Legislature(2003 - 2004)

04/30/2004 01:35 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE                                                               
                         April 30, 2004                                                                                         
                           1:35 p.m.                                                                                            
TAPE (S) 04-25&26                                                                                                             
MEMBERS PRESENT                                                                                                               
Senator Fred Dyson, Chair                                                                                                       
Senator Lyda Green, Vice Chair                                                                                                  
Senator Gary Wilken                                                                                                             
Senator Bettye Davis                                                                                                            
Senator Gretchen Guess                                                                                                          
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
CS FOR HOUSE BILL NO. 425(EDU)                                                                                                  
"An  Act  relating  to funding  for  school  districts  operating                                                               
secondary  school boarding  programs  and to  funding for  school                                                               
districts from  which boarding students  come; and  providing for                                                               
an effective date."                                                                                                             
     MOVED CSHB 425(EDU) OUT OF COMMITTEE                                                                                       
HOUSE BILL NO. 500(title am)                                                                                                    
"An Act including the Joint Commission on Accreditation of                                                                      
Healthcare Organizations under the definition of medical review                                                                 
     MOVED HB 500(title am) OUT OF COMMITTEE                                                                                    
CS FOR HOUSE BILL NO. 511(HES) am                                                                                               
"An Act relating to the certificate of need program for health                                                                  
care facilities; and providing for an effective date."                                                                          
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 425                                                                                                                  
SHORT TITLE: SCHOOL FUNDS RELATED TO BOARDING SCHOOLS                                                                           
SPONSOR(s): REPRESENTATIVE(s) COGHILL                                                                                           
02/04/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/04/04       (H)       EDU, HES, FIN                                                                                          
03/02/04       (H)       EDU AT 11:00 AM CAPITOL 124                                                                            
03/02/04       (H)       Heard & Held                                                                                           
03/02/04       (H)       MINUTE(EDU)                                                                                            
03/09/04       (H)       EDU AT 11:00 AM CAPITOL 124                                                                            
03/09/04       (H)       Moved CSHB 425(EDU) Out of Committee                                                                   
03/09/04       (H)       MINUTE(EDU)                                                                                            
03/18/04       (H)       EDU RPT CS(EDU) NT 1DP 2NR 3AM                                                                         
03/18/04       (H)       DP: GARA; NR: OGG, WOLF; AM: SEATON,                                                                   
03/18/04       (H)       WILSON, GATTO                                                                                          
04/01/04       (H)       HES AT 3:00 PM CAPITOL 106                                                                             
04/01/04       (H)       Moved CSHB 425(EDU) Out of Committee                                                                   
04/01/04       (H)       MINUTE(HES)                                                                                            
04/05/04       (H)       HES RPT CS(EDU) NT 6DP 1NR                                                                             
04/05/04       (H)       DP: GATTO, WOLF, COGHILL, SEATON,                                                                      
04/05/04       (H)       KAPSNER, WILSON; NR: CISSNA                                                                            
04/14/04       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/14/04       (H)       Heard & Held                                                                                           
04/14/04       (H)       MINUTE(FIN)                                                                                            
04/20/04       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/20/04       (H)       Moved CSHB 425(FIN) Out of Committee                                                                   
04/20/04       (H)       MINUTE(FIN)                                                                                            
04/21/04       (H)       FIN RPT CS(EDU) NT 4DP 4NR                                                                             
04/21/04       (H)       DP: CROFT, MOSES, FATE, FOSTER;                                                                        
04/21/04       (H)       NR: HAWKER, STOLTZE, HARRIS, WILLIAMS                                                                  
04/23/04       (H)       TRANSMITTED TO (S)                                                                                     
04/23/04       (H)       VERSION: CSHB 425(EDU)                                                                                 
04/26/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/26/04       (S)       HES, FIN                                                                                               
04/30/04       (S)       HES AT 1:30 PM BUTROVICH 205                                                                           
BILL: HB 500                                                                                                                  
SHORT TITLE: DEFINITION OF MEDICAL REVIEW ORGANIZATION                                                                          
SPONSOR(s): REPRESENTATIVE(s) SAMUELS                                                                                           
02/16/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (H)       HES                                                                                                    
03/25/04       (H)       HES AT 3:00 PM CAPITOL 106                                                                             
03/25/04       (H)       Moved Out of Committee                                                                                 
03/25/04       (H)       MINUTE(HES)                                                                                            
03/29/04       (H)       HES RPT 5DP 2NR                                                                                        
03/29/04       (H)       DP: COGHILL, SEATON, CISSNA, KAPSNER,                                                                  
03/29/04       (H)       WILSON; NR: GATTO, WOLF                                                                                
04/21/04       (H)       TRANSMITTED TO (S)                                                                                     
04/21/04       (H)       VERSION: HB 500(TITLE AM)                                                                              
04/22/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/22/04       (S)       HES                                                                                                    
04/30/04       (S)       HES AT 1:30 PM BUTROVICH 205                                                                           
BILL: HB 511                                                                                                                  
SHORT TITLE: CERTIFICATE OF NEED PROGRAM                                                                                        
SPONSOR(s): REPRESENTATIVE(s) SAMUELS                                                                                           
02/16/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (H)       HES, FIN                                                                                               
03/02/04       (H)       HES AT 3:00 PM CAPITOL 106                                                                             
03/02/04       (H)       Heard & Held                                                                                           
03/02/04       (H)       MINUTE(HES)                                                                                            
03/04/04       (H)       HES AT 3:00 PM CAPITOL 106                                                                             
03/04/04       (H)       Heard & Held                                                                                           
03/04/04       (H)       MINUTE(HES)                                                                                            
03/18/04       (H)       HES AT 3:00 PM CAPITOL 106                                                                             
03/18/04       (H)       Moved CSHB 511(HES) Out of Committee                                                                   
03/18/04       (H)       MINUTE(HES)                                                                                            
03/24/04       (H)       HES RPT CS(HES) 3DP 1DNP 2NR                                                                           
03/24/04       (H)       DP: KAPSNER, CISSNA, WILSON; DNP: WOLF;                                                                
03/24/04       (H)       NR: GATTO, COGHILL                                                                                     
03/29/04       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/29/04       (H)       Heard & Held                                                                                           
03/29/04       (H)       MINUTE(FIN)                                                                                            
03/31/04       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/31/04       (H)       Moved CSHB 511(HES) Out of Committee                                                                   
03/31/04       (H)       MINUTE(FIN)                                                                                            
04/01/04       (H)       FIN RPT CS(HES) 4DP 2NR 2AM                                                                            
04/01/04       (H)       DP: MEYER, HAWKER, HARRIS, WILLIAMS;                                                                   
04/01/04       (H)       NR: FATE, FOSTER; AM: STOLTZE, CHENAULT                                                                
04/26/04       (H)       MOVED TO BOTTOM OF CALENDAR                                                                            
04/26/04       (H)       NOT TAKEN UP 4/26 - ON 4/27 CALENDAR                                                                   
04/27/04       (H)       NOT TAKEN UP 4/27 - ON 4/28 CALENDAR                                                                   
04/28/04       (H)       TRANSMITTED TO (S)                                                                                     
04/28/04       (H)       VERSION: CSHB 511(HES) AM                                                                              
04/29/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/29/04       (S)       HES, FIN                                                                                               
04/30/04       (S)       HES AT 1:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
Karen Lindster                                                                                                                  
Staff to Representative John Coghill                                                                                            
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Introduced CSHB 425(EDU) for the sponsor                                                                 
Eddy Jeans                                                                                                                      
Manager Education Support Services                                                                                              
Department of Education & Early Development                                                                                     
801 W 10 St.                                                                                                                    
Juneau, AK  99801-1894                                                                                                          
POSITION STATEMENT:  Answered questions on CSHB 425(EDU)                                                                      
Floyd Brooks                                                                                                                    
No address provided                                                                                                             
POSITION STATEMENT:  Testified on HB 425                                                                                      
Lorry Yates                                                                                                                     
No address provided                                                                                                             
POSITION STATEMENT:  Testified on CSHB 425(EDU)                                                                               
Agnes David                                                                                                                     
No address provided                                                                                                             
POSITION STATEMENT:  Testified on CSHB 425(EDU)                                                                               
Sara Nielsen                                                                                                                    
Staff to Representative Ralph Samuels                                                                                           
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
                         511(HES) am for the sponsor                                                                            
Janet Clarke                                                                                                                    
Department of Health & Social Services                                                                                          
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
                         511(HES) am                                                                                            
Laurie Herman                                                                                                                   
Regional Director of Government Affairs                                                                                         
3200 Providence Drive                                                                                                           
P.O. Box 196604                                                                                                                 
Anchorage, AK 99510-6604                                                                                                        
POSITION STATEMENT:  Testified on HB 500(TITLE AM)                                                                            
Mayor John Williams                                                                                                             
City of Kenai Peninsula Borough                                                                                                 
144 North Binkley Street                                                                                                        
Soldotna, AK 99669                                                                                                              
210 Fidalgo Ave., St. 200                                                                                                       
