HOUSE FINANCE COMMITTEE April 12, 1996 8:20 A.M. TAPE HFC 96-115, Side 1, #000 - end. TAPE HFC 96-115, Side 2, #000 - end. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 8:20 a.m. PRESENT Co-Chair Hanley Representative Martin Co-Chair Foster Representative Mulder Representative Brown Representative Navarre Representative Grussendorf Representative Parnell Representative Kelly Representative Therriault Representative Kohring ALSO PRESENT Representative Norman Rokeberg; Tom Anderson, Staff, Representative Martin; Harlan Knudson, Executive Director, Alaska Hospital and Nursing Home Association; Bob Labbe, Director, Division of Medical Assistance. SUMMARY HB 436 An Act relating to purchase and sale of mobile homes by mobile home dealers or agents; to mobile home titles; and providing for an effective date. CSHB 436 (TRA) was reported out of Committee with "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development, dated 4/2/96 and with a zero fiscal note by the Department of Public Safety, dated 4/2/96. HB 393 An Act relating to managed care for recipients of medical assistance; and providing for an effective date. CSHB 393 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Health & Social Services, 3/27/97. HB 528 An Act relating to applications for certificates 1 of need and licensing of nursing homes; amending the standard of review for certificates of need for health care facilities in the state; establishing a moratorium with respect to new applications by prohibiting the issuance of a certificate of need or a license for additional nursing home capacity in the state until July 1, 1998; and providing for an effective date. HB 528 was HELD in Committee for further consideration. HB 543 An Act establishing a preference when entering into state airport land leases. HB 543 was rescheduled to another time. HOUSE BILL NO. 436 "An Act relating to purchase and sale of mobile homes by mobile home dealers or agents; to mobile home titles; and providing for an effective date." TOM ANDERSON, STAFF, REPRESENTATIVE MARTIN noted that HB 436 was introduced at the request of the Alaska Manufactured Housing Association. He noted that current statutes do not provide for titling of mobile homes. The bill will title mobile homes under the Division of Motor Vehicles. He noted that mobile home dealers are not currently licensed or under regulations. The legislation would also place mobile home dealers under the purview of the Division of Occupational Licensing, Department of Commerce and Economic Development. A bond of $50.0 thousand dollars would be required of mobile home dealers. Representative Martin added that the legislation will place dealers under disclosure requirements. Representative Brown questioned if mobile homes should be sold by licensed real estate agents. She asked how the legislation will protect the public. Representative Martin noted the bonding requirements. Representative Mulder stressed the need for bonding. He noted that mobile homes represent substantial investments. In response to a question by Representative Brown, Representative Mulder noted that the Legislature repealed previous statutes regarding title requirements for mobile homes. He observed that problems occurred as a result of that action. In response to a question by Representative Kelly, Mr. Anderson noted that banks and lending institutions require a 2 certificate of title for financing. He noted that long after a cash sale the buyer's unit and a seller's collateral can be claimed by an unknown lien holder. Representative Kelly asked if title companies only deal with real property. Representative Mulder stressed that mobile homes are on wheels. He noted that the Division of Motor Vehicles has requested that the fee schedule reflect the cost of administration. Representative Brown noted that the change from "may" to "shall" will require titles to be issued. She questioned the affect on current owners. Representative Mulder stressed that titles will be issued during the transference of ownership. Owners will not have to get titles immediately. He noted that the Division has the ability to charge for titling. Representative Martin noted that approximately 124 dealers would want to be licensed. Mr. Anderson estimated that 20 to 30 titles will be issued a year. Representative Brown expressed concern that owners will be required to obtain titles. Representative Mulder pointed out that the alternative is to require a $500 dollar title search. Representative Parnell MOVED to report CSHB 436 (TRA) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Kohring OBJECTED. He asserted that the legislation will help big operators and hurt small operators. He expressed concern with the bonding requirement. He asked for evidence of consumer concern regarding current practices. Representative Mulder disclosed that he is a mobile home owner and real estate agent. Mr. Anderson noted that a $50.0 thousand dollar bond would cost approximately $1.5 thousand dollars a year. Representative Kohring noted that the bonding requirement assumes that the individual has the proper credit credentials. A roll call vote was taken on the