATOR BEGICH  asked if it would  still be status quo  for those                                                               
entities if the CON is removed.                                                                                                 
CHAIR  WILSON said  that those  exempted services  could open  up                                                               
anywhere in Alaska today.                                                                                                       
1:59:52 PM                                                                                                                    
SENATOR  BEGICH clarified,  and Chair  Wilson affirmed,  that the                                                               
removal of CON  would have no impact on that  their legal ability                                                               
to  do what  they do  now. Senator  Begich said  that his  safety                                                               
issue  is  whether  there  are  adequate  regulatory  protections                                                               
outside  of  CON  for  protections of  public  health  for  these                                                               
facilities.  He  assumes they  exist  in  a number  of  different                                                               
statutes. He wants to know  that healthcare provision will not be                                                               
diminished if  CON is removed.  Those who support CON  argue that                                                               
it would deregulate the protections of the market.                                                                              
MR.  ZEPP  replied   that  SB  26  only  repeals   CON  laws  and                                                               
regulations    and    doesn't     affect    medical    licensing,                                                               
certifications, or  current laws  and regulations  that addresses                                                               
that particular area.                                                                                                           
CHAIR  WILSON added  that, technically,  with CON  the state  has                                                               
seen facilities try to stay  under the threshold of dollars, like                                                               
ambulatory surgery  centers, so  the facilities  have one  or two                                                               
rooms and  don't have adequate  medical staff. If  something does                                                               
go wrong,  it is going to  go wrong quickly. Repealing  CON would                                                               
allow those  facilities to have  the equipment and  staffing they                                                               
need to provide safer services.                                                                                                 
SENATOR BEGICH  asked that if he  decides to start a  hospital or                                                               
clinic  that would  have needed  a CON,  now without  the CON  he                                                               
would just build and staff it or  is there a process so the state                                                               
would ensure  that he  was a practitioner  who could  provide the                                                               
CHAIR WILSON  replied that he  will let Deputy  Commissioner Wall                                                               
answer that as the state has healthcare licensing regulations.                                                                  
SENATOR  BEGICH asked  if Mr.  Wall  could also  explain why  the                                                               
fiscal note has an indeterminate Medicaid cost.                                                                                 
2:03:09 PM                                                                                                                    
ALBERT  WALL,  Deputy  Commissioner,  Department  of  Health  and                                                               
Social Services,  Juneau, Alaska, said that  every regulation and                                                               
law that  covers in this case,  building a hospital, would  be in                                                               
place  outside  of CON.  The  facility  would  need to  meet  the                                                               
requirements of  building a new  facility, become  accredited and                                                               
licensed as a hospital and so on.  There are a number of laws and                                                               
number  of  regulations  that  would  apply.  They  would  differ                                                               
according  to  the  type  of   facility.  CON  covers  a  lot  of                                                               
facilities.  The   fiscal  note  is  indeterminate   because  the                                                               
department  cannot  identify  what  may or  may  not  potentially                                                               
happen. His belief  is that it would not cost  the state anything                                                               
not to have the CON, but there  could be costs to the state based                                                               
on  the billing  pattern  of  the facility  once  it  was up  and                                                               
SENATOR COSTELLO  said that under  the disaster  declaration, any                                                               
and  all state  regulations  can  be ignored.  She  asked if  the                                                               
licensure rules  Mr. Wall described  were not followed  under the                                                               
disaster declaration.                                                                                                           
MR. WALL  answered that he would  defer to others about  what was                                                               
waived.  He  is aware  of  a  temporary  waiver to  increase  bed                                                               
capacity in hospitals.  He will ask Ms. Hicks to  explain what is                                                               
currently in place for regulatory oversite of the CON process.                                                                  
CHAIR WILSON asked  Ms. Hicks to talk about  how alternative care                                                               