Kenai, AK 99601                                                                                                                 
POSITION STATEMENT:  Testified on CSHB 511(HES) am                                                                            
Paul Fuhs                                                                                                                       
Alaska Open Imaging Center                                                                                                      
POSITION STATEMENT:  Testified on CSHB 511(HES) am                                                                            
ACTION NARRATIVE                                                                                                              
TAPE 04-25, SIDE A                                                                                                            
CHAIR FRED DYSON  called the Senate Health,  Education and Social                                                             
Services  Standing  Committee  meeting  to  order  at  1:35  p.m.                                                               
Present  were  Senators Wilken,  Davis,  Guess  and Chair  Dyson.                                                               
Senator Green arrived momentarily.                                                                                              
He announced his intention to take action on HB 425 and HB 500,                                                                 
but to take no action on HB 511 until the following meeting.                                                                    
  CSHB 425(EDU)-SCHOOL FUNDS RELATED TO BOARDING SCHOOLS (EDU)                                                              
CHAIR DYSON asked Ms. Lindster to present CSHB 425(EDU).                                                                        
KAREN LINDSTER, staff to Representative John Coghill, introduced                                                                
herself and advised that she would read the sponsor statement                                                                   
and some additional information into the record.                                                                                
     HB  425 puts  into  statute  Department of  Education's                                                                    
     current  practice. This  legislation supports  existing                                                                    
     programs  that  are  successful.   Under  this  bill  a                                                                    
     student  wouldn't have  to  pass  the current  entrance                                                                    
     standards.  The bill  would give  students a  choice of                                                                    
     going to a school  that offers something different than                                                                    
     may be available in their hometown.                                                                                        
     This legislation  by statute reimburses to  full school                                                                    
     year secondary  boarding schools costs incurred  by the                                                                    
     district operating the program.                                                                                            
     The legislation  limits the program to  schools already                                                                    
     operating boarding schools on January 1, 2004.                                                                             
     There are five boarding  schools that would qualify for                                                                    
     reimbursement  for a  per-pupil stipend  and one  round                                                                    
     trip between  the student's community of  residence and                                                                    
     the  school  during the  school  year  if the  district                                                                    
     expends money for the trip.                                                                                                
     These  schools will  participate in  a five-year  pilot                                                                    
     project that the Department  of Education will evaluate                                                                    
     for the legislature.                                                                                                       
     The  hold  harmless  section  of  this  bill  allows  a                                                                    
     student's district of residence  to count a student for                                                                    
     the ADM  count even though  the student is  attending a                                                                    
     secondary boarding school.  This avoids the possibility                                                                    
     of  paying  the  base  allocation twice  for  the  same                                                                    
MS. LINDSTER explained the sectional for the committee                                                                          
     Section 1                                                                                                                  
     (a) Provides that a school  district that was operating                                                                    
     a secondary  boarding school prior  to January  1, 2004                                                                    
     could  be  reimbursed for  the  cost  of operating  the                                                                    
     boarding school providing they  have a suitable student                                                                    
     dormitory and  provide daily access to  a public school                                                                    
     offering the grades 9-12 classes.                                                                                          
     (b)  The district  may be  reimbursed  for a  per-pupil                                                                    
     stipend determined  by the Department of  Education and                                                                    
     for one round trip per  student that travels from their                                                                    
     (c)  Defines  district as  "a  city  or borough  school                                                                    
     district or a regional educational attendance area.                                                                        
     Also   defines  district   secondary  school   boarding                                                                    
     program as "a public school  operated for a full school                                                                    
     year by  a district  in which the  domiciliary services                                                                    
     are provided for  students in grades 9  through 12. The                                                                    
     full  school year  was  added to  the  language in  the                                                                    
     Special Committee  on Education and this  resulted in a                                                                    
     reduction in the fiscal note of $227,000.                                                                                  
     Section 2.                                                                                                                 
     Provides a  hold harmless  clause for  school districts                                                                    
     that have children  move out of the  district to attend                                                                    
     a secondary  boarding school. The students  moving from                                                                    
     the  district would  be counted  in  the average  daily                                                                    
     membership of the home district.                                                                                           
     Section 3.                                                                                                                 
     This is a sunset clause that repeals the substance of                                                                      
     this bill on July 1, 2009.                                                                                                 
     Section 4.                                                                                                                 
     Puts into place an effective date of July 1, 2004.                                                                         
CHAIR DYSON asked Eddy Jeans to join Ms. Lindster at the table.                                                                 
EDDY JEANS,  finance manager  for the  Department of  Education &                                                               
Early Development, introduced himself.                                                                                          
SENATOR GRETCHEN GUESS  asked what the stipends are  used for and                                                               
whether Mount Edgecombe gives a  stipend and round trip ticket to                                                               
its students.                                                                                                                   
MR. JEANS  said the stipend is  to pay for the  students' monthly                                                               
residential  care, which  includes  meals  and supervision  24/7.                                                               
Mount  Edgecombe  does  provide  a  stipend  and  one  round-trip                                                               
airfare  from  home  for  each   student  so  this  provision  is                                                               
consistent  with   the  way  that  program   is  operated.  Mount                                                               
Edgecombe  is not  included in  this  bill because  it's a  state                                                               
operated  boarding school  that's included  in the  Department of                                                               
Education and Early Development budget.                                                                                         
SENATOR BETTYE DAVIS asked whether the  round trip is to and from                                                               
a  student's home  community or  did they  receive one  more trip                                                               
than that.                                                                                                                      
MR. JEANS said it's just one trip.                                                                                              
SENATOR LYDA  GREEN stated  that she  wouldn't define  stipend in                                                               
the  same way.  She then  asked whether  the parents  of students                                                               
with  an  IEP would  be  given  transportation  to and  from  the                                                               
MR.  JEANS  replied  it  would  be up  to  the  parents  to  make                                                               
arrangements and pay for their own  trip to the school for an IEP                                                               
SENATOR GREEN asked what happens at Mount Edgecombe.                                                                            
MR.  JEANS  said   he  wasn't  sure.  He   thought  that  parents                                                               
participated  via teleconference,  but the  State didn't  provide                                                               
them with round trip airfare.                                                                                                   
SENATOR GREEN  disagreed saying  that was an  issue that  came up                                                               
when  she was  on the  governor's  council and  she recalls  that                                                               
those parents  were provided transportation  to the site  for IEP                                                               
MR. JEANS said he'd be happy to clarify that.                                                                                   
SENATOR GARY WILKEN  referred to page 2, line 4  and said that if                                                               
the Legislature  accepts "a per-pupil  stipend determined  by the                                                               
department on  a regional  basis" then they  are giving  up their                                                               
appropriation  power  and   placing  it  in  the   hands  of  the                                                               
department. He said  he didn't know that he could  be talked into                                                               
that. He asked Mr. Jeans whether he was reading that correctly.                                                                 
MR.  JEANS replied  the reading  is  correct, but  he wanted  the                                                               
committee to  know that the legislation  intentionally mirrors an                                                               
existing  program the  Department of  Education has  for students                                                               
that  don't have  daily access  to a  secondary program  in their                                                               
district  or  near  their  residence.  Using  St.  George  as  an                                                               
example, he pointed out that the  school there is K through 10 so                                                               
the  students leave  for  grads  11 and  12.  Then  they go  into                                                               
another community  and the state pays  a stipend to help  pay for                                                               
the  residential costs.  The  program  has been  in  place for  a                                                               
number of years  and the department has always  set the stipends.                                                               
He said  he has  a list  of the  stipends by  region if  that was                                                               
CHAIR  DYSON asked  him to  distribute  copies right  then if  he                                                               
MR. JEANS said he'd be happy to do so.                                                                                          
SENATOR WILKEN said,  "That may well be, but the  passage of this                                                               
legislation  is a  seat  change in  the way  we  look at  funding                                                               
schools so  we may do  it that way today.  If we allow  this with                                                               
boarding schools, I'd like to have the Legislature involved."                                                                   
Referring to page 2, line 12  he said that agreeing to that would                                                               
make it possible to have a school of one.                                                                                       
MR. JEANS  agreed the  example is correct,  but it's  extreme and                                                               
they don't currently have any  schools that have fallen into that                                                               
category. The intent of the provision  is to provide a safety net                                                               
for the communities  that have a very low  student population and                                                               
are right on the threshold  of ten. Representative Coghill didn't                                                               
want the community to be  penalized if a secondary school student                                                               
elected  to take  advantage of  this program.  "We do  understand                                                               
your concern  in having a  minimum number and that  was discussed                                                               
