Legislature(2003 - 2004)
05/08/2004 09:04 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE CS FOR CS FOR HOUSE BILL NO. 511(HES)
"An Act relating to the certificate of need program for health
care facilities; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken noted that the Senate Health, Education, & Social
Services Committee (HES) committee substitute, Version 23-LS1755\X,
is before the Committee. He noted that two Letters of Intent
accompany the legislation.
SARA NIELSEN, Staff to Representative Ralph Samuels, the bill's
sponsor, stated that this bill would attempt to "level the playing
field," by altering current Certificate of Need (CON) requirements
such as those that pertain to a relocation of an ambulatory
surgical facility to a new site. In addition, she explained that
the bill would further define the term "expenditure" to aid in
correcting a current "loophole" in the CON process in which
"facilities are leasing space and equipment to themselves" to
circumvent "the one million dollar threshold," which is the point
at which a CON would be required.
Ms. Nielsen noted that the bill would also: eliminate the
requirement that an additional CON be required for expenses
associated with routine maintenance and replacement; would not
require a CON to be issued in the case of an emergency or temporary
situation such as an earthquake; and would add independent
diagnostic facility and residential psychiatric treatment centers
to the definition of a health care facility. She pointed out that
the inclusion of these two entities in the definition would require
them to adhere to CON requirements.
Ms. Nielsen stated that the bill would also require the Department
of Health and Social Services to process CON applications more
expeditiously by specifying a 60-day rather than a 90-day review
process. She noted that the bill also specifies that were a
residential psychiatric treatment center under construction at the
time this legislation enacted, it would not be required to adhere
to CON guidelines.
Ms. Nielsen explained that the Senate HES committee substitute
addressed concerns regarding the CON process that was provided for
in the House of Representatives Letter of Intent.
Amendment #1: This amendment inserts new language into Section 2 of
the bill on page two, line one, as follows.
(d) Beginning July 1, 2005, the $1,000,000 threshold in (a) of
this section shall be increased by $50,000 annually until July
1, 2014.
Co-Chair Green moved to adopt Amendment #1.
Co-Chair Wilken objected for explanation.
Co-Chair Green explained that while she had originally sought a
larger annual CON limit increase, the $50,000 annual increase is
acceptable to most concerned parties. She informed the Committee
that Alaska is one of only six states with a CON ceiling of one
million dollars or less as others have no ceiling or incorporate a
significantly higher ceiling pertinent to such things as long-term
care facilities or renovations. She stated that Alaska's current
ceiling was established in the 1980s and has never been inflation
proofed. She stated that, while this issue would continue to be re-
addressed every few years, this amendment would serve as a step in
adjusting the "woefully" low CON rate in that, by the year 2014, it
would be to "at least half of the level" it should be. This gradual
rise, she noted, would not be implemented until January 1, 2005.
Co-Chair Green noted that the Department of Health and Social
Services' Commissioner voiced concern that too rapid an increase
might negatively affect programs such as Medicaid.
Co-Chair Wilken asked for further clarification regarding what
would be affected in Sec. 2(a) were this amendment adopted.
Co-Chair Green clarified that Sec. 2(a) pertains to the CON
threshold.
Co-Chair Wilken removed this objection to Amendment #1.
There being no further objection, Amendment #1 was ADOPTED.
BLAINE GILMAN, Attorney, testified via teleconference from Kenai
and noted that his clients: The Lord's Ranch, Arkansas Counseling,
and Alaska Counseling among others; currently provide residential
psychiatric treatment for approximately 110 children in the State
of Arkansas, some of whom are from Alaska. He noted that these
clients are in the process of purchasing land in Kenai upon which
to construct a children's psychiatric treatment center. He asked
that consideration be given to implementing an October 1, 2004
effective date for the bill rather than an immediate effective date
as specified in Section 9, page five, line 27, as their project
would be negatively impacted were it required to adhere to the CON
specifications.
Mr. Gilman also requested adding the words "if necessary" to
building permit language as specified in Section 8, subsection
(c)(1)(B) on page five, line 23. He noted that while the land
currently identified for purchase by his clients is within the
Kenai Municipal Borough city limits, an alternate site is located
outside of the Municipality and, as such, is exempt from building
permit requirements. He asked that consideration be given to both
amendment suggestions.
Co-Chair Wilken asked the Department of Health and Social Services
to respond to Mr. Gilman's concern regarding the bill's effective
date.
JOEL GILBERTSON, Commissioner, Department of Health and Social
Services, affirmed that this legislation would incorporate
residential psychiatric treatment centers into the CON process. He
noted that, due to the unavailability of in-state services,
approximately half of the State's youth in need of these services
are receiving treatment outside of the State. He noted that the
effective date identified in this bill was determined based on the
Department's historical Certificate of Need process that has
addressed such things as how a project "in the works" would be
recognized. He furthered that the traditional interpretation of
grandfathering in a project that is "in the works" would include
projects that have a building permit; have a valid set of
architectural drawings; and of which valid construction has begun.
He stated that the Department's historical interpretation policy
was incorporated into the Senate HES committee substitute, as
referenced in Section 8, subsection (c) beginning on page five,
line 17 of Version "X".
