Legislature(1995 - 1996)
04/12/1996 01:35 PM House FIN
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HOUSE BILL NO. 528
"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."
JAY LIVEY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES discussed section 2. He observed that if
147 nursing home beds are built over the next five years it
will cost the State approximately $57.0 million dollars. He
stated that it is unclear where cost effectiveness review
will occur if it is not part of the legislation. He
stressed that cost effectiveness can be part of the
certificate of need process. He maintained that section 2
is critical to the legislation.
CONNIE SIPES, DIVISION OF SENIOR SERVICES, DEPARTMENT OF
ADMINISTRATION stressed that certificates of need are
appealed to the judicial branch. The judicial branch makes
a binding finding on whether or not a certificate of need
should be granted by the Department. Once a certificate of
need is granted, nursing home beds are a mandatory service
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under Medicaid that must be funded. She pointed out that
the courts ultimately rule.
Mr. Knudson provided members with the criteria for
certificates of need (Attachment 1). He maintained that the
primary purpose of the certificate of need is to assure that
none are issued if there is a less costly alternative. He
stated that if section 2 is adopted the certificate of need
would not be needed.
Co-Chair Hanley summarized that the Department determines if
there is a need. The Legislature does not have the option
of rejecting the construction of new beds. Mr. Knudson
agreed that if the need is identified the Department is
instructed to approve the beds and request funding from the
Legislature.
Mr. Knudson suggested that the Legislature identify how many
nursing home beds will be in each region of the State. He
noted that there is a proposal in the Mat-Su Valley to build
60 new beds which will create 40 new jobs and cost $6.0
million dollars a year to operate. The nursing home spent
$200.0 thousand dollars to meet the requirements of the
certificate of need. He pointed out that 30 of the nursing
home beds in Anchorage are occupied by individuals from Mat-
Su.
LARRY STRIVER, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES noted that 18
states have moratoriums on nursing home beds.
DAVID PIERCE, CERTIFICATE OF NEED COORDINATOR, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES noted that 10 states had
moratoriums in 1985.
Representative Martin asked how much money has been spent on
beds that are empty. The Department could not answer. Mr.
Livey explained that the Department pays on a per day, per
patient basis. This cost is calculated based on the total
Medicaid cost to operate each facility. The fixed cost is
spread across the beds.
Representative Brown asked why the Department does not find
against the certificate of need if there is a surplus of
beds. Ms. Sipes explained that criteria for the certificate
of need is based on rescinded federal regulation. She
stressed that it is difficult to argue against the need for
long term care due to the growing population of elderly.
She emphasized that if the service being offered is nursing
home beds that the argument can be made to support their
construction. She observed that there are states that have
75 nursing home beds for every 1,000 people over the age of
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65 years of age. Florida has limited nursing home beds to
29 per 1,000 people over 65 years of age. She pointed out
that there is great disagreement as to what is the need of
nursing home beds. She stressed that there will be a 30 -
60 year commitment for each bed that is built. She
emphasized the importance of cost effective review.
Co-Chair Hanley asked what percentage of the cost of a
nursing home bed is paid for by the State.
Mr. Knudson explained that each bed costs approximately $250
dollars. Mr. Livey stated that between 85 - 90 percent of
all nursing home expenditures are paid through public funds.
Co-Chair Hanley pointed out that the Legislature would be
critical of adding new beds which will result in an
increased Medicaid budget when the State is having
difficulty funding existing beds. He acknowledged that
there is a need. He expressed frustration with the lack of
legislative input. He expressed a preference for a two year
moratorium. He noted that section 2 would provide a
statutory change but is not part of an overall strategy. He
suggested that section 2 would not be necessary if the
moratorium is longer than one year. He suggested that
section 2 be deleted, the moratorium be extended, section 1
be deleted, and an additional member be added to the working
group.
Representative Martin noted that Medicaid is the fastest
growing program in the State.
