Legislature(1995 - 1996)

04/26/1996 09:10 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         April 26, 1996                                        
                           9:10 a.m.                                           
  MEMBERS PRESENT                                                              
 Senator Lyda Green, Chairman                                                  
 Senator Loren Leman, Vice-Chairman                                            
 Senator Mike Miller                                                           
 Senator Johnny Ellis                                                          
 Senator Judy Salo                                                             
  MEMBERS ABSENT                                                               
 All members present                                                           
  COMMITTEE CALENDAR                                                           
 CS FOR HOUSE BILL NO. 393(FIN)                                                
 "An Act relating to managed care for recipients of medical                    
 assistance; and providing for an effective date."                             
 CS FOR HOUSE BILL NO. 216(HES)                                                
 "An Act establishing the Alaska education technology program; and             
 providing for an effective date."                                             
 CS FOR HOUSE BILL NO. 528(FIN)                                                
 "An Act relating to applications for certificates of need and                 
 licensing of nursing homes; establishing a moratorium with respect            
 to acceptance of new applications for a certificate of need or for            
 a license for additional nursing home capacity in the state until             
 May 1, 1998; establishing a working group to study and issue a                
 report about long-term care; and providing for an effective date."            
  PREVIOUS SENATE COMMITTEE ACTION                                             
 HB 393 - See Senate Health, Education & Social Services minutes               
          dated 4/19/96, 4/24/96.                                              
 HB 216 - See Senate Health, Education & Social Services minutes               
          dated 4/12/96.                                                       
 HB 528 - No previous action to record.                                        
  WITNESS REGISTER                                                             
 Representative Norman Rokeberg                                                
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Prime Sponsor of HB 393                                
 Bob Labbe, Director                                                           
 Division of Medical Assistance                                                
 Department of Health & Social Services                                        
 P.O. Box 110660                                                               
 Juneau, AK 99811-0660                                                         
  POSITION STATEMENT:   Testified in support of HB 393                         
 Ed Hansen                                                                     
 Yukon-Kuskokwim Health Care Corporation                                       
 Box 528                                                                       
 Bethel, AK 99559                                                              
  POSITION STATEMENT:   Testified on HB 393                                    
 Roger Poppe, Staff to Representative Pete Kott                                
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information on HB 216                          
 Jay Livey, Deputy Commissioner                                                
 Department of Health & Social Services                                        
 P.O. Box 110601                                                               
 Juneau, AK 99811-0601                                                         
  POSITION STATEMENT:   Testified in support of HB 528                         
 Gladys Jung                                                                   
 P.O. Box 506                                                                  
 Bethel, AK 99559                                                              
  POSITION STATEMENT:   Supports HB 528                                        
 Jim Beck                                                                      
 Box 508                                                                       
 Palmer, AK 99645                                                              
  POSITION STATEMENT:   Supports passage of HB 528                             
 Harlan Knudson                                                                
 Alaska State Hospital & Nursing Home Association                              
 319 Seward St., #11                                                           
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Supports concept of HB 528                             
 Mary Lou Meiners                                                              
 American Association of Retired Persons                                       
 805 Goldbelt                                                                  
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   AARP supports HB 528                                   
 Connie Sipe, Director                                                         
 Division of Senior Services                                                   
 Department of Administration                                                  
 3601 C St., Suite 310                                                         
 Anchorage, AK 99503-5984                                                      
  POSITION STATEMENT:   Testified in support of HB 528                         
 Paul Gregory                                                                  
 Box 393                                                                       
 Bethel, AK 99559                                                              
  POSITION STATEMENT:   Supports HB 528                                        
 Kimberly Duke, Staff to Representative Mark Hanley                            
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information in support of HB 528               
  ACTION NARRATIVE                                                             
 TAPE 96-35, SIDE A                                                            
 Number 001                                                                    
 CHAIRMAN GREEN called the Senate Health, Education and Social                 
 Services (HESS) Committee to order at 9:10 a.m., and noted there              
 was a quorum present.                                                         
 Number 015                                                                    
        CSHB 393(FIN) MANAGED CARE PROGRAM FOR MEDICAID                       
 CHAIRMAN GREEN brought CSHB 393(FIN) before the committee.                    