Commissioner Gilbertson informed the Committee that there are,
currently, a number of private for-profit and non-profit
organizations examining whether or not to construct residential
treatment centers in the State, and he noted that were they all
furthered, they might provide more beds than the State requires.
Therefore, he communicated that the Department is supportive of
incorporating these types of facilities into the CON program as it
would provide the State the opportunity to oversee what the actual
needs of the State are and to determine the appropriate
geographical placement of these centers in order to best serve
those in need of services. He concluded therefore that the
Department supports an effective date consistent with historical
Department interpretation.
Co-Chair Wilken noted that the effective date issue had been
discussed in other committee hearings on the bill, and, while he
acknowledged Mr. Gilman's concern, he voiced understanding the
Department's "logic" in this regard.
There being no further questions regarding the effective date
clause, Co-Chair Wilken asked the Department to address the
building permit issue for facilities being constructed outside of
an organized community
Commissioner Gilbertson stated that Mr. Gilman's concern regarding
the appropriateness of requiring a building permit in an area where
none is otherwise required is "a fair comment." Therefore, he
stated that the Department would support an amendment to clarify
that were a building permit not otherwise necessary, the State
should not require it.
Conceptual Amendment #2: The intent of this conceptual amendment is
to clarify that a building permit would not be required for a
facility being constructed in a location that would otherwise not
involve a building permit, such as being outside of an organized
borough. The language being affected by this amendment is located
in Sec. 8, subsection (c) (1) (B) on page five, line 23 of Version
"X".
Senator Dyson moved to adopt Conceptual Amendment #2.
There being no objection, Conceptual Amendment #2 was ADOPTED.
Co-Chair Green asked whether the Senate HES Committee Letter of
Intent would supersede the House of Representatives Letter of
Intent.
Senator Dyson affirmed that it would.
Senator Dyson moved to adopt the Senate HES Committee Letter of
Intent.
Ms. Nielsen acknowledged that the Senate HES Committee Letter of
Intent was appropriate.
Co-Chair Green objected to the motion.
Co-Chair Green brought to the Committee's attention her on-going
concern regarding the discrepancies that exist "between regulations
and current statutes;" particularly in regards to some of the
decision making that is conducted in regards to the CON process.
She noted that this Letter of Intent specifies that CON applicant
information should not be made available before the CON has been
declared complete by the Department, as those involved in the CON
process should be assured that their preliminary information would
be kept confidential until that point.
Co-Chair Green removed her objection.
There being no further objection, the Senate HES Committee Letter
of Intent was ADOPTED.
Co-Chair Green moved to report the bill from Committee.
Senator Olson interjected that the CON process has evolved beyond
its original intent. Continuing, he declared that there is a belief
that the CON process is used as a tool by large health care
organizations to refrain smaller local health care entities from
advancing their service. Therefore, he asked how he could assure
small entities that this bill would not inhibit their ability to
compete with larger organizations or businesses.
Commissioner Gilbertson agreed that the Certificate of Need program
has been an issue of debate for a long time. He stated that the
Department endeavors to manage the CON program in a fair manner. He
stated that when reviewing a CON, one of the Department's primary
considerations is whether there is a need for the service. He noted
that the lone exception would be that the cost factor is an
additional concern in the case of long-term care facilities. He
stated, therefore, that the CON program has provided the State with
the ability to appropriately determine the level of need in a
community and statewide. He stressed that the Department has worked
aggressively to expand health care services in the State, and he
opined that the CON program "is not a barrier" to this goal. He
stated that this legislation would affect residential psychiatric
care facilities, imaging facilities, and ambulatory surgery
centers, as they are not currently included in the CON
requirements. He agreed that health care has changed since the
inception of the CON process; however, he stressed that the
Department is aware of the on-going challenge of fairly
administering the CON program during these "changing times."
Senator Olson reiterated the concern that the CON is a complicated
program and that providers in rural areas of the State are
concerned that larger organizations could use the program to the
disadvantage of smaller programs.
Commissioner Gilbertson replied that the Department reviews and
approves appropriate applications and denies inappropriate ones,
both from large and small organizations.
Senator Dyson declared that this bill would provide some
improvement to the current process. He stated that, in the bigger
picture, the process might not work well for a small entity that
wishes to offer services also offered by a larger facility.
However, he stated that assistance in the effort to address "the
deeper underlying problems" of providing health care in the State
is welcome.
Co-Chair Green restated her motion to report the bill, as amended,
and the HES Letter of Intent, from Committee with individual
recommendations and accompanying fiscal notes.
There being no objection, SCS CS HB 511(FIN) was REPORTED from
Committee, accompanied by the HESS Letter of Intent, and zero
fiscal note #1, dated March 1, 2004 from the Division of Public
Health, Department of Health and Social Services and zero fiscal
note #2, dated March 1, 2004 from the Division of Behavioral
Health, Department of Health and Social Services
AT EASE 11:20 AM / 11:21 AM
RECESS TO THE CALL OF THE CHAIR 11:21 AM / 3:54 PM.
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