Legislature(1995 - 1996)

04/26/1996 09:10 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    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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