Legislature(1999 - 2000)

03/03/1999 01:35 PM HES

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

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