Legislature(2003 - 2004)
05/05/2004 01:56 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 511-CERTIFICATE OF NEED PROGRAM
The committee took up CSHB 511(HES)am.
CHAIR DYSON referred to page 2, line 3, (version A) and offered
an amendment, designated as Amendment 1.
A M E N D M E N T 1
OFFERED IN THE SENATE BY SENATOR DYSON
TO: CSHB 511(HES) am
Page 2, line 1:
Delete "new subsections"
Insert "a new subsection"
Page 2, lines 2 - 3:
Delete all material.
Page 2, line 4:
Delete "(e)"
Insert "(d)"
Page 5, line 10:
Delete "and (e)"
Delete "apply"
Insert "applies"
CHAIR DYSON explained that with this amendment, a health care
facility that has gotten a Certificate of Need (CON) approved
and has been in business can move that same capacity without
going through the CON process. It deletes the existing section
(d), [page 2], lines 2 and 3 indicating this can only be done
once. The department agrees that as long as it's the same
capacity and the same community, it can be moved.
SENATOR LYDA GREEN objected.
MS. SARA NIELSEN, Staff to Representative Ralph Samuels, sponsor
of HB 511, testified that the sponsor would not have a problem
with the amendment.
CHAIR DYSON added that the department would not have a problem
with this either.
SENATOR GREEN asked if this was just the deletion of lines 2 and
3, and everything else would be conforming.
CHAIR DYSON confirmed this was the case and said, "The rest of
it just cleans it up."
SENATOR GREEN asked if this just moves everything up and changes
(e) to (d).
CHAIR DYSON said yes. He asked if the objection was maintained.
SENATOR GREEN wondered if "apply" was now in the singular.
SENATOR GRETCHEN GUESS referred Senator Green to page 5, line
10.
SENATOR GUESS said for the record that one reason this section
can be deleted is because of the understanding on page 1, line
7, that "in order to relocate the services" means the entire
services, so there will not be a two-for-one situation whereby
those services can be moved.
MS. NIELSEN confirmed this was correct. She said [Legislative]
Legal's opinion of "relocate" means these services.
SENATOR GUESS asked if it applies to [services], and received
confirmation this was correct.
CHAIR DYSON said for the record it does not refer to a previous
facility where the services are located that is not under an
approved CON - this will not be grandfathered - the CON moves
with the service.
CHAIR DYSON asked again if the objection was maintained. [It
was not.] Amendment 1 was adopted.
Amendment 2 was distributed to members.
CHAIR DYSON explained that two or three new kinds of facilities
are included, and would now be included under the CON process.
Amendment 2 indicates that if somebody already has a project
underway - with plans, a building permit, and is moving dirt -
they are grandfathered in. The rules aren't being changed for
somebody who is already committed to a project, which only seems
fair. [Amendment 2 reads as follows:]
AMENDMENT 2
Senator Davis
OFFERED IN SENATE HESS
TO: HB 511
Page 5, Line 16:
Add:
(c) AS 18.07.043, enacted by sec. 4 of this Act, does not apply
to a health care facility that is under construction on the
effective date of this Act if
(1) the health care facility is in compliance with all
(other) applicable requirements; and
(2) the health care facility's project under construction
(A) includes completed architectural plans
approved by the applicable authority;
(B) has acquired a building permit;
(C) has begun the construction of the building's
foundation; and
(D) will be completed within two years of the
effective date of this Act.
SENATOR BETTYE DAVIS moved to adopt Amendment 2.
SENATOR GARY WILKEN objected and asked if this amendment would
apply to a situation wherein architectural plans exist but a
building permit has not been acquired. He asked if
[(A),(B),(C),(D)] are required?
SENATOR DAVIS responded the department said these were
necessary.
SENATOR WILKEN removed his objection.
SENATOR GUESS referred to the statement, "(1) the health care
facility is in compliance with all applicable requirements" and
asked if, according to Legislative Legal this includes CON. She
requested a circular reference.
MS. NIELSEN said the drafter was on-line.