on the  House side although  they never  put a minimum  number in                                                               
this section."                                                                                                                  
SENATOR WILKEN asked  if this wouldn't result  in double counting                                                               
the student this way.                                                                                                           
MR. JEANS  said the foundation formula  has a base number  of ten                                                               
and  from 10  to 20  students the  funding level  for the  school                                                               
remains  the same.  "So if  you had,  for example,  11 kids  in a                                                               
community and two of them elected  to go to one of these boarding                                                               
schools, that community would get  the same funding that it would                                                               
have gotten with  11 students. The school  receiving the children                                                               
is  going to  generate additional  foundation funds,  but they're                                                               
generating these  funds in these  communities now. At  Nenana and                                                               
at Galena  both of these  programs are  up and running  and we're                                                               
currently paying for these students in those regions."                                                                          
SENATOR WILKEN  read the last  sentence of the  sponsor statement                                                               
then  used the  example of  a student  moving from  a 200-student                                                               
school to  one with 400  and asked if  that wouldn't result  in a                                                               
double count.                                                                                                                   
MR. JEANS  said that example  wouldn't work because if  a student                                                               
attended a  school with  200 students and  then moved  to Nenana,                                                               
the first  school would  no longer receive  money for  the child.                                                               
Funding at  the first school  would be  reduced by one  child and                                                               
Nenana would receive funding for  an additional child. "It's only                                                               
for those  schools that are very  small that may fall  under that                                                               
threshold  of  10 students."  Typically  in  those small  schools                                                               
there would  only be  one or two  secondary students  because the                                                               
majority are elementary.  He repeated it's just a  safety net for                                                               
the communities during this pilot program.                                                                                      
SENATOR WILKEN referred to the last  sentence of Section 2 of the                                                               
analysis and  asked if the  statement that "students  moving from                                                               
the district  would be counted in  the ADM of the  home district"                                                               
applies only to those schools that would be ten or less.                                                                        
MR. JEANS said the last sentence  of the sponsor statement is not                                                               
correct when  the school  falls below ten  students. The  base is                                                               
the same for 10 to 20  students. That community would continue to                                                               
generate   the  base   and  Nenana   would  generate   additional                                                               
foundation  funds   for  those  students  that   fall  into  that                                                               
SENATOR WILKEN pressed, "So we're paying twice."                                                                                
MR. JEANS  said in that particular  case you would, but  once you                                                               
exceed 20  students you wouldn't  pay for the same  student twice                                                               
because  the  funding is  then  based  on an  individual  student                                                               
basis. "If you exceed 20 then  you will no longer receive funding                                                               
for that child if they move."                                                                                                   
CHAIR DYSON asked  if he was saying that the  school with 19 kids                                                               
gets the same total amount as the school with 11 kids.                                                                          
MR.  JEANS said  that's correct,  it's an  economy of  scale. You                                                               
need a  certain minimum to  operate a school  and when SB  36 was                                                               
written  it was  decided that  the minimum  level would  apply to                                                               
schools  with 10  to 20  students. Beyond  20 students,  the per-                                                               
student costs begin to decline.                                                                                                 
SENATOR WILKEN asked if the  fiscal note includes just airfare or                                                               
airfare and the stipend.                                                                                                        
MR. JEANS said it also includes the monthly stipend for the 180-                                                                
day school year.                                                                                                                
SENATOR WILKEN asked for the amount of the stipend.                                                                             
MR. JEANS pointed  out the information on page two  of the fiscal                                                               
note. The  spreadsheet lists the school  district, the community,                                                               
capacity of the program, monthly  stipend, yearly cost, estimated                                                               
round trip,  annual airfare  and the  estimated grant  amount for                                                               
the  180-day  program. At  the  bottom  of the  spreadsheet  they                                                               
listed other  communities that have boarding  capacity but aren't                                                               
currently operating  for 180  days. He  pointed that  out because                                                               
when they started  with the bill they included  all programs, but                                                               
Representative  Coghill only  wanted to  include the  communities                                                               
that operate a full 180-day program.                                                                                            
CHAIR DYSON asked about the asterisk.                                                                                           
MR. JEANS  said that  Galena has the  capacity for  100 students,                                                               
but eight of those students  are currently being reimbursed under                                                               
the Boarding  Home program. The  remaining 92 are the  number for                                                               
which they do not currently pay any stipend.                                                                                    
SENATOR WILKEN said he needed a  little more time to evaluate the                                                               
data, but:                                                                                                                      
     To answer the  question of what we save  by doing this,                                                                    
     he   said  they   seem  to   indicate   that  we   save                                                                    
     $358,939.000.  I think  they're comparing  that to  the                                                                    
     $3,958.00 that's  a bricks and  mortar ADM and  I think                                                                    
     the  number they  should be  comparing is  $9,667.00 so                                                                    
     Eddy, if you  could help me with taking  this sheet and                                                                    
     taking  a  different look  at  it  to make  sure  we're                                                                    
     comparing apples and apples. When  we look at this, two                                                                    
     things we should remember. When  this was put in by the                                                                    
     Department  of  Agriculture it  was  a  grant from  the                                                                    
     Department of  Agriculture to put in  a boarding school                                                                    
     and  that's  been funding  this  thing  and we've  been                                                                    
     trying  to  help it  along  with  offset grants  and  I                                                                    
     remember the discussion well what  if this doesn't work                                                                    
     or what if  it can't pay its own way.  They're going to                                                                    
     come to the general fund  and we've now arrived at that                                                                    
     day  and we're  now  saying we  want  to fund  boarding                                                                    
     schools across  the state and  I'm not sure  that's the                                                                    
     best application  of our education money.  This amounts                                                                    
     to a  test case.  The other  thing is  that back  in 02                                                                    
     they  had 1,567  correspondence  students  and we  know                                                                    
     correspondence students  are, in  my mind, a  cash cow.                                                                    
     In 04 they  have half of that - 724.  So they've lost a                                                                    
     funding  source   just  because   their  correspondence                                                                    
     program  has  gone from  zero  to  1,900 and  now  it's                                                                    
     dropped down on the other side  to 700 so they may just                                                                    
     be having  a program  problem -  trying to  attract the                                                                    
     proper number of students  to both their correspondence                                                                    
     program and  to the boarding school.  I appreciate your                                                                    
     patience  and  although  I  think  this  bill  is  well                                                                    
     intentioned,  it's much  more  expensive  than what  it                                                                    
     shows and if this  Legislature chooses to start funding                                                                    
     boarding schools  okay, but I  would suggest  that that                                                                    
     money  becomes competition  for all  the other  schools                                                                    
     that we  have in  the state  and we  want to  make sure                                                                    
     that investment is well spent.                                                                                             
SENATOR  GUESS remarked  that  she  heard that  this  is a  pilot                                                               
program yet  she also  heard that  "this is what  we do  now." If                                                               
it's  a  pilot  program,  she   questioned  what  would  they  be                                                               
evaluating and what outcome measures were they looking for.                                                                     
MR. JEANS  assured her  it is  a pilot program,  but in  terms of                                                               
"what  we  do now"  it  models  the  current practice  for  those                                                               
students that  don't have  daily access  to a  secondary program.                                                               
"These are  students that  have elected  to participate  in these                                                               
programs, maybe because  they come from a  small community, maybe                                                               
because they  have problems  with things at  home, ...  but these                                                               
students  have elected  to  go  to this  program  because of  the                                                               
consistency that's made available to them."                                                                                     
SENATOR GUESS  asked for an  explanation of the  outcome measures                                                               
they were looking for in the evaluation.                                                                                        
MR.  JEANS  said  they'd  be looking  at  achievement  rates.  He                                                               
pointed  out that  this  expands program  offerings  for all  the                                                               
kids, but particularly  for the ones in Nenana  because there are                                                               
more kids there  so more state funding is  generated and expanded                                                               
programs may be offered.                                                                                                        
SENATOR  GUESS  noted  that the  military  youth  academy  wasn't                                                               
included and asked  if there was discussion  about including them                                                               
in the pilot program.                                                                                                           
MR. JEANS reminded her that  they have their own separate funding                                                               
mechanism,   which   is   why   they   weren't   considered   for                                                               
SENATOR   GUESS  commented   that   the   stipend  language   was                                                               
worrisomely  open and  initially she  assumed that  stipend meant                                                               
pocket  money for  the students.  She asked  whether there  was a                                                               
reason that they weren't specific.                                                                                              
MR.  JEANS replied  they  didn't have  that  discussion, but  the                                                               