sites  are  being  handled currently  without  a  declaration  in                                                               
MS. HICKS  replied that the  only standard waived because  of the                                                               
declaration related to  the pandemic was the addition  of beds as                                                               
far  as  the  CON  is  concerned.  For  example,  an  independent                                                               
diagnostics facility was  not impacted because of  CON because of                                                               
the  emergency declaration  because that  facility would  not add                                                               
beds.  It  was specific  to  waiving  CON requirements  regarding                                                               
additional beds.  The emergency declaration  was lifted so  it is                                                               
not applicable at this point.                                                                                                   
2:08:40 PM                                                                                                                    
SENATOR  HUGHES said  that it  blows  her mind  that people  were                                                               
advocating  for this  in  the  60s and  70s  to  lower costs  and                                                               
increase  access for  the  underserved  population. That  doesn't                                                               
make sense  logically. She asked  how the  case was made  for CON                                                               
and did it ever achieve those goals.                                                                                            
MR. ZEPP  said that in  his research  and talking to  the Federal                                                               
Trade Commission  officials, there was  a high rate  of inflation                                                               
and  CON was  a way  to  combat that.  It  did not  work and  the                                                               
federal government repealed it in 1987.  It was a mandate tied to                                                               
additional federal funding. Every  state except Louisiana enacted                                                               
some  sort  of  CON  program because  of  federal  leverage.  The                                                               
program was unsuccessful in restraining high health costs.                                                                      
SENATOR HUGHES asked  if the state will lose  any federal dollars                                                               
by repealing the CON program.                                                                                                   
MR. ZEPP answered not to his knowledge.                                                                                         
SENATOR HUGHES  asked whether the  states that repealed  CON were                                                               
able to track any lowering of healthcare costs.                                                                                 
MR. ZEPP  replied that the  Federal Trade  Commission, Department                                                               
of Justice, Mercatus Center, and  other institutions have studied                                                               
that. All the empirical evidence that  he can read shows that CON                                                               
did not  control costs and  did not achieve the  results expected                                                               
when it was enacted in 1976.                                                                                                    
SENATOR HUGHES  said she wants  to know the reverse,  whether any                                                               
data shows that costs went down after CON was removed.                                                                          
MR. ZEPP said  that all the empirical evidence he  has read shows                                                               
that in comparisons of states with  CON programs to those that do                                                               
not, costs are lower and  healthcare quality is higher for states                                                               
without CON.  He does  not know quickly  how that  happened after                                                               
the federal mandate was repealed.                                                                                               
SENATOR HUGHES said  she wonders if within a state  there is data                                                               
showing costs went  down after it was repealed.  She would assume                                                               
that happened, but that would be interesting to see.                                                                            
MR.  ZEPP  said that  New  Hampshire  in  2016 repealed  its  CON                                                               
program. He  spoke to  staffers and the  legislator who  had that                                                               
bill. They  provided information  that after  the repeal  of CON,                                                               
employment for healthcare professionals rose.                                                                                   
SENATOR  BEGICH  said that  maybe  NCSL  (National Conference  of                                                               
State Legislatures)  has that data  on the impact on  prices pre-                                                               
and postrepeal of CON within a state.                                                                                           
CHAIR WILSON said his office can try to find that data.                                                                         
SENATOR  REINBOLD said  that Eagle  River is  in deep  need of  a                                                               
facility  and this  is  holding them  back.  She appreciated  the                                                               
chair bringing this bill forward.                                                                                               
2:14:09 PM                                                                                                                    
MR.  ZEPP  presented  the  sectional   analysis  and  noted  many                                                               
sections are conforming amendments:                                                                                             
     Section 1: AS 12.25.030(e) - Title 12, Code of Criminal                                                                    