MS. JEAN MISCHEL, Legislative Legal Services, testified that
there may be an ambiguity that went unnoticed. It could say all
other applicable federal, state, and local laws. This
subsection makes it clear that it's not applicable, so there
shouldn't be a conflict. In other words, the applicability
section takes it out of a CON requirement. To be completely
clear, the word "other" could be added in between the words
"all" and "applicable."
SENATOR GUESS moved to amend Amendment 2 to insert the word
"other" between "all" and "applicable."
CHAIR DYSON asked if there was any objection. There being none,
the amendment to Amendment 2 was adopted.
SENATOR GREEN referred to "(D) will be completed within two
years of the effective date of this Act" and asked if it wasn't
completed within two years, would there be a process by which
that process ends, and they're not grandfathered.
CHAIR DYSON responded this was implied, and it would be subject
to the CON process.
SENATOR GREEN asked where (c) AS 18.07.043 would be inserted in
the bill.
MS. MISCHEL replied that this would not go into codified law in
the statutes; it's a temporary applicability permission that is
in session law.
CHAIR DYSON asked if the objection was maintained.
SENATOR WILKEN withdrew his objection.
CHAIR DYSON announced Amendment 2 as amended was adopted.
SENATOR GREEN moved the Letter of Intent [referred to as
Amendment 3 during the meeting]:
HB 511 Letter of Intent
[as amended]
It is the intent of the Legislature that the
Commissioner of the Department of Health and Social
Services convene a task force to review existing
Certificate of Need procedures and standards. The task
force shall identify measures to improve the
efficiency and effectiveness of the Certificate of
Need Program. The task force shall include members who
represent a broad range of health care facilities
[and] , providers , and representatives with a
background in health care policy development. The task
force will report its findings and recommendations
directly to the Commissioner.
It is further the intent of the Legislature that the
Commissioner of the Department of Health and Social
Services move expeditiously to update Certificate of
Need regulations, policies, and procedures including
developing standards including those for concurrent
review, the public release of documents under the
certificate of need program, and time lines regarding
the certificate of need process. In so doing, the
Commissioner shall fully consider the recommendations
of the Certificate of Need task force.
[The House adopted the above letter of intent, with new language
underlined and bolded.]
SENATOR GREEN said the department helped in the drafting, and
this addresses the concern for the current inadequacy between
statutes and regulations, and developing the standards for
concurrent review. Another concern is a public release of
documents under the CON program in which information is released
too soon. She said document release should not take place until
someone has committed to a project, the application is complete
and they're going to move forward. It should not occur when a
letter of intent is complete, for that could lead to disclosure
of proprietary information.
SENATOR WILKEN asked if the House also has a Letter of Intent.
SENATOR GREEN said yes and this supersedes that letter; the
underlined sections are the additions.
SENATOR GUESS asked for an explanation of, "including developing
standards for concurrent review."
SENATOR GREEN said there have been times when more than one
provider of services has filed a Letter of Intent, and another
has coincidentally filed and begun the process at the same time.
There is a concurrent comparative review that is conducted by
the CON assessment people. She said this could become
cumbersome, and it is desirable for the privacy section to apply
until the CON application is deemed complete. The information
provided to the department should not be public information
until there's a bona fide move forward with the application
because that is very proprietary information. A hospital or
group that wants to expand may begin the process and decide to
come back in three or four years. If the word is on the street,
everyone knows of the intention to expand, move or whatever. If
that certificate applicant wants to share that information
that's fine, but if not, then that information should be
withheld.
SENATOR GUESS asked if there was a reason why policies and
procedures are not mentioned regarding objective criteria and
that the procedures of determining CON be expeditiously updated.
She commented that it is disturbing that the commissioner
couldn't say how CON decisions are made. She asked if there is
a reason why policies and procedures weren't included in the
letter.
MS. JANET CLARK, Division of Administrative Services, Department
of Health & Social Services (DHSS) said it was included in the
second paragraph where it says, "move expeditiously to update
Certificate of Need regulations, policies and procedures
including developing standards for concurrent review." Ms. Clark
said there might have been a drafting error, as the intent was
to say "developing standards, including those for concurrent
review." She said the department's intent is to support being
urged to expeditiously develop those written standards.