monthly  stipend comes  from regulation.  School districts  often                                                               
are contracting with  parents for the residential care  so it's a                                                               
stipend to the parents that house and feed the students.                                                                        
CHAIR  DYSON clarified  the  stipend would  go  to whatever  home                                                               
that's housing the student.                                                                                                     
SENATOR GUESS  asked whether there were  regulations ensuring the                                                               
safety of these kids that go into other people's homes.                                                                         
MR. JEANS assured her there  are regulations under the Department                                                               
of Health  & Social  Services and  they're also  referenced under                                                               
the  Department of  Education &  Early Development  boarding home                                                               
program and he would provide her a copy of that.                                                                                
SENATOR GREEN held up a piece of  paper and asked if this was the                                                               
Department  of  Education  &   Early  Development  regulation  on                                                               
boarding schools.                                                                                                               
MR. JEANS  said, "That's  our current  program that's  limited to                                                               
students that do not have daily access to a secondary program.                                                                  
SENATOR GREEN held  up a piece of  paper and asked it  this was a                                                               
list of the students who qualified.                                                                                             
MR. JEANS  told her  that the  students on  that list  have daily                                                               
access to  a secondary  program so they  would not  qualify under                                                               
existing  regulations,  which  is  the reason  for  the  proposed                                                               
legislation.  It  would expand  the  current  program to  provide                                                               
funding for the kids on that list.                                                                                              
SENATOR GREEN said," So these would be rewritten."                                                                              
MR. JEANS said they'd be modified.                                                                                              
SENATOR GREEN  questioned whether the language  does that because                                                               
the  language talks  about  secondary students  who  do not  have                                                               
daily access  to a  school. She added,  "I recognize  many school                                                               
districts and  sites that we  clearly pay a  lot of money  to for                                                               
schools, which, to me, is inconsistent."                                                                                        
MR.  JEANS said  they  modeled the  language  after the  existing                                                               
program  just to  keep  it simple.  "All we're  trying  to do  is                                                               
expand an existing program to the  kids that do have daily access                                                               
that are electing,  by choice, to go to  these boarding programs.                                                               
To  provide  those boarding  programs  with  some kind  of  state                                                               
support to offset the residential cost."                                                                                        
CHAIR DYSON referred  to line three of the  sponsor statement and                                                               
asked for  an explanation of  the statement, "...a  student would                                                               
not have to pass the current entrance standards."                                                                               
MR.  JEANS  reiterated  that under  current  regulations,  for  a                                                               
student  to  qualify for  the  program,  they cannot  have  daily                                                               
access to a secondary program.                                                                                                  
CHAIR  DYSON turned  to  Ms.  Lindster and  said  that with  this                                                               
significant  expansion of  the program,  he  would have  expected                                                               
that  she and  the sponsor  would have  limited qualification  to                                                               
just those students that come  from communities that don't have a                                                               
secondary  school  and/or  where  there was  a  school  that  was                                                               
failing under  the No  Child Left Behind  Act and  an alternative                                                               
was required. "Did you consider that?" he asked.                                                                                
MR. JEANS pointed to Mountain  Village to provide an explanation.                                                               
The  community  does  offer  a K-12  program  so,  under  current                                                               
regulations, DEED can't provide Nenana  with any state support to                                                               
help with  the residential  costs for  the Mountain  Village kids                                                               
that   are  attending   school  in   Nenana.  That's   what  this                                                               
legislation is trying  to do, he said. The  Mountain Village kids                                                               
that have elected to attend  secondary school in Nenana have done                                                               
so because  they believe the  program in Nenana has  something to                                                               
offer them that they can't get in Mountain Village.                                                                             
CHAIR DYSON commented that he covered that previously.                                                                          
MR. JEANS  continued saying that  if they limited  eligibility to                                                               
those  students  that don't  have  daily  access to  a  secondary                                                               
program then there would be  no need for this legislation because                                                               
current regulation already covers that.                                                                                         
CHAIR DYSON  asked if,  under this  bill or  current legislation,                                                               
the state is  required to offer a boarding  school alternative to                                                               
students that  attend a school  that is failing to  make progress                                                               
under the No Child Left Behind Act.                                                                                             
MR.  JEANS  replied that  within  the  capacity of  the  boarding                                                               
school  to accept  the students,  if  the parents  elected to  go                                                               
there during the  pilot program, this legislation  allows for the                                                               
state  to  reimburse monthly  boarding  costs  and one  roundtrip                                                               
CHAIR DYSON  questioned whether current legislation  allowed that                                                               
or not.                                                                                                                         
MR. JEANS replied, "Under our current regulations we cannot."                                                                   
CHAIR DYSON encouraged  the sponsor and Mr. Jeans  to tighten the                                                               
requirements to those schools that  aren't making adequate yearly                                                               
progress   before   the   Finance  Committee   hearing.   Another                                                               
alternative would be to establish  some criteria for schools that                                                               
can't offer students very much because they're too small.                                                                       
He  questioned what  happens when  students decide  to move  to a                                                               
boarding  school after  the school  year begins  and the  ADM has                                                               
been counted  because the receiving school  typically wouldn't be                                                               
reimbursed for the additional student(s).                                                                                       
MR. JEANS  agreed that would  be the  case under this  program as                                                               
well,  but the  programs  are already  operating  at capacity  so                                                               
there  probably  wouldn't  be  room for  a  student  that  wasn't                                                               
enrolled at the beginning of the year.                                                                                          
CHAIR DYSON called a brief at ease then reconvened the meeting.                                                                 
SENATOR GREEN asked how the parents participate.                                                                                
MR. JEANS  said it varies  with the  program, but in  Nenana some                                                               
parents move  to help with  the student(s). He wasn't  sure about                                                               
parent participation in Galena.                                                                                                 
SENATOR GREEN asked how much each parent is expected to pay.                                                                    
MR. JEANS  told her it varies  by community and they  don't track                                                               
that information.                                                                                                               
SENATOR GUESS suggested amending the  stipend language to make it                                                               
more clear because it really  is specific in the regulations. She                                                               
then pointed out that it doesn't  say this is a pilot project and                                                               
the program  will be assessed in  five years to look  for certain                                                               
broad outcomes.                                                                                                                 
CHAIR DYSON  announced that the  bill would likely move  from the                                                               
committee  that  day  and  he  suspected  that  anyone  that  was                                                               
interested in  testifying would have  an opportunity to do  so in                                                               
the  Finance Committee.  He asked  whether there  was anyone  who                                                               
specifically wanted or needed to testify that day.                                                                              
FLOYD BROOKS testified  via teleconference to say he  is a single                                                               
parent  of three  students that  have the  opportunity to  attend                                                               
school in Nenana. He spoke in  strong support of the program. "In                                                               
supporting HB 425 everyone wins," he said.                                                                                      
LOTTIE  YATES  testified via  teleconference  to  say that  small                                                               
schools  are limited  in terms  of what  they are  able to  offer                                                               
students. She  said the  quality of education  in Nenana  is high                                                               
and she urged support for HB 425.                                                                                               
TAPE 04-25, SIDE B                                                                                                            
AGNES DAVIS  testified via teleconference to  express support for                                                               
HB 425.                                                                                                                         
SENATOR WILKEN  asked Mr. Jeans if  it is correct that  a student                                                               
from Mountain Village  that is attending the school  in Nenana is                                                               
counted "in Nenana  as just a normal student that  is run through                                                               
the formula."                                                                                                                   
MR. JEANS said that's correct.                                                                                                  
SENATOR WILKEN  then said,  "We would  be able to  go to  the ADM                                                               
funding  for the  school district  for  Nenana to  see what  that                                                               
child costs us in school - in the learning center in Nenana."                                                                   
MR. JEANS started to reply.                                                                                                     
SENATOR  WILKEN added,  "It's transparent  as to  whether it's  a                                                               
boarding school or not."                                                                                                        
MR. JEANS said yes.                                                                                                             
There were no further questions.                                                                                                
CHAIR DYSON asked for the will of the committee.                                                                                
SENATOR WILKEN  motioned to report  CSHB 425(EDU)  from committee                                                               
with  individual recommendations  and the  attached fiscal  note.                                                               
There being no objection, it was so ordered.                                                                                    
2:30 pm                                                                                                                       
   HB 500(title am)-DEFINITION OF MEDICAL REVIEW ORGANIZATION                                                               
CHAIR  DYSON  announced the  next  order  of  business to  be  HB
500(title am).                                                                                                                  
SARA NIELSON,  staff to  Representative Ralph  Samuels, described                                                               
HB  500  as a  simple  bill.  She  paraphrased from  the  sponsor                                                               