     PAGE 1, LINES 4-6:                                                                                                         
     This conforming section replaces the statutory definition                                                                  
     of a "health care facility" reference under the "Arrests &                                                                 
     Citations"  chapter of  statutes  and  deletes the  previous                                                               
     reference under the "Certificate of Need" program.                                                                         
     Section  2:  AS  12.55.155(c)(36)(A)  - Title  12,  Code  of                                                               
     Criminal Procedure                                                                                                         
     PAGE 1, LINE 7 - PAGE 2, LINE 4:                                                                                           
     This  section provides  for a  new definition  of a  "health                                                               
     care   facility"  reference   under   the  "Sentencing   and                                                               
     Probation" chapter of statutes.                                                                                            
     Section 3: AS 12.55.155(c)(36) -  Title 12, Code of Criminal                                                               
     PAGE 2, LINES 5 - 7:                                                                                                       
     This  section   adds  the   definition  of   a  "residential                                                               
     psychiatric   treatment   center"    reference   under   the                                                               
     "Sentencing and Probation" chapter of statutes.                                                                            
     Section  4:  AS 18.20.400(c)  -  Title  18, Health,  Safety,                                                               
     Housing, Human Rights, and Public Defender                                                                                 
     PAGE 2, LINE 8 - PAGE 4, LINE 10:                                                                                          
     This   conforming  section   adds   the   definition  of   a                                                               
     "residential psychiatric  treatment center"  reference under                                                               
     the "Overtime Limitations for Nurses" chapter of statutes.                                                                 
     Section  5:  AS  18.20.400  -   Title  18,  Health,  Safety,                                                               
     Housing, Human Rights, and Public Defender                                                                                 
     PAGE 4, LINE 11 - LINE 23:                                                                                                 
     A  conforming   section  that  adds  the   definition  of  a                                                               
     "residential psychiatric  treatment center"  reference under                                                               
     the "Overtime Limitations for Nurses" chapter of statutes.                                                                 
     Section  6:  AS 18.20.499(2)  -  Title  18, Health,  Safety,                                                               
     Housing, Human Rights, and Public Defender                                                                                 
     PAGE 4, LINE 24  PAGE 5, LINE 5:                                                                                           
     A conforming section  that adds the definition  of a "health                                                               
     care  facility" reference  under  the "Overtime  Limitations                                                               
     for  Nurses" section  of statutes  and deletes  the previous                                                               
     "Certificate of Need" statutory references.                                                                                
     Section  7:  AS  18.26.220  -   Title  47,  Welfare,  Social                                                               
     Services, and Institutions                                                                                                 
     PAGE 5, LINE 6  LINE 16:                                                                                                   
     This  section   is  amended  to  add   the  state  licensing                                                               
     requirements  for  facilities  and   services  under  a  new                                                               
     statutory  reference remove  the  previous requirements  for                                                               
     facilities  and  services  under  a  "certificate  of  need                                                                
     program  under   the  "Centralized  Licensing   and  Related                                                               
     Administrative Procedures" chapter  of statutes. The amended                                                               
     section  maintains  licensing  requirements  for  facilities                                                               
     and/or services.                                                                                                           
     Section 8: AS 18.35.399(9)  - Health, Safety, Housing, Human                                                               
     Rights, and Public Defender                                                                                                
     PAGE 5, LINE 17  LINE 29:                                                                                                  
      A  conforming section  that removes  the  reference to  the                                                               
     "certificate  of  need" statute  and  replaces  it with  the                                                               
     updated   statue   reference   under   AS   18.20.400   (d),                                                               
     Section 9: AS 18.07.021  - 18.07.111; AS 21.86.030(c)(1); AS                                                               
     44.64.030(a)(18); and AS 47.80.140(b)                                                                                      
     PAGE 5, LINE 30  PAGE 6, LINE 1:                                                                                           
     This  section repeals  various statutory  references related                                                               