MOTION to move CSHB 436 (TRA) out of Committee. IN FAVOR: Brown, Grussendorf, Navarre, Kelly, Martin, Mulder, Parnell, Therriault, Foster, Hanley OPPOSED: Kohring 3 The MOTION PASSED (10-1). CSHB 436 (TRA) was reported out of Committee with "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development, dated 4/2/96 and with a zero fiscal note by the Department of Public Safety, dated 4/2/96. HOUSE BILL NO. 393 "An Act relating to managed care for recipients of medical assistance; and providing for an effective date." REPRESENTATIVE NORMAN ROKEBERG, sponsor of HB 393, spoke in support of the legislation. He noted that the bill asks the Department to draft legislation establishing a pilot program for Medicaid recipients in the state of Alaska. He emphasized that the legislation will expedite and give direction to the implementation of managed care. He noted that Medicaid is the second largest component in the State's budget after education. He observed that Medicaid funding has escalated. Over the past five years it has increased annually by 13.9 percent. He observed that Congress is focused on replacing Medicaid with MediGrants. MediGrants would be issued as block grants on a per capita basis. He emphasized the importance of planning for the implementation of national Medicaid and welfare legislation. He pointed out that 94 percent of all states have managed care principals. Alaska does not have any. Representative Rokeberg noted that the Department of Health & Social Services has awarded a contract to develop a report and plan for the development of a managed care program. He observed that the state of Oregon expanded services through savings realized by a managed care program. He emphasized that nationally 30 percent of the population is uninsured. He maintained that managed care will work in Alaska. He observed that there are examples of managed care programs in other small areas. He noted interest in rural areas. He asserted that managed care is coming. He maintained that the Legislature should be involved in the development and implementation of this major state policy. Representative Rokeberg provided members with a proposed committee substitute, Work Draft 9-LS1451\K, dated 4/10/96 (copy on file). He explained that the committee substitute would clarify the steps needed to implement the pilot program. "Competition" was also deleted. Representative Kelly noted that the Department of Health & Social Services intends to implement the program mandated by 4 HB 393 in June, 1996. Representative Rokeberg stressed that the Department intends to incrementally implement many of the procedures that are part of managed care. He noted the lack of debate regarding the issues surrounding managed care. He stated that the legislation would mandate that the process be hastened and that the legislature be involved. He emphasized the need to review statutes to assure that the State is capable of implementing a large managed care system. In response to a question by Representative Brown, Representative Rokeberg reiterated that Alaska does not have any managed care models. He envisioned the establishment of at least two population groups. He stated that the pilot could be set in an urban area with a rural component. He stressed that the group should contain single mothers. He noted that the program will take many years to implement. The pilot program will probably not incorporate mental health and developmentally disabled concerns. Representative Rokeberg discussed programs in Montana. He noted that information systems were installed to track information regarding the program. In response to a question by Representative Brown, Representative Rokeberg pointed out that the Medicaid fee schedule does not reimburse physicians for one hundred percent of their services. Representative Brown asked how the single mother in the pilot program would be affected. Representative Rokeberg noted that the primary care case management system (PPCCM) assigns patients a specific physician to manage their entire care. The physician will be the patients "gatekeeper" in the utilization of the plan. They would be the primary provider in addition to managing the patient's health care. Representative Brown asked if the gatekeeper/doctor will be able to decide without restrictions what the patient needs. She asked if the legislation would provide that the Governor or Department introduce draft legislation as a result of HB 393. Representative Rokeberg noted that the amendment would require that the Department work through the Governor (copy on file). Amendment 1 would also delete "authorize" and insert "provide for" on page 2, line 17. HARLAN KNUDSON, EXECUTIVE DIRECTOR, ALASKA HOSPITAL AND NURSING HOME ASSOCIATION testified in support of HB 393. He stressed that the cost of health care must be contained. He noted that the strength of managed care is that it provides an incentive for maintaining the patient's health. He asserted that managed care can work in Alaska. He 5 emphasized that the legislation directs the Department to work with the provider community. Representative Therriault MOVED to adopt Work Draft 