statement as follows:                                                                                                           
     House  Bill 500  simply  adds the  Joint Commission  on                                                                    
     Accreditation of  Health Care Organizations  (JCAHO) to                                                                    
     the narrow definition of a "review organization."                                                                          
     The Joint  Commission on  Accreditation of  Health Care                                                                    
     Organizations    is     the    principle    independent                                                                    
     organization that  performs accreditation  of hospitals                                                                    
     throughout the  United States, including  Alaska. JCAHO                                                                    
     recently implemented a  new program requiring hospitals                                                                    
     to  undergo  a  Periodic Performance  Review  (PPR)  to                                                                    
     achieve  continuous  standards  compliance,  and  thus,                                                                    
     continuous  provision  of   safe,  high-quality  health                                                                    
     The  current statute  defines  a "review  organization"                                                                    
     expressly and  narrowly and is  silent as to  the major                                                                    
     organization conducting  hospital accreditation  in our                                                                    
     state,  [which is]  JCAHO. Without  the change  in this                                                                    
     legislation,  a party  in  an  unrelated civil  action,                                                                    
     could argue vigorously that JCAHO  is well known within                                                                    
     the health care community  as the primary accreditation                                                                    
     instrument  for hospitals  in  the  United States,  and                                                                    
     that  it would  have been  a very  easy matter  for the                                                                    
     legislation to have included it  in the definition of a                                                                    
     "review organization."  It could  be asserted  that the                                                                    
     courts have no business  re-writing statutes to include                                                                    
     provisions that  it thinks  the legislature  would have                                                                    
     included  if it  had thought  of  it at  the time  that                                                                    
     provision  was  enacted. Thus,  there  is  a very  real                                                                    
     danger that  information provided  to JCOHO as  part of                                                                    
     this process would not be treated as confidential.                                                                         
     This legislation  is necessary  so that  hospitals will                                                                    
     feel free to fully  report all the information required                                                                    
     by JCAHO in  an open manner and  promote quality health                                                                    
     care in Alaska.                                                                                                            
CHAIR DYSON asked whether the administration supported the bill.                                                                
MS.  NIELSON said  she didn't  believe they  had a  position, but                                                               
Janet Clarke could respond.                                                                                                     
JANET   CLARKE,   Department   of  Health   &   Social   Services                                                               
representative,  said  they  support   quality  health  care  and                                                               
quality  assurance  for  health  care  facilities,  but  she  was                                                               
unaware  of any  public position  paper on  the legislation.  She                                                               
continued  to say,  "We run  a hospital  that is  covered by  the                                                               
Joint  Commission  Review.  We have  hospital  certification  and                                                               
licensing  and   anything  that  could  promote   that  we  would                                                               
CHAIR DYSON asked if the organization is credible.                                                                              
MS. CLARKE replied they are extremely credible.                                                                                 
CHAIR DYSON asked what the  legislation would allow that can't be                                                               
done now.                                                                                                                       
MS. CLARKE  didn't know of  anything, but  right now it  could be                                                               
argued that  confidentiality is in  question because  JCAHO isn't                                                               
mentioned as a review organization.                                                                                             
CHAIR DYSON asked Laurie Herman to comment.                                                                                     
LAURIE  HERMAN,  Regional  Director  of  Government  Affairs  for                                                               
Providence    Health   System    in    Alaska,   testified    via                                                               
teleconference. To demonstrate why  they believe this legislation                                                               
is necessary she explained:                                                                                                     
     Recently  JCAHO redesigned  their  survey process  from                                                                    
     being  a  once-every-three-year   survey  to  one  that                                                                    
     requires hospitals and  other health care organizations                                                                    
     to complete a mid-cycle  performance review the purpose                                                                    
     of  which is  to review  and make  certain that  we are                                                                    
     achieving  continuous   standards  of   compliance  and                                                                    
     continuous  provision  of  safe,  high  quality  health                                                                    
     In  addition to  the requirement  of self-reporting  of                                                                    
     deficiencies, this performance  review process requires                                                                    
     that a  hospital or  health care  organization complete                                                                    
     an in-depth  survey of  their policies  and procedures.                                                                    
     If the hospital  is found to be out  of compliance with                                                                    
     accepted standards in any  area, an attended corrective                                                                    
     plan has  to be submitted  to JCAHO. And  JCAHO prefers                                                                    
     implementation  of  both  the   review  and  the  self-                                                                    
     reporting  deficiency to  be  in  an electronic  online                                                                    
     To the  extent that anyone would  have deficiencies, as                                                                    
     part of  this process  they must  prepare and  post the                                                                    
     corrective action  plans. Because  of the  concern that                                                                    
     state statutes  do not specifically include  JCAHO as a                                                                    
     quality  review   organization,  which   would  thereby                                                                    
     protect   the   reporting   information   from   public                                                                    
     accessibility, they  may go to a  less preferred option                                                                    
     that would  allow such organizations to  simply certify                                                                    
     that  they  made  corrections   on  their  own  without                                                                    
     providing  any information  to JCAHO.  We believe  that                                                                    
     the  quality of  health  care would  improve if  health                                                                    
     care organizations  feel free  to fully report  all the                                                                    
     information required by JCAHO in an open manner.                                                                           
CHAIR DYSON asked if she had any idea why JHACO wasn't included                                                                 
in the statutory language.                                                                                                      
MS. HERMAN said there aren't any specific organizations that are                                                                
mentioned in current statute. The language is quite vague, which                                                                
makes  it arguable  that  since they  aren't  mentioned then  the                                                               
information  should  be  accessible  to the  public.  That  could                                                               
certainly deter reporting and/or lead to self-analysis.                                                                         
There was no further testimony, questions or comments.                                                                          
CHAIR DYSON asked for a motion.                                                                                                 
SENATOR GREEN motioned to report  HB 500(title am) from committee                                                               
with  individual recommendations  and accompanying  fiscal notes.                                                               
There being no objection, it was so ordered.                                                                                    
2:40 pm                                                                                                                       
          CSHB 511 (HES)am-CERTIFICATE OF NEED PROGRAM                                                                      
CHAIR  DYSON announced  the next  order  of business  to be  CSHB
SARA NIELSON,  staff to  Representative Ralph  Samuels, explained                                                               
that  the bill  modifies certain  aspects of  the Certificate  of                                                               
Need statute to level the playing field.                                                                                        
She said the following would provide an overview of the changes:                                                                
     The bill  modifies the section  of statute  that allows                                                                    
     the relocation  of an  ambulatory surgical  facility to                                                                    
     only one  time as  long as  they still  would otherwise                                                                    
     meet all  the requirements of the  original Certificate                                                                    
     of Need.                                                                                                                   
     It also clarifies that a  Certificate of Need would not                                                                    
     be needed in  an emergency or a temporary  case such an                                                                    
     earthquake or some kind of a disaster.                                                                                     
     It  also adds  independent diagnostic  testing facility                                                                    
     and  residential psychiatric  treatment center  - would                                                                    
     make  them go  through  the CON  process  if they  fall                                                                    
     within the $1 million expenditure limit.                                                                                   
     The  bill   also  reduces  the   amount  of   time  the                                                                    
     department has to review the  application from 90 to 60                                                                    
     On the  House floor a  letter of intent was  adopted to                                                                    
     address the Certificate of Need  process by asking that                                                                    
     a  task  force  be  assembled to  go  over  the  entire                                                                    
JANET CLARKE, Department of Health & Social Services                                                                            
representative, identified herself and stated:                                                                                  
     I am  here to testify in  support of HB 511  - Relating                                                                    
     to certificates  of need (CON). Certificate  of need is                                                                    
     a health planning process  that reviews health facility                                                                    
     construction  projects   that  cost  over   $1  million                                                                    
     dollars to  determine whether there  is a need  for the                                                                    
     This  particular bill  does not  do away  with CON;  it                                                                    
     keeps the underpinnings of the  statute in place. There                                                                    
     are nine sections in the  bill and I'll quickly go over                                                                    
     a sectional review.                                                                                                        
     As  Sara stated,  Section 1  corrects  an inequity  for                                                                    
     ambulatory  surgery centers  related to  relocation and                                                                    
     whether a CON is needed for relocation.                                                                                    
     Section  2  has  two  parts. It  basically  limits  the                                                                    
     relocation outlined  in the first Section  to one time.                                                                    
     It also  amends the  statute to include  equipment that                                                                    
     is  purchased through  a lease  provision that  for CON                                                                    