     to the "certificate of need" program.                                                                                      
     Section 10: Section 4, ch. 275, SLA 1976, is repealed:                                                                     
     PAGE 6, LINE 2:                                                                                                            
     Repeals a section of uncodified law  in sec. 4, ch. 275, SLA                                                               
     1976,  which   provided  a   transition  to   allow  medical                                                               
     facilities in  existence or  under construction  before July                                                               
     1, 1976 to obtain certificates of need.                                                                                    
     Section 11: Certificate of Need; Applicability:                                                                            
     PAGE 6, LINE 3  LINE 8:                                                                                                    
     Amends uncodified  law and provides  that the  Department of                                                               
     Health & Social Services may  not take any action to revoke,                                                               
     enforce, or modify a certificate  of need issued to a health                                                               
     care facility before the effective date of the Act.                                                                        
     Section 12:                                                                                                                
     PAGE 6, LINE 9 - LINE 14:                                                                                                  
     Adds a new subsection that  directs the Department of Health                                                               
     and  Social  Services  to create  regulations  necessary  to                                                               
     implement  the changes  made by  this Act  by the  effective                                                               
     date of the legislation.                                                                                                   
     Section 13:                                                                                                                
     PAGE 6, LINE 15:                                                                                                           
     Section 12  of this  Act takes  effect immediately  under AS                                                               
     Section 14:                                                                                                                
     PAGE 6, LINE 16:                                                                                                           
     Provides that, except section 13 of the Act, the effective                                                                 
     date of the Act is July 1, 2024.                                                                                           
2:19:08 PM                                                                                                                    
CHAIR WILSON opened public testimony.                                                                                           
2:19:18 PM                                                                                                                    
JARED  KOSIN,  President  and  CEO,  Alaska  State  Hospital  and                                                               
Nursing Home  Association (ASHNHA), Anchorage, Alaska,  said that                                                               
ASHNHA respectfully  opposes SB  26. Problems  do exist  with the                                                               
current CON  program, but the  wholesale statutory repeal  of CON                                                               
is not  the answer. Healthcare  is not a  true free market.  In a                                                               
free  market,  hospitals  and ambulatory  surgery  centers  could                                                               
compete  on an  equal footing  for outpatient  surgical services,                                                               
but hospitals must maintain emergency  rooms, treat all patients,                                                               
regardless  of  ability  to  pay,  and  be  open  all  the  time.                                                               
Ambulatory surgery  centers do not have  a duty to treat  and can                                                               
have  limited hours.  Ambulatory surgery  centers are  a critical                                                               
component  of healthcare.  The point  is that  customers are  not                                                               
choosing between  two similarly situated  goods in a  free market                                                               
where the  lowest cost  wins, but they  are choosing  between two                                                               
totally  different  products.  One  is   subject  to  a  host  of                                                               
expensive requirements  that the  other is  not. For  this reason                                                               
and many  others, it makes sense  to have some controls  in place                                                               
to level the playing field  and ensure a comprehensive healthcare                                                               
system  is in  place. ASHNHA  is  committed to  working with  the                                                               
legislature and  the department to  improve the CON  program. The                                                               
way  to  do this  is  updating  and  revising CON  standards  and                                                               
calculations.   These  reside   in   regulations,  not   statute.                                                               
Decisions should be  made using current data, not  data from 2011                                                               
and 2012.  ASHNHA urges the  committee to look at  the regulatory                                                               
framework of CON rather than a statutory repeal.                                                                                
SENATOR HUGHES  said that 12  or 14 states  do not have  CON. She                                                               
asked  how  they  are  managing  this.  Mr.  Kosin  describes  an                                                               
impossible situation, but those states must have hospitals.                                                                     