9- LS1451\K, dated 4/10/96. There being NO OBJECTION, it was so ordered. Representative Therriault referred to a letter from the Tanana Chiefs Conference, dated 2/16/96 (copy on file). He noted that the letter raises questions regarding the participation of the Indian Health Service. Mr. Knudson emphasized that no one should be excluded. Representative Parnell asked if there is a compelling reason to keep the findings section in HB 393. BOB LABBE, DIRECTOR, DIVISION OF MEDICAL ASSISTANCE stated that the findings section directs the Department regarding the implementation of the pilot. He stated that the information is helpful. He emphasized the need to make Alaska's program specific to Alaska. (Tape Change, HFC 96-115, Side 2) Mr. Labbe stressed that HB 393 fits with the Department's plan. Representative Rokeberg stated that the intent of section 1 is to provide further direction to the Department. He noted that HB 393 mandates that the Governor bring back to the Legislature draft legislation. He observed that HB 393 will essentially sunset after January 1, 1997. Mr. Labbe pointed out that CSHB 393 (FIN) could be read to imply that the Department does not have authority to move forward on its current planning if HB 393 is enacted. This could inhibit the Department's attempts to manage Medicaid expenditures. Representative Parnell MOVED to adopt Amendment 1. There being NO OBJECTION, it was so ordered. Representative Parnell MOVED to report CSHB 393 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 393 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Health & Social Services, 3/27/97. HOUSE BILL NO. 528 6 "An Act relating to applications for certificates of need and licensing of nursing homes; amending the standard of review for certificates of need for health care facilities in the state; establishing a moratorium with respect to new applications by prohibiting the issuance of a certificate of need or a license for additional nursing home capacity in the state until July 1, 1998; and providing for an effective date." HARLAN KNUDSON, EXECUTIVE DIRECTOR, ALASKA HOSPITAL AND NURSING HOME ASSOCIATION testified on HB 528. He provided members with recommendations for modifications to HB 528 (Attachment 1). He maintained that HB 528 is an opportunity to create a plan to meet Alaska's long term care needs. Mr. Knudson reviewed Attachment 1. He requested that in section 1, subsections (1) and (2) be deleted. He observed that there were 764 licensed nursing home beds in January 1992. He stressed that the State pays by the bed. The occupancy of nursing home beds was 84 percent in January 1992. Medicaid accounted for 70 percent of occupancy. He pointed out that the pioneer home in Ketchikan contributes to the low occupancy rates. There was 758 beds in January 1, 1996. He disagreed that there is an overabundance of nursing home beds. He noted that occupancy of nursing home beds in Anchorage and Fairbanks is above 90 percent. He maintained that the moratorium requires rural residents to send their elderly to urban areas. He stressed the cultural difference between rural and urban areas. Mr. Knudson requested that section 2 be deleted. He maintained that section 2 takes responsibility from the legislature. Section 2 allows the Department of Health & Social Services to establish state policy on the funding of new construction or new services for health facilities in Alaska. He asserted that the Department can deny nursing home beds to protect its Medicaid budget. Representative Martin maintained that the executive branch has the responsibility for establishing policy for many state programs. Representative Kelly pointed out that the executive branch establishes regulations based on the statutes. He maintained that the legislature establishes policy. Mr. Knudson stated that providers and state agencies have the responsibility to identify the needs and recommend policy to the legislature and implement the policy directives of the legislature. He emphasized that agencies should not establish were funding should be provided and overall policy. 7 Mr. Knudson noted that the Alaska Hospital and Nursing Home Associations supports a one year moratorium on nursing home beds. He emphasized that this is the second year of a three year moratorium. He pointed out that a study on the long term care needs of Alaska was contracted by the Division of Senior Services in June 1995. He stressed that the study will be released soon. He stated that if the next Legislature does not agree with the recommendations of the study the moratorium could be extended. Mr. Knudson recommended that section 4 be amended to include a nursing home administrator and that "working group" be changed to "planning group". He stated that the planning group should propose a plan identifying needs, priorities and funding sources. Representative Mulder noted that proposed committee substitute, Work Draft 9-LS1731\F, dated 4/11/96 reflects Mr. Knudson's request for deletion of section 1 (1) and (2) (copy on file). He added that the work draft provides a one year moratorium. HB 528 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 10:00 a.m. 8