03/10/2023 03:15 PM House LABOR & COMMERCE

            HB 35-REPEAL CERTIFICATE OF NEED PROGRAM                                                                        
                                                                                                                                
3:42:18 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that the  final order of business would be                                                               
HOUSE BILL  NO. 35, "An Act  relating to the certificate  of need                                                               
program  for  health  care  facilities;   and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
3:42:37 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:42 p.m. to 3:46 p.m.                                                                       
                                                                                                                                
3:46:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GEORGE  RAUSCHER,  Alaska State  Legislature,  as                                                               
prime sponsor,  introduced HB  35.   He stated  that HB  35 would                                                               
repeal the certificate  of need program and  provide an effective                                                               
date of July 1, 2024.   He explained that the certificate of need                                                               
program was  first mandated  by the  federal government  in 1974,                                                               
and later repealed  federally in 1987.  He said  that since 1987,                                                               
13  states have  already repealed  certificate of  need programs.                                                               
He  stated that  this program  was intended  to lower  healthcare                                                               
costs;  however, healthcare  costs have  changed from  a fee  per                                                               
service  system to  a prospective  payment system,  and this  has                                                               
caused  healthcare  costs  to  increase  because  of  a  lack  of                                                               
competition.                                                                                                                    
                                                                                                                                
3:48:49 PM                                                                                                                    
                                                                                                                                
CRAIG  VALDEZ,  Staff,  Representative  George  Rauscher,  Alaska                                                               
State  Legislature, gave  the sectional  analysis for  HB 35,  on                                                               
behalf  of Representative  Rauscher,  prime sponsor.   He  stated                                                               
that   Sections  1   through  7   would  make   modifications  to                                                               
definitions  of healthcare  terms under  current state  statutes.                                                               
Sections 8  and 9 would  repeal the certificate of  need program,                                                               
and  Section  10  would  prevent the  Department  of  Family  and                                                               
Community Services from acting on  or after the effective date to                                                               
modify or revoke  any certificate of need.  He  said that Section                                                               
11  would provide  for an  effective date  of July  1, 2024.   He                                                               
added that the proposed bill currently has a zero fiscal note.                                                                  
                                                                                                                                
3:51:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  asked whether  repealing the  certificate of                                                               
need program  would cost significant  amounts of  money regarding                                                               
Medicare.                                                                                                                       
                                                                                                                                
REPRESENTATIVE RAUSCHER  answered that  he has not  consulted the                                                               
Department of Health, but he  expressed the belief that it would.                                                               
He added  that the certificate of  need program only adds  to the                                                               
costs  and complications  of remote  communities trying  to build                                                               
new healthcare facilities.                                                                                                      
                                                                                                                                
3:54:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE asked whether  it would be more accurate                                                               
to say that the fiscal note is "indeterminant."                                                                                 
                                                                                                                                
MR.  VALDEZ answered  that  this would  be  correct for  indirect                                                               
costs.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE asked  how  other issues,  such as  the                                                               
inability to raise  revenue via property taxes  in certain areas,                                                               
would  be addressed  in  regard to  funding  the construction  of                                                               
hospitals.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  RAUSCHER  expressed   agreement  that  there  are                                                               
multiple hurdles to building a  hospital in rural areas; however,                                                               
he  expressed  the belief  that  the  certificate  of need  is  a                                                               
"needless hurdle"  which takes money  away from the  actual funds                                                               
to build these facilities.                                                                                                      
                                                                                                                                
3:57:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK  asked if the  $1.5 million figure  is the                                                               
start-up cost for requiring a certificate of need.                                                                              
                                                                                                                                
MR. VALDEZ answered  that if the cost of the  facility were equal                                                               
to or greater  than $1.5 million, a certificate of  need would be                                                               
required.  In  response to a follow-up question, he  said that he                                                               
is  unsure of  the exact  figure for  any additional  costs being                                                               
incurred in relation to the certificate of need requirement.                                                                    
                                                                                                                                
REPRESENTATIVE  CARRICK asked  whether any  healthcare facilities                                                               
support the repeal of the certificate of need program.                                                                          
                                                                                                                                
REPRESENTATIVE  RAUSCHER answered  that he  has spoken  to a  few                                                               
healthcare clinics that are supportive of the repeal.                                                                           
                                                                                                                                
4:01:01 PM                                                                                                                    
                                                                                                                                
JAIMIE CAVANAUGH,  Attorney, Institute  for Justice,  stated that                                                               
the Institute  for Justice  has been  working on  legislation and                                                               
litigation  to end  certificate of  need laws  for decades.   She                                                               
said that  certain aspects  of these  laws were  suspended during                                                               
the  pandemic,   and  this   had  pointed   out  that   they  are                                                               
ineffective.   She  stated that  Tennessee, Alabama,  Oregon, and                                                               
Washington have  certificate of need  laws which do not  apply to                                                               
rural areas, but  these laws are not effective  at preventing the                                                               
closure of  rural healthcare facilities, while  Utah and Colorado                                                               
are states  without certificate  of need  laws, and  these states                                                               
have not had a rural hospital  closure since 2005.  She said that                                                               
the Federal Trade Commission and  Department of Justice have been                                                               
involved  in efforts  to repeal  certificate of  need laws.   She                                                               
argued that this is because  of the negative effect on healthcare                                                               
competition.  She suggested that  the concentration of healthcare                                                               
facilities  in a  single area  leads  to higher  costs and  lower                                                               
quality.                                                                                                                        
                                                                                                                                
4:06:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  if  there were  any  examples  of                                                               
certificate of need laws affecting  Alaska differently than other                                                               
states.                                                                                                                         
                                                                                                                                
MS.  CAVANAUGH  answered  that  the  data  shows  states  without                                                               
certificate of  need laws have  greater access to  healthcare and                                                               
an increased  number of healthcare facilities.   She acknowledged                                                               
that repealing  the law would  not address  Alaska's geographical                                                               
spread.  She  added that many individuals seeking to  start a new                                                               
healthcare facility give  up before starting because  it is known                                                               
that  other  healthcare  facilities  have the  ability  to  argue                                                               
against the  need for  a new facility  during the  certificate of                                                               
need process.                                                                                                                   
                                                                                                                                
4:10:12 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that HB 35 was held over.