MR. KOSIN  said that he  would first look  at Texas. He  does not                                                               
know if Texas has  a CON program in place, but  he does know that                                                               
Texas   has  had   an  explosion   of  free   standing  emergency                                                               
departments. Those are boutique  services on almost every corner.                                                               
Mr. Zepp said  in his presentation that there wouldn't  be a boom                                                               
of  services, but  ASHNHA has  heard that  that is  a problem  in                                                               
Texas. He cannot  answer her question directly, but  he has heard                                                               
stories about Texas.                                                                                                            
CHAIR WILSON said that Texas  taxes ambulatory services to combat                                                               
the  differentials   with  facilities  that  fall   under  EMTALA                                                               
(Emergency Medical  Treatment and Labor Act),  like the emergency                                                               
SENATOR  BEGICH said  that Mr.  Kosin said  that the  current CON                                                               
system is flawed.  He asked if Mr. Kosin has  made suggestions to                                                               
the committee or provided ways to  improve the CON law to address                                                               
some of the concerns in the legislation.                                                                                        
MR. KOSIN said that two  years ago ASHNHA provided the department                                                               
a  playbook   on  possible   improvements  to   the  regulations,                                                               
specifically  to   the  standards  and  calculations   used.  The                                                               
department worked on it at some  point, but he doesn't know where                                                               
that process is.  ASHNHA did provide detailed  suggestions on how                                                               
the department can update the  program and adjust the formulas to                                                               
make it a more sensible program.                                                                                                
SENATOR BEGICH  asked him to provide  that or any updates  to the                                                               
MR. KOSIN answered that he will.                                                                                                
SENATOR HUGHES  asked whether the  requirement for a  hospital to                                                               
have an  emergency room and not  turn anyone away is  required by                                                               
federal law  in order  to get  Medicaid and Medicare  or is  it a                                                               
state-by-state  thing. Now  that there  are urgent  care centers,                                                               
she asked why a hospital has  to see someone with an earache. She                                                               
asked if that  could be fixed in  state law or is  that a federal                                                               
MR. KOSIN  replied that EMTALA  is the federal law  that requires                                                               
that. ASHNHA  would agree  on trying to  correct patient  flow so                                                               
that people  go to the  correct place  of care. It  is economical                                                               
for  the  patient  and  better  for the  system  of  care.  There                                                               
absolutely needs  to be  improvement there, but  it is  a federal                                                               
law that if  someone comes to an emergency room  there is duty to                                                               
SENATOR  HUGHES said  that she  would hope  that hospitals  would                                                               
advocate for change at the federal  level. It would be helpful if                                                               
a  decision point  system was  in  place to  help consumers  make                                                               
choices about  appropriate care.  She asked if  anything prevents                                                               
hospitals from doing something like that.                                                                                       
MR. KOSIN  replied that  he does not  know about  the limitations                                                               
once someone enters an emergency  department. Hospitals want that                                                               
result. Mat-Su Regional  built two free standing  urgent cares to                                                               
try  to get  people to  access care  at the  right level.  Mat-Su                                                               
Regional   ran  a   superutilizer  program   to  try   to  reduce                                                               
overutilization of the  emergency department. Hospitals generally                                                               
want proper utilization  to happen because it frees  up bed space                                                               
and allows more  efficient patient flow. That is  what all models                                                               
of care are trying to get at.                                                                                                   
SENATOR  HUGHES said  she knows  that is  not exactly  related to                                                               
CON,  but when  trying to  justify the  need for  CON because  of                                                               
overregulation  and   the  bottom  line  for   hospitals,  it  is                                                               
pertinent.  Hospitals  should try  to  solve  the fact  that  the                                                               
system has changed and people have other options.                                                                               
2:29:09 PM                                                                                                                    
