Legislature(1995 - 1996)
04/26/1996 09:10 AM Senate HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
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= bill was previously heard/scheduled
CSHB 528(FIN) NURS.HOME MORATORIUM/CERTIFICATES OF NEED
CHAIRMAN GREEN brought CSHB 528(FIN) before the committee as the
final order of business.
JAY LIVEY, Deputy Commissioner, Department of Health & Social
Services, said the legislation will establish a approximately 20-
month moratorium on the granting of a certificate of need to
construct a nursing home, or the licensing of a certificate of
need, or the licensing of a nursing home bed.
There are two ways that nursing home beds essentially can be
created in Alaska. A new facility can be built, and, if the
building of that facility costs more than $1 million, then a
certificate of need is required. Or an existing bed can be
converted to nursing home usage, and, if that conversion costs less
$1 million, it can be done without a certificate of needs. HB 528
would be a moratorium that would stop both the conversion of beds
that cost less $1 million, as well as the granting of a certificate
of need for a facility or a changeover that costs more than a $1
million. This moratorium would be in place until May 1, 1998.
Mr. Livey said the department supports this legislation because it
believes it is essential for controlling Medicaid costs. There
are potentially 147 nursing home beds that could come on line over
the next three to four years. If all of those beds were to come on
line, it would cost the Medicaid program approximately $57 million
over those seven years. Medicaid pays from 85 to 90 percent of the
cost of these beds if they are built.
The average cost of nursing homes in the state of Alaska ranges
from about $75 thousand to $134 thousand per bed per year. The
average cost of home community-based care is about $30,000, so
there are less expensive alternatives out there.
Mr. Livey pointed out that current general fund dollars in the
Medicaid program total about $155 million. If there were a five
percent growth over a 5-year period, it would mean an additional
$43 million to pay for that growth. If these nursing home beds
were added to the mix of the services they have, that number jumps
from $43 million to approximately $75 million. The department does
not believe that building these beds is cost effective in terms of
that kind of growth when there are less expensive alternatives that
provide the same level of care.
It was also pointed out by Mr. Livey that there is no facility
currently providing service that will lose any money under this
bill. This bill just addresses how future revenues will be divided
up and what services they are willing to purchase. Further, this
is a temporary measure.
Number 373
SENATOR LEMAN observed that if the act takes effect immediately and
it goes to May 1, 1998, that would be a 24-month moratorium. MR.
LIVEY agreed with his observation.
Number 400
GLADYS JUNG, representing the Senior Center in Bethel testified
from Bethel in support of HB 528. She suggested there should be a
needs assessment on this issue and a study done that looks at the
entire state and what impact all the areas have on the state. She
agreed that the legislation will not harm their plans in Bethel for
caring for their elders, and she acknowledged there are
alternatives for serving people other than just a regular nursing
home.
Number 410
JIM BECK, testifying from Mat-Su in support of HB 528, agreed that
if HB 528 does not pass, Medicaid costs will definitely increase.
He noted the state has an excellent Medicaid waiver program in
place, but these waivers are underfunded as it is. The current
long-term care system is very unbalanced in favor of institutions
because it limits peoples' choices and it wastes a lot of money.
He noted there are many people in the state who are under the age
of 65 that are stuck in nursing homes and would much rather take
advantage of community-based care but are unable to because all of
the Medicaid money is being diverted to nursing homes.
Mr. Beck cited a case filed by an individual against the state of
Pennsylvania's Department of Public Welfare, which the state lost.
The Unites States Third Circuit of Appeals found that the states
cannot fund nursing home incarceration while, at the same time,
cutting funding for community-based program. He asserted that by
not passing HB 528, it will put Alaska at the top of the list to be
next in line to lose a similar suit.
Number 471
HARLAN KNUDSON, representing the Alaska State Hospital and Nursing
Home Association, stated the nursing homes in Alaska have a lot to
be proud of. He added there is no question that probably everybody
in the state prefers home and community-based care. It's the way
to go and the association endorses it heartily.