     purposed, the net  present value of the  lease space or                                                                    
     equipment is used to calculate  the cost. Currently, if                                                                    
     you purchase equipment that costs  over $1 million, you                                                                    
     go through  the CON  program. If you  lease it,  you do                                                                    
     not.  This would  put those  two purchase  processes on                                                                    
     the same level playing field.                                                                                              
     Section  3  amends  the   provision  for  emergency  or                                                                    
     temporary CON that's currently in the bill.                                                                                
     Section 4 would  add "residential psychiatric treatment                                                                    
     centers" to  fall within CON review.  The department is                                                                    
     particularly  interested  in  this  provision.  As  you                                                                    
     know,  Medicaid  is  a primary  payer  for  residential                                                                    
     psychiatric treatment  centers (RPTC). We  have several                                                                    
     we're paying for. We're paying  for children in out-of-                                                                    
     state  placement.  At any  one  time  there's over  500                                                                    
     children  who  are  in these  out-of-state  residential                                                                    
     psychiatric  treatment centers.  We have  a program  to                                                                    
     bring these kids  home to Alaska. We want  to make sure                                                                    
     that as we  built these RPTCs in Alaska  that it's done                                                                    
     in a  very thoughtful, planned  process and that  we do                                                                    
     them close  to hub communities in  Alaska because these                                                                    
     kids  do better  when  they're closer  to  home. So  we                                                                    
     believe that the  CON program is the  best mechanism to                                                                    
     look at this planning process for RPTCs.                                                                                   
     Section 5  adds a new  section in law relating  to time                                                                    
     standards  for review  by the  department. It  shortens                                                                    
     the time period that the  department has to review CONs                                                                    
     from 90 to 60 days internally.                                                                                             
     Section  6   amends  the  definition  of   health  care                                                                    
     facilities  to include  independent diagnostic  testing                                                                    
     facilities   as   well   as   residential   psychiatric                                                                    
     treatment centers.                                                                                                         
     Section  7  goes along  with  Section  6. It  adds  the                                                                    
     definition   for   what   a   residential   psychiatric                                                                    
     treatment center is.                                                                                                       
     Section 8  deals with the applicability  issues of when                                                                    
     this law is applicable to what.                                                                                            
     Section  9   is  the  effective  date   clause  of  the                                                                    
CHAIR DYSON  said he  appreciates the  problem they're  trying to                                                               
solve  in  Fairbanks,  but  he didn't  understand  why  an  empty                                                               
building should have a CON grandfathered in.                                                                                    
MS  CLARKE pointed  to Section  1 and  said a  few years  ago the                                                               
Legislature added  language that  was confusing  and that  is the                                                               
language that  would be  deleted. She  reminded members  that CON                                                               
covers capital construction and services.  HB 511 gets rid of the                                                               
provision  where   someone  could  construct  a   new  ambulatory                                                               
surgical center  and take  their certificate  of need  with them.                                                               
That provision is counter to  CON because it's actually a capital                                                               
construction  review that  looks  at whether  you're spending  $1                                                               
million on construction or adding a new service.                                                                                
CHAIR DYSON asked Ms. Nielson to further clarify.                                                                               
MS.  NIELSON   reported  that  according  to   Legislative  Legal                                                               
Services, the language in Section 2 makes the last sentence in                                                                  
Section  1 (c)  unnecessary, which  is why  it would  be deleted.                                                               
"Basically,  you can't  have  a  building -  you  can't have  one                                                               
person  -  have their  services  in  one  building and  have  the                                                               
certificate of need  and then move over to another  one. And then                                                               
that building  that was left, they  still have to go  through the                                                               
certificate of  need process  if somebody else  wants to  move in                                                               
there  -  assuming  that  those  people  didn't  already  have  a                                                               
certificate   of  need   and  are   exercising  their   one  time                                                               
CHAIR  DYSON  admitted that  his  blood  pressure rises  when  he                                                               
thinks about the  issue. Furthermore, he said  he's more confused                                                               
because Ms.  Clarke says this  is just for construction  and then                                                               
the bill  says it's  okay to  relocate. In  addition to  that, he                                                               
heard it's also for the  present worth value of leased equipment,                                                               
which isn't  construction either.  Section 1  simply gets  rid of                                                               
the restrictive and  stupid language, but then in  Section 2 "you                                                               
only eliminate  stupid once and  if we'd ever done  anything else                                                               
stupid like this, in law, that we can only [make a] fix once."                                                                  
MS.  NIELSON agreed  that the  final  sentence in  Section 1  (c)                                                               
wasn't needed. The  first part of Section 1,  subsection (c) says                                                               
a  business may  relocate  an ambulatory  surgical facility  once                                                               
without obtaining a  certificate of need as long  as bed capacity                                                               
and  the   number  of  categories   of  health   services  remain                                                               
unchanged.  Any subsequent  business  or person  moving into  the                                                               
site is no longer addressed, which is what the sponsor intended.                                                                
CHAIR DYSON  opined it all has  to do with capacity  and a person                                                               
should be able to move from  site to site without jumping through                                                               
hoops as long as capacity isn't changed.                                                                                        
SENATOR GUESS  questioned why the language  they propose removing                                                               
is problematic except  that it is redundant. "You  can't use that                                                               
site unless  you get a certificate  of need because they  want to                                                               
see, 'Is there  the capacity for that  site to go back  up how it                                                               
used to be?' so if you take  this out, and someone moves from one                                                               
site to  the other and someone  wants to use that  previous site,                                                               
they should have to go through  the certificate of need to ensure                                                               
that we're not overcapacity."                                                                                                   
MS. NIELSON agreed that the  language is redundant and that's why                                                               
they propose removing it.                                                                                                       
MS. CLARKE said it is a  confusing section of law, but she needed                                                               
to clarify her  previous statement. Although she  was focusing on                                                               
the  construction  aspect, certificate  of  need  applies to  the                                                               
expenditure of  $1 million or  more for  construction, renovation                                                               
or the purchase of new equipment.                                                                                               
2:55 pm                                                                                                                       
CHAIR DYSON asked  her to show the committee how,  "with the help                                                               
of  government  intervention,  we've  gotten  into  this  bizarre                                                               
situation where having more than  adequate capacity drives prices                                                               
up and  how choices  by consumers  can drive  prices up  and then                                                               
specifically this section here about  mental health and how after                                                               
31 days or 30 days, government  has to pay and how having choices                                                               
there can drive costs up."                                                                                                      
MS.  CLARKE replied  health  care  isn't as  clean  cut as  other                                                               
market forces  that we're used to  because the decision to  go to                                                               
one place or another for  a particular procedure is divorced from                                                               
the  economics of  that decision.  "We might  make that  decision                                                               
related to where  our doctor refers us based on  the proximity to                                                               
a hospital," she said. Furthermore:                                                                                             
     As government, and  government plays a big  part in the                                                                    
     economics  of  the  health   care  industry  in  Alaska                                                                    
     whether it's Medicaid or Medicare  - we're a big player                                                                    
     in that  so we, particularly  for certain parts  of the                                                                    
     health care  system, as the  primary payer - you  are -                                                                    
     the  Legislature appropriates  - particularly  for long                                                                    
     term care, nursing homes, for  mental health services -                                                                    
     we are  the primary  payers so we  have an  interest in                                                                    
     looking at this regulation to  make sure that it's done                                                                    
     in such  a way  that the primary  payer is  not stiffed                                                                    
     with  the  bill  in  the  end  because  the  individual                                                                    
     decision is not based on economics of the decision.                                                                        
CHAIR   DYSON   said  that   after   his   discussion  with   the                                                               
commissioner,   he  understands   that  if   there  are   several                                                               
providers,  there's nothing  keeping  a patient  whose costs  are                                                               
paid by Medicare  from selecting the very  highest cost treatment                                                               
as  long  as  the  provider hasn't  been  disqualified  for  some                                                               
MS.  CLARKE replied  there is  a mandatory  freedom of  choice in                                                               
both the Medicare and Medicaid programs.                                                                                        
CHAIR DYSON continued  to say that he also  understands that when                                                               
someone is in  a mental health residential program  for more than                                                               
30 or  31 days  then Medicaid  picks up the  entire cost  for the                                                               
rest of  the time the person  is in the program.  He wasn't clear                                                               
whether both adults and children were included or just children.                                                                
MS. CLARKE  replied she'd  have to check  on that  then clarified                                                               
that this is about children and  adolescents and just as with any                                                               
insurance  program,   there  are   certain  standards   for  when                                                               
insurance coverage would apply. For  an acute care setting, which                                                               
is psychiatric  hospital treatment, she  thought 30 days  was the                                                               
