Legislature(2017 - 2018)HOUSE FINANCE 519
03/06/2017 01:30 PM FINANCE
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HOUSE BILL NO. 49 "An Act extending the termination date of the Board of Certified Direct-Entry Midwives; and providing for an effective date." 2:48:05 PM REPRESENTATIVE SAM KITO, SPONSOR, introduced himself and the bill. CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SAM KITO, shared the sponsor's statement (copy on file): House Bill 49 extends the termination date for the Board of Certified Direct-Entry Midwives until June 30, 2021. Legislative Audit conducted their review of this board and determined that "The board is serving the public's interest by effectively licensing and regulating certified direct-entry midwives and apprentice midwives. The board monitors licensees and works to ensure only qualified individuals practice. Furthermore, the board adopts regulations to improve the practice of midwifery. In accordance with AS 08.03.010(c)(8), the board is scheduled to terminate on June 30, 2017. We recommend that the legislature extend the board's termination date to June 30, 2021." The board currently oversees 52 active licensees and is composed of five members: two certified direct- entry midwives, one physician licensed by the State Medical Board, one certified nurse midwife licensed by the Board of Nursing, and one public member. The continuation of the Board of Certified Direct- Entry Midwives is important to the health and safety of Alaska's women and children, as it serves an important role in protecting the well-being of Alaskans by identifying individuals who are willing to pursue technical training and meet specified technical qualifications necessary for license as midwives. Thank you for your support of House Bill 49. 2:50:18 PM Co-Chair Foster noted there were individuals available for questions. Representative Wilson queried the cost of the audit, relative to the size of the group the board oversaw. She wondered whether the board paid for the audit. Representative Kito deferred the question to the division. He answered that the four-year extension had been recommended by the division. Co-Chair Foster recognized that Vice-Chair Gara had joined the meeting. Co-Chair Seaton noted the fee increase of 169 percent and the one-time surcharge of $2000. Representative Kito explained that the audit recommended that licensing fees should be increased to cover the cost of board operations. 2:52:42 PM KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, testified that the previous sunset audit conducted on the board had been in 2014, and at that point the division found that the Division of Corporations, Businesses and Professional Licensing (DCBPL) investigative staff had not been actively processing investigations that posed a public safety risk. She said that at that point the board was extended only 2 years; the division had conducted a 2016 follow-up sunset review. The latest review found that the board is serving in the public's interest by effectively licensing and regulating certified direct-entry midwives (CDM) and apprentice midwives. She stated that the division recommended that the legislature extend the board's termination date to June 30, 2021, provided the board execute the following recommendations [from the Performance Audit of the Department of Commerce, Community and Economic Development, State Board of Certified Direct- Entry Midwives (board) April 30, 2016(copy on file)]: Recommendation 1: DCBPL management, in consultation with the board, should increase licensing fees to eliminate the board's operating deficit. High regulatory costs relative to the low number of licensees has led to high license fees. The board primarily receives its revenue from license and renewal fees. Renewals are conducted on a biennial basis, creating a two-year cycle in board revenues. Fee levels were increased in FY 15, but fees were not high enough to cover operating costs. As shown in Exhibit 3, the board's deficit grew to $183,081 as of February 29, 2016, the second year of its biennial licensing period (see Recommendation 1.) Recommendation 2: The DCBPL director should take steps to ensure license records are accurately recorded. Audit test work identified two instances where DCBPL staff provided insufficient support to the board. In one instance, division staff noted the wrong license as on probation in the online licensing database. In another instance, a consent agreement approved by the board had the wrong year. Both instances were due to administrative error by DCBPL staff. Recommendation 3: The legislature should consider alternate forms of regulating the midwifery profession. In order to address the deficit, licensing fees would need to be significantly increased. Fees are expected to be upwards of $4,000 for CDMs and $2,000 for apprentice permits by the year 2020. The high licensing fees could limit entry