Mr. Knudson pointed out that Section 3 of the bill, which calls for
the study, was put in the bill by the providers who agree the need
to identify the long-term care needs in this state, where they are,
and what it is going to cost to provide those cares, and HB 538
will
provide some of that badly needed information.
Mr. Knudson said there is very serious study out, and anybody who
thinks that to move from nursing home care to home and community-
based care and save money should step back as the AARP has done and
take a look the cost of providing home and community-based
services. He observed it is not going to be a cost free catchall
for meeting patient needs.
Mr. Knudson said the only argument the association has with the
bill is the length of the moratorium. They believe that a study on
long-term care can be accomplished in a year, however, they are
willing to live with the bill and support its concept if the
legislature decides it should be two years.
Number 504
MARY LOU MEINERS, representing the American Association of Retired
Persons, stated their support for CSHB 528(FIN).
Number 508
CONNIE SIPE, Director, Division of Senior Services, Department of
Administration, informed the committee that the Commission on Aging
has been on record for five years in favor of a moratorium.
Ms. Sipe noted that Medicaid has been paying for nursing home beds
for nearly 30 years, and Medicaid has only been paying for
comprehensive home care waivers since 1980 in some states and in
Alaska only two years. So there is a faster growth in home
community care costs in expenses and use, but there is some
catching up to do. There are approximately 147 elders who are
nursing home level qualified and could walk into a empty nursing
home bed today under Medicaid who are instead receiving care.
Their annual total Medicaid costs are about $4.3 million a year.
If these individuals were in 147 nursing home beds, their annual
cost today would be at least $12.8 million, and, depending on which
area of the state they went into nursing home beds, it would be
more.
Ms. Sipe said the state's nursing homes are important and they are
good nursing homes, but things are changing, and once the state
commits to a nursing home, it is committed for 30 or 40 years.
She noted there are nursing homes in the state where we pay in
Medicaid costs over $100 a day per bed just for financing of the
interest on the mortgage of the building. She said it is an
important franchise decision whether or not to build more or
whether to see if the communities can have time to respond.
Ms. Sipe said home and community-based services are developing,
they need some time to develop and the communities, as well as the
industry, need some time to really participate in this study.
Concluding, she stated the Division of Senior Services supports the
bill with the two-year moratorium.
Number 551
PAUL GREGORY, testifying in support of HB 528, stated he was
representing the senior citizens of Alaska. Having been born in
Alaska, as well as working with the seniors for the last 60 years
of his life, he feels bad when he sees seniors put into nursing
homes in areas that are unfamiliar to them and where no family
members reside. By having an intermediate center, people will
begin to live longer, and people want to take care of their own if
possible. He said the seniors of the Yukon-Kuskokwim Delta are in
support of a study to determine where the greatest need is going to
be.
TAPE 96-35, SIDE B
Number 005
SENATOR GREEN advised that she filed a bill earlier in the week
that repeals the certificate of need process, and her reason for
doing so is so that hearings can be held in the interim to
determine what other states are doing and what Alaska might need to
do to change so that there isn't this debate every other year and
then having to come back in with another moratorium. She added
that she has no intention of attempting to repeal the certificate
of need, but took that approach to get the discussions going.
Number 025
KIMBERLY DUKE, staff to Representative Mark Hanley, who is the
prime sponsor of HB 528, said Representative Hanley is very
supportive of the legislation and that he introduced it on behalf
of the department to give the community-based services a chance to
develop in areas where they haven't been located before. He
believes it is a service more people would prefer rather than being
in the nursing home setting; the intent of the bill is to give a
period of time for that to develop. She said Representative Hanley
supports the length of the moratorium, which was changed in House
Finance to May 1998, to allow for the construction season.
Number 063
SENATOR GREEN noted that Senator Miller had expressed the
possibility of proposing an amendment to the legislation, but that
it could be dealt with in Senate Finance, so it was her intent to
pass the bill out of committee with the understanding that there is
the likelihood of some changes that may come forward. She then
asked for a motion to move the bill out of committee.
SENATOR LEMAN moved that CSHB 528(FIN) and the accompanying zero
fiscal note be passed out of committee with individual
recommendations. Hearing no objection, it was so ordered.
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