industry standard. After  that, if no placement  is available for                                                               
the child  then the general fund  would likely have to  cover 100                                                               
percent of the cost because Medicaid might decertify them.                                                                      
CHAIR DYSON asked what decertify means.                                                                                         
MS. CLARKE  explained that  being decertified  means that  the 30                                                               
days  is  up  and  the   child  typically  no  longer  needs  the                                                               
psychiatric hospital treatment,  but they do need  a continuum of                                                               
care  from mental  health  facilities.  Through careful  planning                                                               
they are trying to ensure  that there is in-home care, outpatient                                                               
care, group homes, and  residential psychiatric treatment centers                                                               
so that the psychiatric hospital isn't the only alternative.                                                                    
CHAIR DYSON  asked if  she said that  decertify means  going from                                                               
acute hospital care to a lesser level of care.                                                                                  
MS.  CLARKE  said  decertification means  the  insurance  program                                                               
won't pay any more.                                                                                                             
SENATOR GUESS referred  to Section 1 and asked  whether she could                                                               
continue operating  an original facility without  going through a                                                               
new CON  process if she had  also constructed a new  facility and                                                               
was running it using the original certificate of need.                                                                          
MS. CLARKE  said she thought  the answer  was yes, one  time, but                                                               
she  would  need to  verify  that.  She  then asked  whether  the                                                               
language didn't refer to a sale.                                                                                                
SENATOR  GUESS said  the language  doesn't  refer to  a sale;  it                                                               
refers  to moving.  Furthermore,  she said  it  seems that  there                                                               
could be over capacity if that were allowed.                                                                                    
MS. CLARKE read  the existing law that says, "as  long as neither                                                               
the bed capacity nor the  number of categories of health services                                                               
provided at the new site is greater."                                                                                           
SENATOR  GUESS   agreed  the  new  site   couldn't  have  greater                                                               
capacity, but  she wondered whether  she couldn't run  both sites                                                               
using just the one CON.                                                                                                         
CHAIR DYSON opined  that you couldn't do that  because that would                                                               
increase the capacity set in the original CON process.                                                                          
SENATOR GUESS asked whether the CON controls the capacity.                                                                      
CHAIR DYSON explained  it's like a government  license to provide                                                               
X amount of service.                                                                                                            
CHAIR DYSON  announced that he wanted  to use the balance  of the                                                               
time  to  take public  testimony  from  anyone that  wouldn't  be                                                               
available on Monday.                                                                                                            
JOHN  WILLIAMS,  Mayor  of  the  City  of  Kenai,  testified  via                                                               
teleconference to say that they  are interested because there are                                                               
several groups  that would like  to build a  psychiatric facility                                                               
for  children in  Kenai.  They applaud  Senator  Green's work  to                                                               
bring children home and place them in care units in the state.                                                                  
Most  recently  the  city  has been  involved  with  two  capable                                                               
companies each  of which  would like  to build  a 30-bed  unit in                                                               
Kenai. Both  companies have expended considerable  time and money                                                               
to get  started this year,  but he sees  many issues in  the bill                                                               
that would prolong and delay the process.                                                                                       
Pointing to  the DHSS fiscal  note dated 3/24/04 and  prepared by                                                               
Sherry Hill he  noted it says that 728 children  between the ages                                                               
of 7 and 19  were served in FY 02 and  that it's conceivable that                                                               
up to  150 new RPTC  beds could be built  in Alaska. The  60 beds                                                               
that might  be built in Kenai  would just scratch the  surface of                                                               
need for  these types of facilities  and he said he  could see no                                                               
reason to  delay by tying  the companies  down with a  great deal                                                               
more paperwork.                                                                                                                 
In conclusion  he said the  City of Kenai recommends  placing the                                                               
effective date  of the  bill as  of January  1, 2005  rather than                                                               
making it  effective immediately.  Doing so  would allow  the two                                                               
companies  working  in Kenai  to  begin  building the  facilities                                                               
immediately. He  added that he  understands there might be  30 to                                                               
60 other beds  that are in the planning stage  that might also be                                                               
expedited if the  effective date were to be changed.  This too is                                                               
beneficial to the  state since DHSS recognizes  an immediate need                                                               
for 150 beds.                                                                                                                   
PAUL FUHS, Alaska Open Imaging  representative, said he'd like to                                                               
frame some of  the issues the first  of which is why  the bill is                                                               
so confusing. The reason, he said,  is because it's a bill that's                                                               
designed to address a specific lawsuit.                                                                                         
Another point is  that this is an effort to  restrict what people                                                               
can do. For the government to tell  you whether or not you can go                                                               
into business  is the most  extreme action that a  government can                                                               
take,  he said,  so  there'd better  be  solid justification  for                                                               
doing that.                                                                                                                     
He continued to say:                                                                                                            
     Mr. Chairman,  you hit  the nail on  the head  when you                                                                    
     asked, 'Show  us where  the cost  savings are  going to                                                                    
     be.'  Because what's  actually happened  is when  these                                                                    
     independent testing  facilities have resulted  in lower                                                                    
     prices - up  to 30 percent lower. So then  you get into                                                                    
     the argument -  well it's not really  cost control. Now                                                                    
     it's over  to we  want a level  playing field.  And the                                                                    
     hospitals -  we need  to overcharge on  imaging because                                                                    
     we're  making up  for something  else. And  in all  the                                                                    
     hearings  that  were  held, no  one  came  forward  and                                                                    
     showed their  economics to show  why they  needed this.                                                                    
     They  didn't come  and show  why when  we went  through                                                                    
     this  -  one  hospital,  Providence,  they  made  $13.4                                                                    
     million in revenues over expenses  last year. So why do                                                                    
     they  need that  protection and  what happened  to that                                                                    
     money? And then you get  into the smaller hospitals and                                                                    
     they say  well it's  to protect the  smaller hospitals,                                                                    
     but  the smaller  hospitals  themselves  said that  new                                                                    
     imaging would  not develop  in small  communities where                                                                    
     there are low patient volumes,  but only in the largest                                                                    
     markets  of Anchorage,  Fairbanks,  Wasilla, Kenai  and                                                                    
     Juneau.  So it's  not  the small  hospital.  That is  a                                                                    
     completely  empty argument  that the  department itself                                                                    
     dismisses.  It's really  the  big  hospitals trying  to                                                                    
     limit competition. That's what it comes down to.                                                                           
     Although  some of  these are  listed as  non-profits, I                                                                    
     pulled off  of Moody's or  Dun and Bradstreet,  some of                                                                    
     the   financials  on   some   of  these   corporations.                                                                    
     Providence -  $3.5 billion in revenues  last year. This                                                                    
     isn't  some  mom  and   pop  non-profit.  They're  also                                                                    
     showing  profits of  $58 million  a year  - 38  percent                                                                    
     increase  over the  previous year.  Triad hospitals  in                                                                    
     the valley  - a $3.8  billion corporation -  they're in                                                                    
     the  Fortune 500.  That's who's  managing that.  Banner                                                                    
     Corporation  for  Fairbanks  Memorial  -  $2.1  billion                                                                    
     corporation  -  a  private non-profit  corporation.  So                                                                    
     before  you believe  the idea  that these  are poverty-                                                                    
     stricken operations that  need government protection, I                                                                    
     hope  that  you'll  take  a   look  at  some  of  these                                                                    
     financials  and maybe  some other  information will  be                                                                    
     brought out.                                                                                                               
     The other thing  I want to mention - you  can level the                                                                    
     playing  field  two  ways.   You  can  either  increase                                                                    
     government  regulation or  you  could  decrease it  and                                                                    
     that's what we offered on  the House side. We said well                                                                    
     let's relieve the hospitals of  this too especially for                                                                    
     imaging.  This technology  driven sector  - it's  not a                                                                    
     bed - you want the  best technology available. But when                                                                    
     that  was offered,  it was  not even  allowed to  go to                                                                    
     second  reading on  the House  floor to  even have  the                                                                    
     amendment considered.  So that's  how strong  it's been                                                                    
     to even try to restrict the discussion on this.                                                                            
     I hope your committee will  look into all these issues.                                                                    
     I think  you'll hear a  lot of testimony  and hopefully                                                                    
     we'll  have a  much  clearer discussion  on the  issues                                                                    
     than occurred in the other body.                                                                                           
TAPE 04-26, SIDE A                                                                                                            
3:05 pm                                                                                                                       
SENATOR GUESS  said she looked  forward to a discussion  with his                                                               
client about policies for the  uninsured and the underinsured and                                                               
whether  anyone  from  those populations  gets  served  in  these                                                               
facilities. She  then remarked that government  does get involved                                                               
