Legislature(2001 - 2002)
03/04/2002 01:35 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 256-CERTIFICATE OF NEED PROGRAM MR. JERRY BURNETT, staff to Senator Lyda Green, sponsor of SB 256, informed members that a proposed committee substitute (CS) is before the committee (Version O). The CS contains significant changes to the original bill. He explained those changes to members as follows. · Section 1 provides that all nursing home and psychiatric beds are subject to a certificate of need regardless of their location in Alaska; · It increases the threshold for a certificate of need to $2 million for facilities and $1 million for equipment but it exempts communities with a population of more than 55,000 from certificate of need requirements for acute care facilities; · Section 2 removes a section in current law that only allows for replacement of ambulatory-surgical facilities and applies to smaller communities; · Section 3 allows an exact replica of a facility to be built on the same site without a certificate of need and defines what is included in the $1 and $2 million thresholds. It says a donation or transfer of equipment is also included under the threshold for a certificate of need; · Section 4 establishes a specific timeline for the certificate of need process; · Section 5 sets up a time limit for decisions; · Section 6 puts all acute care, psychiatric and nursing home beds under the same standards for review, which allows the budgetary resources of the state to be considered; · Sections 7, 8, 9, 10, 11 and 12 address technical changes required by changes made in earlier sections of the bill; · Section 13 contains moratorium language for certain psychiatric beds (only those beds designated for children and adolescents); · Section 14 creates a working group to look at psychiatric care services and the certificate of need program. The group consists of 7 members: two providers of mental health services, two mental health service consumers or their parents or guardians; a physician whose primary practice is not the provision of mental health services; an administrator of a hospital who is not a provider of mental health services; and the commissioner of DHSS or his/her designee. This working group is tasked with looking at the principles used to develop the state's psychiatric care system and certificate of need process for psychiatric care beds and to recommend changes to statutes and regulations governing the certificate of need program to clarify the standards applied during the application process. SENATOR WARD moved to adopt Version O as the working document of the committee. There being no objection, the motion carried. CHAIRWOMAN GREEN called Dr. David McGuire to testify. DR. DAVID MCGUIRE, an orthopedic surgeon practicing in Anchorage, gave the following testimony. I appreciate the opportunity to testify on this bill - or the committee substitute and to discuss very briefly with you the issue of certificate of need in general. As most of you probably know, the certificate of need was originally enacted by the United States government during the Lyndon Johnson years in an effort to control the cost of health care. The theory was that if there were too many providers, all of the providers would be duplicating services and they would all have to charge more money for the duplication. Unfortunately, that theory doesn't work in anything else that we know about, and neither did it work in medicine. By 1987 the federal government recognized that this was not working and they repealed the law in its entirety. Unfortunately, as is seemingly the habit of the federal government, they had by then mandated that all states adopt this legislation in order to be in compliance with the Medicare-Medicaid regulations. But when the federal government got rid of the certificate of need, they left it entirely to the states. Many states have gotten rid of the CON, others have modified it, and some, like Alaska, have it pretty much intact from what it was when it was first adopted. It doesn't take much of a student of the scene to know that medicine has changed dramatically in the last few decades. The way we do medicine, the things that we can do and the way that it's delivered is radically different than what it was 20, 30 years ago. And so, the problem is, that there are many kinds of procedures that can be done better, quicker, cheaper in a setting other than a traditional hospital setting. Well, as of not too long ago, the hospital association seemed to think the same way and they argued for the repeal of the certificate of need. Since then they've changed their opinion and they argue that having surgery centers will cherry pick the patients. I don't know how many patients really think of themselves as being cherries to be picked, most of the time we think that patients would want to have a choice and be able to go where they want to go. They argue that having a surgery center will undercut the revenue base of the hospital and that it will in turn cause the hospital to go broke or to rely upon public subsidies or something of that nature. And even a superficial examination of the situation in Anchorage, Fairbanks and, to some extent, the Mat-Su, would lead you to rapidly different conclusions. The hospitals, in fact, are doing quite well. They have sufficient resources that they are able to spend on any project they want. They build any time they want and so I think the idea that they are endangered is probably not a good one. The certificate of need process, even if it were a good idea to begin with, has now become subject to political machinations to obfuscation to uncertainties as to who needs and who doesn't need. The department determined that a certificate of need was required in Fairbanks for two ambulatory centers. Unfortunately, the individual to whom this had been issued was not able to complete in a timely fashion the building of those two ambulatory operating rooms. The assumption would be that since Fairbanks has grown, and since the needs are greater, not less, that that same certificate of need issued some six or seven years ago would still be operant. But, we found upon application that the commissioner was able to, in short order, request an RFP for a study and the study was issued within 30 days of the RFP and the study was required to report within 60 days its conclusions. Well, it came to Fairbanks and studied the situation and came back with the following recommendation - that there was only a need for one ambulatory surgery room and that that being the case, one was not economically viable and therefore none were needed. But, it's interesting to see how they did that study. How they did it is they said that the operating room that FMH was granted in the original CON that was given to Dr. Odom (ph), FMH got one at the same time, that was to be designated as an ambulatory operating room where you can only count minutes in an ambulatory operating room from 7 in the morning until 5 at night because you don't do elective surgery at 3 in the morning. So that gives you 5 days a week times from 7 to 5 and that's the number of minutes. But when they came back to do the study, they lumped that in as an acute care room and therefore you get to count 24-7 365 which is some 50 - 60 percent increase in the number of operating room minutes and that's how the study determined that no certificate of need is needed. So my point, I guess, is it was a bad idea to begin with and it never worked and hasn't worked and hasn't worked anywhere else and it has become a process that is highly, highly political and subject to manipulation, is not fair, is not reasonable. To the extent that the very small communities feel their hospital care is threatened, this bill would exempt them from any such threat. Communities like Homer, Kenai, Juneau, etcetera would continue to live under the same certificate of need that's been in existence since it was first put on the books. But in larger communities where there is a demonstrable need, in my opinion, for competitive activities, the experiment could be done without a disaster occurring to any of the hospitals. For those reasons, I would urge your consideration and support of this. CHAIRWOMAN GREEN said at this time she will set aside SB 256 to give members time to study it. She then took up SB 302.