Legislature(1999 - 2000)
03/03/1999 01:35 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 59-CERTIFICATES OF NEED FOR HEALTH FACILITY VICE-CHAIRMAN KELLY brought up SB 59 and announced that Mr. Jay Livey would provide an overview of the bill. Number 376 MR. JAY LIVEY, Deputy Commissioner, Department of Health & Social Services, explained that SB 59 would change the criteria for review of Certificate of Need applications for long-term care. Currently, if a facility is going to cost more than $1 million, it has to ask for a Certificate of Need from the department. Under the current criteria of review, the standards are availability, accessibility and quality. If a need can be demonstrated for the nursing bed, the DHSS is hard-pressed not to say yes. This bill adds several other criteria for the department to consider in its decision, including whether or not the nursing home expansion fits into the plans of the community for long-term care; whether or not the service provided will be efficient; and most importantly, the cost-effectiveness of the nursing home expansion. MR. LIVEY said 90% of the nursing home costs in Alaska are paid by Medicaid. The department operating budget in particular has an interest in the expansion of nursing home beds. If other ways to provide that long-term care were less expensive or more cost-effective to the state, the department could consider those in its decision-making process. Number 401 SENATOR WILKEN commented that SB 59 relates to Recommendation #21 of the LTCTF final report. He asked Mr. Livey to discuss the skepticism surrounding this kind of legislation. MR. LIVEY replied the skepticism probably arises from the degree to which people want the state to regulate this kind of business. The nursing home industry is largely run by private, nonprofit organizations, but it's all state money. Ninety percent of the $43 - $44 million the department spends on nursing homes out of the Medicaid program is state money. The department needs tools to regulate the growth and expenditure of the nursing home business. He continued, saying the department needs to look at other alternatives for providing that same level of care through assisted living, or through home and community-based waivers. DHSS runs the waiver program in conjunction with the DOA. Home and community-based care can be provided for significantly less expenditure than nursing home care. Number 426 SENATOR WILKEN asked Mr. Livey to explain the effect of the two- year moratorium on the Certificate of Need. MR. LIVEY said that two years ago the Legislature placed a two- year moratorium on the development of nursing home beds. The intent was to stop the growth of nursing home beds to let the more efficient and less expensive community based care system develop, including the building of more assisted living homes and expansion of the home and community-based waiver. It was fairly successful over the 2-year period. In 1998, about 143,000 patient days were provided through the home and community- based care system. These patient days included the provision of nutritional meals or a nurse visiting the home. Now, around 160,000 patient days are provided through the nursing homes, about equalizing the two different services. However, the 143,000 patient days cost the Medicaid program about $6.5 million, whereas the 160,000 patient days in institutions cost the Medicaid program about $44 million. The moratorium is now off. Where families have a choice, some feel the nursing home is the best care provider, while others like the community options. SENATOR ELTON asked if the department might never issue a Certificate of Need, if a criteria is cost-effectiveness. MR. LIVEY replied it is just one of the criteria that include accessibility and need. If there is consistently a waiting list for nursing home care, that would still be a criteria considered in the decision. SENATOR ELTON assumed there might be a demand, due to the two- year moratorium. MR. LIVEY stated that since it ended last September, the department has had one certificate pending. Facilities expanding the number of beds but falling below the $1 million threshold don't come to the department for review. Regarding the pending certificate, the department would review whether community-based services are available and the family still prefers the nursing home option; if so, the Medicaid program has an obligation to make it available and pay for that service. SENATOR WILKEN invited Ms. Jane Demmert to comment on the four bills. MS. JANE DEMMERT, Executive Director of the Commission on Aging, expressed the commission's support for the four bills which consider basic infrastructure to help aging residents stay in the state. The commission is now drafting resolutions of support for the bills that will be forwarded to the committee.