 REPRESENTATIVE ROKEBERG, prime sponsor of HB 393, advised that                
 after the previous hearing on the legislation, further discussions            
 with the Department of Health & Social Services resulted in an                
 agreement by the department to modify their amendment and indicate            
 their willingness to proceed by developing the program and the                
 pilot programs almost immediately.  One of the issues that remains            
 to be worked out by the department is the makeup of a pilot program           
 involving the public, affected consumers, the legislature and the             
 provider community.  He expressed his pleasure that these efforts             
 have ended up with a modified amended bill, and it is his hope that           
 it will accelerate the process.                                               
 Representative Rokeberg explained that the amended amendment puts             
 a date on the implementation, as well as adding in the word                   
 "public" into those people that should be involved in the process             
 of developing a managed care system that will be used in the                  
 Number 055                                                                    
 SENATOR LEMAN moved the adoption of the following amendment to CSHB
 Amendment No. 1                                                             
 Delete existing Section 2 and replace with:                                   
     *Sec. 2.  MANAGED CARE PROGRAM.  (a)  The Department of                   
 Health and Social Services shall begin development of a managed               
 care system for recipients of medical assistance under AS 47.07 by            
 designing and implementing no fewer than two innovative managed               
 care pilot projects by June 30, 1997.  The projects must be in one            
 or more predominantly urban areas of the state that take into                 
 account the unique features of the project areas and include a                
 rural element, if feasible.  The department shall involve the                 
 public, affected consumers and providers of health care services in           
 the selected project areas in the development of the managed care             
 system that will be used in the projects.                                     
  (b)  Upon developing a system required under (a) of this                     
 section, the Department of Health and Social Services shall submit            
 through the governor legislation if necessary that would provide              
 for implementation of the proposed system in two or more pilot                
 project areas to the legislature on the first day of the First                
 Regular Session of the Twentieth Alaska State Legislature.                    
  (c)  The department under this Act may require that a                        
 recipient of medical assistance under 47.07 must participate in a             
 managed care system in order to remain eligible for medical                   
 assistance under AS 47.07.  This participation requirement may be             
 based on geographical, financial, social, medical, and other                  
 factors that the Department of Health and Social Services                     
 determines are relevant to the development and efficient management           
 of the managed care system.                                                   
  (d)  The department under this Act may apply for waivers of                  
 federal law or for other federal approval if federal approval is              
 required in order to implement the pilot projects for the managed             
 care system developed under this section.                                     
  (e)  Nothing in this section precludes the department from                   
 acting to effectively manage costs through case management and                
 other cost containment measures that are within the department's              
 statutory authorization in order to assure the operation of the               
 program within its budget.                                                    
 Hearing no objection to the motion to adopt the amendment, CHAIRMAN           
 GREEN stated Amendment No. 1 was adopted.                                     
 Number 061                                                                    
 REPRESENTATIVE ROKEBERG said the legislation is important because             
 it provides statutory authority, clearly for the first time, that             
 the department should manage care, per se.  He added that he                  
 compliments the department because of intent language in the budget           
 and the implicit need for cost containment while they move forward.           
 Number 083                                                                    
 BOB LABBE, Director, Division of Medical Assistance, Department of            
 Health & Social Services, also expressed his pleasure that the                
 department and the sponsor have been able to work through an                  
 agreement.  The department is committed to managing the program               
 within the constraints that they have and to assure the best                  
 service for the consumers.  He said he is looking forward to                  
 challenge, and although there is a bit of anxiety with the date, he           
 thinks they need to have that to motivate them a bit.                         
 Number 104                                                                    
 SENATOR SALO inquired if the department has selected sites for the            
 pilot programs.  MR. LABBE responded that the department is                   
 currently getting data from the contractor to give them an idea of            
 utilization patterns, and the contractor will be coming up with               
 some recommendations.  The department will then approach                      
 communities that seem appropriate and see if there is a willingness           
 for a pilot project.  SENATOR SALO noted there is a physician in              
 her area who has been interested in setting up a managed care                 
 facility, but one of the impediments to doing it has been that he             
 would like to have a birthing center as part of this clinic, but he           
 has been told that Medicaid doesn't allow the cost of delivery to             
 be reimbursed if the birthing center is outside of the hospital.              