into the profession. Ms. Curtis noted the department's response on Page 21 of the audit. She shared that the department concurred with recommendation's 1 and 2, but did not respond to recommendation 3, as it was not directed to the department. However, the department acknowledged that merging the board could result in economies of scale. She spoke to the board's response on Page 23 of the audit. The board concurred with recommendations 1 and 2, but strongly disagreed with recommendation 3: Midwifery is a unique profession that any other board would have difficulty regulation. The suggestion of the Board of Nursing and the Physician's Board would be problematic on several different levels. These two boards have historically been competitive to the CDM profession and often oppose legislation that we have introduced to improve the standard of care and safety of our clients. I am concerned that we would be regulated out of practice or to a very minimal practice, which is what the majority of the Alaskan population clearly does not want. Also, I believe that the doctor's and nurse's board would not want CDMs sitting on their Board (which we would need to do if we were to have proper representation) and having a voice in decisions regarding their regulations and practices. 2:57:27 PM Representative Wilson asked who decided which cases warranted investigation. Ms. Curtis responded that the division had an investigative section that had the statutory responsibility to conduct investigations. The board was removed from, but eventually weighed in on, the decision. Representative Wilson asked whether unlicensed midwives were charged with reimbursing the board for any fines. Ms. Curtis deferred to DCCED. She offered that there were no dedication of fines to any particular board; any levied fines went to the General Fund. Representative Wilson thought that there should be a mechanism that could protect midwives from having their licensing fees increased because of acts of unlicensed midwives. Ms. Curtis asked whether Representative Wilson was asking if the board's deficit was the result of investigations. Representative Wilson replied in the affirmative. Ms. Curtis stated that the schedule on Page 6 of the audit highlighted the board's expenditures. She said that historically the problem with deficit had stemmed from investigations; however, not only unlicensed activity generated investigations. 3:00:20 PM Representative Wilson surmised that the board would have to pay the fee even though the fee was already in the general fund. Ms. Curtis explained that the cost of regulating was borne by licensees, and any fees that were collected went into the general fund. Representative Wilson asserted that any money collected, based on an investigation, had to be paid by the board, even if it went into the general fund. Ms. Curtis answered that the revenues from the fines did not offset the costs of investigations. Representative Wilson felt that the fees should offset the costs of investigations. 3:02:04 PM Representative Kawasaki asked why there had been an extension of 2 years had been recommended, rather than a 4 year, 6 year, or 8 year. Ms. Curtis replied she had never seen a one-year extension. They had received recommendations for termination. She spoke to boards with significant deficit such as the Board of Game with a $1 million deficit, which resulted in a short recommendation for extension. She explained that problems that posed a public safety risk could prompt a short recommendation. She said that it was very unusual to have 2 year recommendation for extension. She added that the number and nature of the findings would be weighed when considering the length of extension; housekeeping issues would not impact the extension recommendation, but deficits would reduce the number of years recommended. Representative Kawasaki wondered whether the extension were always even numbered years. Ms. Curtis answered that extensions seemed to be made in even numbers. She said that workload was a factor in determining sunset timelines. 3:04:11 PM Representative Kawasaki preferred longer sunset timelines because it meant less work for auditors. He asked about the long sheet (copy on file) in the packet, created by the division and the board, related to ways in which the deficit could be erased. Ms. Curtis replied that she had not seen the document. Representative Pruitt thought that the deficit was the crux of the problem. He spoke of the differing views of all of the involved parties. He wondered whether the board had offered a proposal of how to eliminate the debt. He asked when the legislature should expect action to be taken on the third recommendation. Ms. Curtis clarified that the intent of recommendation 3 had been to acknowledge that direct entry midwives had a board that was serving the public's interest, and should exist. She said that the division's concern was that the number of midwives would decline because of barrier to entry due to increased licensing fees. She stressed that the recommendation had not been made to address the deficit, but to ensure that the public's interest was being served by the board. She felt that it was a management decision as to how the deficit would be addressed, but the increase in licensing fees had seemed extreme. 