PORTIA  NOBLE, representing  self, Anchorage,  Alaska, said  that                                                               
CON laws  across the  country have  limited supplies  of services                                                               
and facilities.  The approval  process for  CON is  determined by                                                               
government.  Government  finds  itself  being  lobbied  by  large                                                               
healthcare  monopolies.  CON  law  has  driven  up  the  cost  to                                                               
consumer, lowered  the quality of care,  limited the availability                                                               
of needed services, and has  fought competition in the healthcare                                                               
market. Any  time in America,  and especially during  a pandemic,                                                               
healthcare  providers should  not need  government permission  to                                                               
expand their  size and  scope of  practice. During  the pandemic,                                                               
over 20 states waived or  suspended CON laws relating to hospital                                                               
beds and  essential services. It  should not take a  pandemic for                                                               
states  to realize  how CON  laws threaten  public health.  It is                                                               
time  to eliminate  laws that  harm  patients and  the spirit  of                                                               
competition. She  would be  happy to  share her  information from                                                               
the Cato Institute and the Mercatus Center.                                                                                     
2:30:58 PM                                                                                                                    
RYAN MCKEE, Americans for Prosperity,  Wasilla, Alaska, said that                                                               
removing CON  would make it  easier for new  healthcare practices                                                               
to be established in Alaska and  for current ones to expand. That                                                               
will create competition  and drive costs down, which  are so high                                                               
in Alaska. During  the pandemic, part of the  emergency order was                                                               
to suspend CON laws.  If this was seen as a  must have during the                                                               
pandemic, why  bring it back  postCOVID. Allowing more  groups to                                                               
practice  in  Alaska, especially  in  rural  Alaska, would  be  a                                                               
benefit  to  the state.  CON  laws  only protects  those  already                                                               
established in Alaska from competition.                                                                                         
2:32:30 PM                                                                                                                    
SARAH  HETEMI, representing  self, Anchorage,  Alaska, said  that                                                               
during the COVID pandemic, many  states suspended CON laws. North                                                               
Carolina  first lifted  CON laws  on  hospital beds  and then  19                                                               
other states  suspended a portion  of their CON laws.  The states                                                               
were reacting quickly to alleviate  strains on medical systems to                                                               
better   respond  to   the  pandemic.   Providers  were   allowed                                                               
flexibility  to  respond to  the  pandemic.  She asked  why  that                                                               
flexibility is  not allowed year-round for  various services. The                                                               
Mercatus  Center  finds  CON  laws   are  associated  with  fewer                                                               
hospitals  per  capita,  fewer ambulatory  surgical  centers  per                                                               
capita, fewer rural hospitals per  capita, fewer rural ambulatory                                                               
surgical  centers  per  capita, fewer  hospice  care  facilities,                                                               
fewer  dialysis  clinics, fewer  hospitals  offering  MRI and  CT                                                               
scans,  longer  driving distances  to  obtain  care, and  greater                                                               
racial disparities. Perhaps people were  not aware of how harmful                                                               
CON laws were before the pandemic,  but now they are. It would be                                                               
morally wrong  not to  repeal CON.  It is  a question  of whether                                                               
people are for a better healthcare system.                                                                                      
2:35:15 PM                                                                                                                    
CHAIR  WILSON  closed   public  testimony.  He  held   SB  26  in                                                               

Document Name Date/Time Subjects
SB 26 Version B.PDF SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 Sponsor Statement.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 Sectional Analysis.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 Fiscal Note 1 DHSS DSS.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 Fiscal Note 2 DHSS Medicaid Svcs.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 - Updated CON Power Point - 3.25.21.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 ASHNHA Letter of Opposition.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 Heartland Institute Letter of Support.docx.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 26 Letter of Support Marty Kincaid_Redacted.pdf SHSS 3/25/2021 1:30:00 PM
SB 26
SB 99 version A.pdf SHSS 3/25/2021 1:30:00 PM
SB 99
SB 99 v. A Sponsor Statement 3.18.2021.pdf SHSS 3/25/2021 1:30:00 PM
SB 99
SB 99 v. A Sectional Analysis 3.18.2021.pdf SHSS 3/25/2021 1:30:00 PM
SB 99
SB 99 Fiscal Note DHSS DJJ.pdf SHSS 3/25/2021 1:30:00 PM
SB 99
SB 99 Public Comment Imbriani 3.24.21_Redacted.pdf SHSS 3/25/2021 1:30:00 PM
SB 99