with natural  monopolies in  situations such as  this so  it's an                                                               
overstatement to say  that there isn't a government  role in this                                                               
type of  market. Whether  it's appropriate or  not is  a separate                                                               
MR. FUHS  reiterated if you restrict  people's private activities                                                               
then you must have strong justification.                                                                                        
CHAIR  DYSON  referenced  the  goal  of  bringing  children  with                                                               
psychiatric needs  home to Alaska  and asked Ms. Clarke  how long                                                               
it would take the two  companies already working on the peninsula                                                               
to go through the CON process.                                                                                                  
MS. CLARKE  explained that  they would first  submit a  letter of                                                               
intent so that DHSS would send them an application.                                                                             
CHAIR DYSON asked whether there  was a review and culling process                                                               
when the letter of intent is filed.                                                                                             
MS. CLARKE said  that when the letter of intent  is received then                                                               
DHSS sends a letter back affirming or denying eligibility.                                                                      
CHAIR DYSON asked how long that would take.                                                                                     
MS. CLARKE  pointed to  an example  that took  one day.  The next                                                               
step is  for the company  to submit  a CON application  for which                                                               
DHSS  provides   some  technical   assistance.  In   the  example                                                               
referenced above, it took two  months for the company to complete                                                               
the application.  At that point,  DHSS goes through a  process of                                                               
declaring  the application  complete. That  took several  days in                                                               
the example,  but could take  longer if the application  was more                                                               
extensive. Once  the application is  complete there is  a noticed                                                               
public  hearing and  in the  example  used that  took about  four                                                               
weeks.  After the  public meeting  the  information is  reviewed,                                                               
which  took four  to  five  weeks in  the  example. Finally,  the                                                               
information  is  submitted to  the  commissioner's  office for  a                                                               
According to current  statute, 90 days is allowed  for the entire                                                               
process once an  applicant submits a CON.  This legislation would                                                               
shorten the process to 60 days.                                                                                                 
CHAIR DYSON asked if that was  from the time the letter of intent                                                               
is received to when a decision is issued.                                                                                       
MS.   CLARKE  clarified   it's  from   when  the   completed  CON                                                               
application  is received  to the  decision. She  then added  that                                                               
there  is a  30  day  comment period  included  within that  time                                                               
SENATOR  GREEN  asked  whether the  commissioner  would  issue  a                                                               
decision within that time.                                                                                                      
MS. CLARKE said  no, the 90 day  period is the time  up until the                                                               
commissioner receives the information.  The commissioner does not                                                               
have a time period within which  to make a decision and that time                                                               
period varies from a day or two up to several months.                                                                           
CHAIR DYSON asked  how to avoid changing the rules  in the middle                                                               
of the game for the two companies already working in Kenai.                                                                     
MS. CLARKE  said that discussions  related to the  effective date                                                               
came up  in the House  and she had  information in her  office to                                                               
further  that discussion  and would  bring it  to the  hearing on                                                               
Monday. With  regard to  Mayor William's  testimony she  said the                                                               
department is  interested in  having the  residential psychiatric                                                               
treatment centers covered by CONs so  they can be located in many                                                               
communities  so the  residents  are  able to  be  close to  their                                                               
support groups.                                                                                                                 
CHAIR DYSON asked if is true  that the companies would still have                                                               
to  go through  a  licensing process  before  they could  receive                                                               
children that are  either in state custody or  in state supported                                                               
treatment programs in other states.                                                                                             
MS. CLARKE told him that is correct.                                                                                            
CHAIR DYSON questioned how long the licensing process takes.                                                                    
MS.  CLARKE   said  she  would   have  to  get  back   with  that                                                               
CHAIR DYSON pressed for an estimate.                                                                                            
MS. CLARKE said she didn't have an answer.                                                                                      
CHAIR DYSON posited  it was months, but he  would enjoy receiving                                                               
that  information at  the next  hearing.  He then  asked if  DHSS                                                               
could combine the  licensing and CON processes  and announce that                                                               
they would only license so many beds within a single region.                                                                    
MS. CLARKE responded  she would have to speak  with the licensing                                                               
CHAIR DYSON  observed that  even someone  that was  successful in                                                               
the  CON process  would still  have to  go through  the licensing                                                               
MS.  CLARKE  agreed then  clarified  that  the licensing  process                                                               
looks  at different  things such  as  health and  safety and  the                                                               
CHAIR  DYSON  continued  to  say, "In  your  efforts  to  provide                                                               
facilities  where they're  needed, in  the government's  opinion,                                                               
you can only restrict people you  can't make anything happen in a                                                               
new place."                                                                                                                     
MS.  CLARKE told  him they  are  working very  hard to  encourage                                                               
private providers  and others to  look at a number  of facilities                                                               
across the state. "The government is doing what it can."                                                                        
CHAIR DYSON remarked that the answer is still yes.                                                                              
SENATOR GREEN asked how much longer the meeting would last.                                                                     
CHAIR DYSON  said he'd like  to wrap up  in five minutes,  but he                                                               
wanted   the  committee   to  make   it  clear   what  additional                                                               
information they  want and what  they're struggling with.  If any                                                               
members  were thinking  about offering  amendments then  he would                                                               
like  them to  let  people  know so  they  could  be prepared  on                                                               
SENATOR GREEN said  she would like to review when  the $1 million                                                               
cap was set.                                                                                                                    
MS. CLARKE advised  that the original CON  threshold was $150,000                                                               
and that was changed to $1 million in the mid 1980s                                                                             
SENATOR GREEN said  she though the equivalency today  was $2.5 or                                                               
$2.75 million  so if the  intent is  the same then  it's probably                                                               
still reliable  for most construction.  Some new  equipment costs                                                               
have gone  down though so  that might  be an issue  worth talking                                                               
about. She then asked about the  timeline and asked at what point                                                               
the department releases the information publicly.                                                                               
MS. CLARKE said  she thought it was when the  review is complete,                                                               
but  she  would  get  back  with the  information.  There  is  an                                                               
opportunity to publicly notice that  someone has applied and this                                                               
has  been  important   in  the  past  because   there  have  been                                                               
situations in which there were competing applications.                                                                          
SENATOR GREEN said,  "I think it's very  inappropriate that there                                                               
is any  disclosure of information  about a CON  application until                                                               
the  application is  deemed complete.  And  I do  not think  that                                                               
information should  be posted, that  information should  not come                                                               
from the department that should be a confidential arrangement."                                                                 
CHAIR  DYSON asked  whether she  wanted  to add  language to  the                                                               
SENATOR  GREEN replied  that with  regard to  amending she  had a                                                               
question  because when  they  last reviewed  the  CON there  were                                                               
regulations  that  were  at  odds   with  current  statutes.  She                                                               
questioned whether the regulations had been cleaned up.                                                                         
MS. CLARKE replied  there were attempts to clean them  up, but it                                                               
wasn't done.                                                                                                                    
SENATOR  GREEN suggested  that the  committee draft  a letter  of                                                               
intent  saying the  regulations must  comport to  current statute                                                               
because they  are woefully out  of date and very  misleading. She                                                               
announced that  she would like  the certificate of  need director                                                               
to attend  the next meeting.  She then asked what  the difference                                                               
is   between  an   approved  adolescent   treatment  bed   and  a                                                               
residential psychiatric treatment bed subject to the CON.                                                                       
MS.  CLARKE replied  she was  referring  to the  acute care  bed,                                                               
which is  a hospital psychiatric  bed. Hospitals  and psychiatric                                                               
hospitals are covered by CONs.  Residential treatment centers are                                                               
not acute  hospital care  and they are  not currently  covered by                                                               
SENATOR  GREEN said  she misunderstood  and thought  there was  a                                                               
current  process for  approving psychiatric  treatment beds,  but                                                               
now she  understands that she was  talking about acute beds  in a                                                               
hospital setting.                                                                                                               
MS. CLARKE said yes.                                                                                                            
SENATOR  GREEN  asked  what  other  acute  psychiatric  beds  for                                                               
adolescents are provided in Alaska.                                                                                             
MS. CLARKE replied she could get that information.                                                                              
CHAIR DYSON  asked Ms.  Clarke to provide  some discussion  as to                                                               
why the department can't say they  would only license X number of                                                               
beds in  a community  that they would  pay for  through Medicaid,                                                               
Medicare, or general fund.                                                                                                      
He  announced he  would hold  the bill  in committee  for further                                                               
discussion on Monday.                                                                                                           
CHAIR DYSON adjourned the meeting at 3:30 pm.                                                                                   

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