3:09:50 PM Representative Pruitt requested to hear from the department. Vice-Chair Gara asked whether Ms. Curtis could speak to the investigation costs for violations that had proved unfounded. Ms. Curtis answered in the negative. Vice-Chair Gara worried about people being put out of business for minor violations. He noted that often traditional medical professionals and midwives disagreed about each other's practices, and wondered if having them share a board would be practical. 3:11:46 PM Representative Wilson asked about the cost of the most recent audit and how it was paid for. Ms. Curtis thought the audit had taken about 450 hours which was approximately $38,000. She said that a follow up review had been conducted by the request of Legislative Budget and Audit to look into the public safety risk of not following up on the investigations. Representative Wilson asked who paid for the audit. Ms. Curtis answered the audit was part of the Division of Audit's operating budget that was approved annually, and was not paid for by the boards that were audited. Representative Wilson thought the boards had to pay the costs. Ms. Curtis answered that the statute that dictated that the boards would pay the operational costs was the operational cost of regulation the board and not the legislative oversight process of sunsets. 3:14:00 PM Representative Thompson spoke to the investigation costs. He lamented that investigators assigned to certain boards may not understand certain aspects to the work the boards oversee, adding to the investigating costs. Ms. Curtis said that she did not know. She stated that there were some boards that had dedicated investigators, such as the medical board. 3:15:30 PM JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, introduced herself. Representative Pruitt asked about the denial of the board to carry a surplus budget forward. Ms. Hovenden answered that there had been concerns by the Department of Law about incorporating the $2000 surcharge, instead the $2000 had been incorporated into the licensing fee, raising the fee to the current level of $3,800. She said that she would not be able to speak to changes that were made to the fees before she took her position. Representative Pruitt asked how long it would take the board to get to a place where the fees would cover the debt. Ms. Hovenden referred to a handout with an Excel spreadsheet chart titled "Board of Direct-Entry Midwives" dated September 7, 2016 (copy on file), which offered a fee analysis. She noted where the board had recommended a one- time surcharge of $2000, over to biennium. Due to the concerns of the Department of Law, the fee of $3,800 was recommended. She said that the fee increase would be stretched out to 2021. Representative Pruitt spoke to the challenge of the continued cost of investigating unlicensed individuals. He asked about the department's suggestion to make sure it did not penalize individuals working within the proper confines of the law. He felt that individuals who were properly licensed should not be penalized. 3:20:57 PM Ms. Hovenden answered that the department did not breakout the information in investigations between licensed and unlicensed individuals. Representative Pruitt asked if a breakdown could be done. Ms. Hovenden answered that it would not be that difficult, but the department did not currently look at the information down to that level. Representative Pruitt recalled that the issue had been brought up a couple of years earlier. He believed the issue had been brought up by midwives a couple of years earlier. 3:22:58 PM Ms. Koeneman relayed that civil penalties for licensed midwives were set under Alaska Statute 08.08.075. She said that there was another statute for unlicensed activity, AS 08.01.082, and did not delineate any civil penalty or any monetary amount. She said that it would be a policy call by the committee to open the unlicensed activity statutes to modify the language. She noted there was another bill in the finance committee that would address investigative costs. Representative Pruitt understood that currently there was no penalty for being unlicensed. Ms. Koeneman answered that under Title 8 there were no fines other than the $5,000 civil penalty. She added that criminal charges could be applied under Title 11. Representative Pruitt asked how to discourage people from practicing without a license. Ms. Koeneman thought that the answer could be found by reading the statute. Representative Kawasaki referred to the fee proposals intended to erase the deficit by 2021. He wondered whether the timeline had been spurred by the audit. 