 MR. LABBE said that in true in terms of the facility cost.                    
 Medicaid will pay for the practitioner cost, but not the cost of a            
 Number 140                                                                    
 ED HANSEN, representing the Yukon-Kuskokwim Health Care Corporation           
 and testifying by teleconference from Bethel, said the Yukon-                 
 Kuskokwim Delta Regional Hospital located in Bethel services a                
 substantially economically depressed population, a large percentage           
 of which are Medicaid eligible.  The hospital is able to address              
 acute levels of needs and high demand for services in large part              
 because of Medicaid reimbursement.  Any action taken by the                   
 legislature which limits Medicaid reimbursement to their hospital             
 will directly and adversely impact the actual health status of the            
 residents of the delta.  Any managed care for Alaska Medicaid must            
 be constructed in a manner that does not limit the capacity of the            
 Native health care or limit the potential to pass through federal             
 dollars at 100 percent.  He said managed care is something that we            
 must prepare for as Alaskans, however, care should be taken not to            
 act in a manner that destabilizes current dynamics which may be to            
 the advantage of multiple parties.                                            
 In his closing remarks, Mr. Hansen said the Yukon-Kuskokwim Health            
 Care Corporation wants to go on record with their concerns and                
 their request for thoughtful, strategic implementation.  Whatever             
 the planning process for implementation, it should include focused            
 consideration of the health and welfare of Alaskan Natives and the            
 Native health care delivery system.                                           
 There being no further testimony on HB 393, CHAIRMAN GREEN asked              
 for the pleasure of the committee.                                            
 Number 226                                                                    
 SENATOR LEMAN moved that SCS CSHB 393(HES) with accompanying fiscal           
 notes be passed out of committee with individual recommendations.             
 Hearing no objection, it was so ordered.                                      
           CSHB 216(HES) EDUCATION TECHNOLOGY PROGRAM                         
 CHAIRMAN GREEN brought CSHB 216(HES) before the committee as the              
 next order of business.                                                       
 Number 238                                                                    
 ROGER POPPE, staff to Representative Pete Kott, explained the                 
 legislation would encourage and enable the Department of Education            
 to be a center for encouragement of education technology on a                 
 statewide basis.  He noted the bill has had bipartisan support, as            
 well as support from the Department of Education, NEA-Alaska and              
 the Alaska Association of School Boards.  He added that there are             
 no state dollars available for the center this year, but the                  
 sponsor wanted to set the fund up anyway in order to provide a                
 source mechanism for the pass-through to make the state and the               
 school districts eligible for federal and private foundation                  
 dollars, which will be coming available.  There is over $2 billion            
 in federal grants that the state would be eligible to apply for               
 through the school districts.                                                 
 Number 262                                                                    
 There being no further testimony on HB 216, CHAIRMAN GREEN asked              
 for the pleasure of the committee.                                            
 SENATOR LEMAN moved CSHB 216(HES) and the accompanying zero fiscal            
 notes be passed out of committee with individual recommendations.             
 Hearing no objection, it was so ordered.                                      
 Number 268                                                                    
 CHAIRMAN GREEN brought CSHB 528(FIN) before the committee as the              
 final order of business.                                                      
 JAY LIVEY, Deputy Commissioner, Department of Health & Social                 
 Services, said the legislation will establish a approximately 20-             
 month moratorium on the granting of a certificate of need to                  
 construct a nursing home, or the licensing of a certificate of                
 need, or the licensing of a nursing home bed.                                 
 There are two ways that nursing home beds essentially can be                  
 created in Alaska.  A new facility can be built, and, if the                  
 building of that facility costs more than $1 million, then a                  
 certificate of need is required.   Or an existing bed can be                  
 converted to nursing home usage, and, if that conversion costs less           
 $1 million, it can be done without a certificate of needs.  HB 528            
 would be a moratorium that would stop  both the conversion of beds            
 that cost less $1 million, as well as the granting of a certificate           
 of need for a facility or a changeover that costs more than a $1              
 million.  This moratorium would be in place until May 1, 1998.                
