Legislature(1995 - 1996)
04/26/1996 09:10 AM Senate HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE 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 projects. Number 055 SENATOR LEMAN moved the adoption of the following amendment to CSHB 393(FIN): 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 facility. 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 CSHB 528(FIN) NURS.HOME MORATORIUM/CERTIFICATES OF NEED 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 home. 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 will 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 more. 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 be. 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.