3:25:38 PM Ms. Hovenden answered in the affirmative. She stated that the board had been active and engaged in increasing fees for that particular reason. Representative Kawasaki spoke to the conflicting nature of recommendations one and three. He was supportive of extending the board for a longer time period and did not believe that the deficit had to be completely erased by 2021. He agreed with recommendation 3. Ms. Koeneman answered that the statutory authority to collect fees did not give the legislature or the board any additional authority to collect outside of the annual review. She said that stretching the payment out over 3 or 4 biennium would go against the statutory intent. Representative Kawasaki referred to the Division of Audit's recommendation to extend the board four years, and he wondered whether the existing deficit, plus the high fees would be problematic. Ms. Koeneman understood that it the board did not have the fees paid up within 4 years, legislative audit would have no choice but to make another recommendation stating the board and the department needed to modify the fees on order to eliminate the deficit. 3:28:35 PM Co-Chair Seaton thought payment of the deficit was tied to the four-year sunset. Ms. Curtis responded there was no term recommended by the Division of Audit for fixing the issue. She stated that the law specified the cost of regulation must be covered every time rates were set. She said that the four year extension was made in order to understand whether the number of midwives in the state were serving the public's interest and had nothing to do with the fee setting process. Representative Kawasaki noted that the step-down calculations that the division proposed would have the board outside of the deficit by 2021, but a drop in the deficit over the next four year could result in a cleaner audit. 3:30:45 PM Ms. Curtis replied that she would revisit the issue in four years to provide an answer. Representative Wilson requested the cost of investigations in the past several years. She wondered whether the legislature could be equally at fault for the deficit. Ms. Koeneman answered that investigative costs for FY 16 was $31,000; FY 14 and FY 15, $41,522 total; FY 12 and FY 13, $45,457; FY 10 and FY 11, $8,034. She said that the figures did not include some of the indirect costs associated with the department's cost allocation plan. She agreed the department was getting in the way of the board. She said that in FY 09, licensing costs dropped from $2088, down to $500, and rose as the investigative costs increased. Representative Wilson requested why the increase in investigative costs had jumped significantly. 3:33:59 PM Co-Chair Foster OPENED public testimony. JOHANNA CROSSET, CERTIFIED DIRECT-ENTRY MIDWIFE, JUNEAU, she expressed gratitude for the current conversation. She hoped for a solution to prevent deficit in the future. She explained it had been a surprise to hear of the proposal for the fee increase. She asked the committee to continue conversing. She directed a comment to Representative Wilson about looking into the investigative costs, penalties, and fees going to the general fund as opposed to the board. SUSAN TERWILLIGER, PRESIDENT, MIDWIVES ASSOCIATION, ANCHORAGE (via teleconference), spoke in support of the legislation. She shared that each member of the association had endured the large hit related to the increase in licensing. The board wanted to pay down the deficit. She said that HB 90 would deal with investigation costs to correct the issue over time. She shared that midwives provided high quality care to low-risk women for less cost and were regulated by a board that was familiar with the nature of their work. She referred to a handout in members' packets that detailed the cost savings that resulted from midwife assisted births. Many women and babies were thankful for the extension of the board. 3:38:08 PM DEBORAH SCHNEIDER, CHAIR, BOARD OF CERTIFIED DIRECT ENTRY MIDWIVES, ANCHORAGE (via teleconference), urged the passage of the bill. She had been involved crafting regulations to protect mothers and babies. She was very appreciative of the conversation supporting the continuation of the board's cost-effectiveness. She referred to the issue related to investigations, and the high cost of investigations covered in the audit, and shared that there had been several cases that had been under investigation for 4 to 6 years, generating enormous cost. She stressed that the midwives were committed to paying down the debt. She believed midwifery could be expanded in Alaska if the issues were addressed. She expressed appreciation for the work done by the committee. Co-Chair Foster CLOSED public testimony. HB 49 was HEARD and HELD in committee for further consideration. Co-Chair Foster discussed housekeeping.