SENATOR GUESS asked how adding "including those" addresses this.
MS. CLARK responded the Letter of Intent pertains to the CON,
and the department is in the process of developing standards for
the program.
SENATOR GUESS said the point is more about "determination of
CON" but she would trust the department on this.
SENATOR GREEN moved to amend the Letter of Intent by adding
"including those" in the fourth line from the bottom of the
second paragraph of the Letter of Intent.
CHAIR DYSON asked if there was any objection. There being none,
the amendment to the [Letter of Intent] was adopted.
SENATOR GREEN moved to adopt the Letter of Intent.
CHAIR DYSON asked if there was any objection. There being none,
the Letter of Intent [referred to as Amendment 3] as amended was
adopted.
MS. NIELSEN told members she could speak to a further conceptual
amendment. She explained that page 2, lines 4 and 5 addresses
the net present value of the lease or space for the $1 million
in the expenditure. There is no current definition of
"expenditure" in the CON, so the amendment would add this
definition, and delete lines 4 and 5 on page 2.
MS. MISCHEL offered an unrevised version. She re-stated the
intent is to move the definition of "expenditure" and to delete
lines 4 and 5 on page 2. On page 5, following line 7, a new
definition would read: "(11) 'expenditure' means a payment made
for one or more purposes described under AS 18.07.031 and
includes the purchase of property occupied by or the equipment
required by the health care facility and the net present value
of the lease or space occupied by or the equipment required from
the health care facility." She pointed out a technical
conforming change on page 5, line 10, the deletion of "and (e)."
SENATOR GUESS said she worked on this amendment with the sponsor
and asked about including purchase, lease, and some equivalent
of other creative financing mechanisms that an accountant might
find, one day. She said it was critical for the diagnoses
testing facilities and that she was looking to the sponsor for
some help on replacement and upgrade so as to not set up a
situation whereby someone in business has to replace a machine
in five years and possibly be denied the CON. She said her
intent in defining "expenditure" was to cover everything and
also to clarify what it isn't.
MS. MISCHEL responded that the definition could be amended to
read, "an expenditure does not include costs associated with
routine maintenance and replacement of equipment at an existing
health care facility." She responded to Senator Guess's
question, saying that creative accounting principles had been
contemplated in this drafting. She pointed out that the use of
"and includes" is not limiting, so those are examples of
specific expenditures that would be included but it doesn't
exclude other types of expenditures. She said the use of the
phrase "payment made for one or more purposes" was as broad as
she could make it.
SENATOR WILKEN referred to page 2, lines 4 and 5, regarding an
expenditure being the net present value of a lease and/or
equipment, and according to what is being proposed, asked what
the list would now look like.
MS. MISCHEL responded that the amendment moves that language to
the back of AS 18.07 in the event that the word "expenditure" is
used in a different section. It also applies to purchases.
SENATOR WILKEN asked, "Purchases of [what]?"
MS. MISCHEL responded purchases of property occupied by the
facility, or equipment required for the facility. She said
another addition was the phrase, "payment made for one of the
purposes under the CON statute."
SENATOR WILKEN asked why "net present value" is used rather than
just "present value."
MS. MISCHEL said she was asked to preserve the language, "net
present value" from the original, and it's a policy call.
SENATOR WILKEN stated that he knows what "present value" is, but
not "net present value."
MS. NIELSEN repeated this language was carried forward.
SENATOR GUESS suggested that in this context, "net present
value" might be the value of the lease. One would have to go
through the future years of the lease and back out the
opportunity costs of spending that money somewhere else, to
actually have a value of that lease versus a one-time payment on
the present value. A lease's present value would be the payment
of that year, but if it's a lease for five years, one wants the
value of that entire lease.
SENATOR WILKEN asked, "What do you back out of the present value
to make it a net present value?"
SENATOR GUESS replied, "opportunity costs, and money" which is
normally reflected in inflation.
The committee took an at-ease.
[No further business was conducted on record.]
[The committee was recessed to the call of the Chair at 2:45
p.m.]
CSHB 511(HES)am was held in committee.
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