 Mr. Livey said the department supports this legislation because it            
 believes it is essential for controlling Medicaid costs.   There              
 are potentially 147 nursing home beds that could come on line over            
 the next three to four years.  If all of those beds were to come on           
 line, it would cost the Medicaid program approximately $57 million            
 over those seven years.  Medicaid pays from 85 to 90 percent of the           
 cost of these beds if they are built.                                         
 The average cost of nursing homes in the state of Alaska ranges               
 from about $75 thousand to $134 thousand per bed per year.  The               
 average cost of home community-based care is about $30,000, so                
 there are less expensive alternatives out there.                              
 Mr. Livey pointed out that current general fund dollars in the                
 Medicaid program total about $155 million.  If there were a five              
 percent growth over a 5-year period, it would mean an additional              
 $43 million to pay for that growth.  If these nursing home beds               
 were added to the mix of the services they have, that number jumps            
 from $43 million to approximately $75 million.  The department does           
 not believe that building these beds is cost effective in terms of            
 that kind of growth when there are less expensive alternatives that           
 provide the same level of care.                                               
 It was also pointed out by Mr. Livey that there is no facility                
 currently providing service that will lose any money under this               
 bill.  This bill just addresses how future revenues will be divided           
 up and what services they are willing to purchase.  Further, this             
 is a temporary measure.                                                       
 Number 373                                                                    
 SENATOR LEMAN observed that if the act takes effect immediately and           
 it goes to May 1, 1998, that would be a 24-month moratorium.  MR.             
 LIVEY agreed with his observation.                                            
 Number 400                                                                    
 GLADYS JUNG, representing the Senior Center in Bethel testified               
 from Bethel in support of HB 528.  She suggested there should be a            
 needs assessment on this issue and a study done that looks at the             
 entire state and what impact all the areas have on the state.  She            
 agreed that the legislation will not harm their plans in Bethel for           
 caring for their elders, and she acknowledged there are                       
 alternatives for serving people other than just a regular nursing             
 Number 410                                                                    
 JIM BECK, testifying from Mat-Su in support of HB 528, agreed that            
 if HB 528 does not pass, Medicaid costs will definitely increase.             
 He noted the state has an excellent Medicaid waiver program in                
 place, but these waivers are underfunded as it is.  The current               
 long-term care system is very unbalanced in favor of institutions             
 because it limits peoples' choices and it wastes a lot of money.              
 He noted there are many people in the state who are under the age             
 of 65 that are stuck in nursing homes and would much rather take              
 advantage of community-based care but are unable to because all of            
 the Medicaid money is being diverted to nursing homes.                        
 Mr. Beck cited a case filed by an individual against the state of             
 Pennsylvania's Department of Public Welfare, which the state lost.            
 The Unites States Third Circuit of Appeals found that the states              
 cannot fund nursing home incarceration while, at the same time,               
 cutting funding for community-based program.  He asserted that by             
 not passing HB 528, it will put Alaska at the top of the list to be           
 next in line to lose a similar suit.                                          
 Number 471                                                                    
 HARLAN KNUDSON, representing the Alaska State Hospital and Nursing            
 Home Association, stated the nursing homes in Alaska have a lot to            
 be proud of.  He added there is no question that probably everybody           
 in the state prefers home and community-based care.  It's the way             
 to go and the association endorses it heartily.                               
 Mr. Knudson pointed out that Section 3 of the bill, which calls for           
 the study, was put in the bill by the providers who agree the need            
 to identify the long-term care needs in this state, where they are,           
 and what it is going to cost to provide those cares, and HB 538               
 provide some of that badly needed information.                                
 Mr. Knudson said there is very serious study out, and anybody who             
 thinks that to move from nursing home care to home and community-             
 based care and save money should step back as the AARP has done and           
 take a look the cost of providing home and community-based                    
 services.  He observed it is not going to be a cost free catchall             
 for meeting patient needs.                                                    
 Mr. Knudson said the only argument the association has with the               
 bill is the length of the moratorium.  They believe that a study on           
 long-term care can be accomplished in a year, however, they are               
 willing to live with the bill and support its concept if the                  
 legislature decides it should be two years.                                   