Mr. Knudson suggested that the study group identify the
total number of nursing home beds to be authorized by the
State. He noted that in New York community based care is
the fastest growing Medicaid cost. He stressed that
assisted living and other alternatives should be addressed.
Co-Chair Hanley pointed out that if community based care is
added and nursing home beds remain the same there would be
an expansion of service. He noted that community based care
is generally cheaper than institutional care. He stated
that the legislature should determine the number of nursing
home beds or the number of eligible nursing home and
community based slots. He emphasized that nursing home beds
are the most expensive way to expand care. He pointed out
that the monetary aspect is a limiting factor. He
emphasized that the legislature needs to have oversight.
Representative Mulder MOVED to conceptually adopt an
amendment to: Delete section 1; delete section 2; after
"services" add "one of whom is a licensed nursing home
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administrator, who operates a community nursing home in
Alaska on page 3, line 24; delete July 1, "1997" and insert
July 1, "1998" in section 6; and amend the title to reflect
the changes. Co-Chair Hanley reviewed the amendment.
Representative Mulder questioned if the report of the
working group should be delivered to the second regular
session. Representative Brown pointed out that the
legislature would have more time to act if the report is
presented to the first session.
Ms. Sipes referred to page 3, lines 6 - 10. She noted that
this section refers back to section 1. Mr. Livey explained
that any applications on file when the bill becomes
effective would be reviewed. He noted that (b) would allow
these applications to be reviewed based on the findings. He
stressed that the findings would allow a more balanced look
at applications in terms of whether services could be
provided in the community.
Ms. Sipes suggested that section 1, subsections (1) and (2)
be deleted and the remaining subsections of section 1 be
retained.
Representative Mulder WITHDREW his motion to amend HB 528.
There being NO OBJECTION, it was so ordered.
In response to a question by Representative Grussendorf, Mr.
Knudson asserted that a one year moratorium would be
sufficient. Mr Livey stated that the Department would
prefer to retain section 2. He added that a two year
moratorium would be better than a one year moratorium.
Representative Mulder MOVED to conceptually adopt an
amendment to: Delete section 1, subsections (1) and (2);
delete section 2; on page 3, line 24 after "services" add
"one of whom is a licensed nursing home administrator, who
operates a community nursing home in Alaska; delete July 1,
"1997" and insert July 1, "1998" in section 6; and amend the
title to reflect the changes.
Representative Martin expressed concern with the deletion of
section 2. Ms. Sipes clarified that a standard of review
will remain in statute. The added requirement for cost
effectiveness review will not exist.
Co-Chair Hanley spoke in support of the two year moratorium.
(Tape Change, HFC 96-116, Side 2)
Representative Mulder pointed out that a repealer of May
would be better than July in regards to the construction
season.
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Representative Mulder MOVED to AMEND his conceptional
amendment to delete "July 1, 1988" and insert "May 1, 1998".
Representative Kelly suggested that April would be better.
Co-Chair Hanley noted that May would allow time for
legislative changes. There being NO OBJECTION, it was so
ordered.
Representative Brown spoke in support of section 2.
There being NO OBJECTION, a conceptional amendment was
adopted to: Delete section 1, subsections (1) and (2);
delete section 2; on page 3, line 24 after "services" add
"one of whom is a licensed nursing home administrator, who
operates a community nursing home in Alaska; delete July 1,
"1997" and insert July 1, "1998" in section 6; delete "July
1, 1988" and insert "May 1, 1998"; and amend the title to
reflect the changes.
Representative Martin MOVED to reinstate section 2.
Representative Kohring OBJECTED. A roll call vote was taken
on the MOTION to reinstate section 2.
IN FAVOR: Brown, Navarre, Martin
OPPOSED: Grussendorf, Kelly, Kohring, Mulder, Parnell,
Therriault, Foster, Hanley
The MOTION FAILED (3-8).
Representative Mulder MOVED to report CSHB 528 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 528 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
Department of Health & Social Services.
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