 Number 504                                                                    
 MARY LOU MEINERS, representing the American Association of Retired            
 Persons, stated their support for CSHB 528(FIN).                              
 Number 508                                                                    
 CONNIE SIPE, Director, Division of Senior Services, Department of             
 Administration, informed the committee that the Commission on Aging           
 has been on record for five years in favor of a moratorium.                   
 Ms. Sipe noted that Medicaid has been paying for nursing home beds            
 for nearly 30 years, and Medicaid has only been paying for                    
 comprehensive home care waivers since 1980 in some states and in              
 Alaska only two years.  So there is a faster growth in home                   
 community care costs in expenses and use, but there is some                   
 catching up to do.  There are approximately 147 elders who are                
 nursing home level qualified and could walk into a empty nursing              
 home bed today under Medicaid who are instead receiving care.                 
 Their annual total Medicaid costs are about $4.3 million a year.              
 If these individuals were in 147 nursing home beds, their annual              
 cost today would be at least $12.8 million, and, depending on which           
 area of the state they went into nursing home beds, it would be               
 Ms. Sipe said the state's nursing homes are important and they are            
 good nursing homes, but things are changing, and once the state               
 commits to a nursing home, it  is committed for 30 or 40 years.               
 She noted there are nursing homes in the state where we pay in                
 Medicaid costs over $100 a day per bed just for financing of the              
 interest on the mortgage of the building.  She said it is an                  
 important franchise decision whether or not to build more or                  
 whether to see if the communities can have time to respond.                   
 Ms. Sipe said home and community-based services are developing,               
 they need some time to develop and the communities, as well as the            
 industry, need some time to really participate in this study.                 
 Concluding, she stated the Division of Senior Services supports the           
 bill with the two-year moratorium.                                            
 Number 551                                                                    
 PAUL GREGORY, testifying in support of HB 528, stated he was                  
 representing the senior citizens of Alaska.   Having been born in             
 Alaska, as well as working with the seniors for the last 60 years             
 of his life, he feels bad when he sees seniors put into nursing               
 homes in areas that are unfamiliar to them and where no family                
 members reside.  By having an intermediate center, people will                
 begin to live longer, and people want to take care of their own if            
 possible.  He said the seniors of the Yukon-Kuskokwim Delta are in            
 support of a study to determine where the greatest need is going to           
 TAPE 96-35, SIDE B                                                            
 Number 005                                                                    
 SENATOR GREEN advised that she filed a bill earlier in the week               
 that repeals the certificate of need process, and her reason for              
 doing so is so that hearings can be held in the interim to                    
 determine what other states are doing and what Alaska might need to           
 do to change so that there isn't this debate every other year and             
 then having to come back in with another moratorium.  She added               
 that she has no intention of attempting to repeal the certificate             
 of need, but took that approach to get the discussions going.                 
 Number 025                                                                    
 KIMBERLY DUKE, staff to Representative Mark Hanley, who is the                
 prime sponsor of HB 528, said Representative Hanley is very                   
 supportive of the legislation and that he introduced it on behalf             
 of the department to give the community-based services a chance to            
 develop in areas where they haven't been located before.  He                  
 believes it is a service more people would prefer rather than being           
 in the nursing home setting; the intent of the bill is to give a              
 period of time for that to develop.  She said Representative Hanley           
 supports the length of the moratorium, which was changed in House             
 Finance to May 1998, to allow for the construction season.                    
 Number 063                                                                    
 SENATOR GREEN noted that Senator Miller had expressed the                     
 possibility of proposing an amendment to the legislation, but that            
 it could be dealt with in Senate Finance, so it was her intent to             
 pass the bill out of committee with the understanding that there is           
 the likelihood of some changes that may come forward.  She then               
 asked for a motion to move the bill out of committee.                         
 SENATOR LEMAN moved that CSHB 528(FIN) and the accompanying zero              
 fiscal note be passed out of committee with individual                        
 recommendations.  Hearing no objection, it was so ordered.                    
 There being no further business to come before the committee,                 
 CHAIRMAN GREEN adjourned the meeting at 10:02 a.m.                            

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