Legislature(1999 - 2000)
03/16/2000 08:25 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 16, 2000
8:25 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Jim Whitaker
Representative Bill Hudson
Representative Beth Kerttula
Representative Hal Smalley
MEMBERS ABSENT
Representative Joe Green
Representative Scott Ogan
COMMITTEE CALENDAR
HOUSE BILL NO. 292
"An Act adopting the National Crime Prevention and Privacy
Compact; making criminal justice information available to
interested persons and criminal history record information
available to the public; making certain conforming amendments;
and providing for an effective date."
- MOVED HB 292 OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 379
"An Act relating to credited service under the public employees'
retirement system for peace officers and fire fighters on leave
without pay or receiving workers' compensation benefits because
of certain on-the-job injuries."
- MOVED CSSSHB 379(STA) OUT OF COMMITTEE
HOUSE BILL NO. 297
"An Act relating to the certificate of need program; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 137
"An Act relating to the municipal dividend program; and
providing for an effective date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 330
"An Act establishing Prisoners of War and Missing in Action
Recognition Days and Women Veterans Day; and providing for an
effective date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 331
"An Act relating to payment, allowances, and benefits of members
of the Alaska National Guard and Alaska Naval Militia in active
service; relating to computation of certain benefits for members
of the Alaska State Militia; and providing for an effective
date."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 292
SHORT TITLE: DISCLOSURE OF CRIMINAL HISTORY RECORDS
Jrn-Date Jrn-Page Action
1/21/00 1954 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1954 (H) STA, JUD
1/21/00 1955 (H) ZERO FISCAL NOTE (DPS)
1/21/00 1955 (H) GOVERNOR'S TRANSMITTAL LETTER
2/22/00 (H) STA AT 8:00 AM CAPITOL 102
2/22/00 (H) Scheduled But Not Heard
2/29/00 (H) STA AT 8:00 AM CAPITOL 102
2/29/00 (H) Scheduled But Not Heard
3/02/00 (H) STA AT 8:00 AM CAPITOL 102
3/02/00 (H) Scheduled But Not Heard
3/07/00 (H) STA AT 8:00 AM CAPITOL 102
3/07/00 (H) Heard & Held
3/07/00 (H) MINUTE(STA)
3/09/00 (H) STA AT 8:00 AM CAPITOL 102
3/09/00 (H) Heard & Held
3/09/00 (H) MINUTE(STA)
3/16/00 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 379
SHORT TITLE: PERS CREDIT:PEACE OFFICERS/FIRE FIGHTERS
Jrn-Date Jrn-Page Action
2/16/00 2213 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2213 (H) STA, FIN
2/28/00 2331 (H) SPONSOR SUBSTITUTE INTRODUCED
2/28/00 2332 (H) READ THE FIRST TIME - REFERRALS
2/28/00 2332 (H) STA, FIN
3/07/00 (H) STA AT 8:00 AM CAPITOL 102
3/07/00 (H) Scheduled But Not Heard
3/16/00 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 297
SHORT TITLE: CERTIFICATE OF NEED PROGRAM
Jrn-Date Jrn-Page Action
1/21/00 1961 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1961 (H) HES
2/02/00 2076 (H) COSPONSOR(S): KOTT
2/10/00 (H) HES AT 3:00 PM CAPITOL 106
2/10/00 (H) Heard & Held
2/10/00 (H) MINUTE(HES)
2/11/00 2186 (H) STA REFERRAL ADDED
2/15/00 (H) HES AT 3:00 PM CAPITOL 106
2/15/00 (H) Moved CSHB 297(HES) Out of Committee
2/15/00 (H) MINUTE(HES)
2/18/00 2235 (H) HES RPT CS(HES) 4AM
2/18/00 2235 (H) AM: GREEN, DYSON, COGHILL, BRICE
2/18/00 2236 (H) FISCAL NOTE (DHSS)
2/18/00 2236 (H) REFERRED TO STA
2/23/00 2289 (H) COSPONSOR(S): BUNDE
2/24/00 (H) STA AT 8:00 AM CAPITOL 102
2/24/00 (H) Heard & Held
2/24/00 (H) MINUTE(STA)
2/29/00 (H) STA AT 8:00 AM CAPITOL 102
2/29/00 (H) Heard & Held
2/29/00 (H) MINUTE(STA)
2/29/00 (H) MINUTE(STA)
3/06/00 (H) STA AT 9:00 AM CAPITOL 102
(SUBCOMMITTEE)
3/06/00 (H) MINUTE(STA) (SUBCOMMITTEE)
3/16/00 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
ELMER LINDSTROM, Special Assistant
to Commissioner Perdue
Department of Health and Social Services
PO Box 110601
Juneau, Alaska 99811
POSITION STATEMENT: Provided department's position and answered
questions regarding HB 297.
LARAINE DERR, President/CEO
Alaska State Hospital and Nursing Home Association
426 Main Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in opposition to HB 297.
SHARON ANDERSON
Alaska State Hospital and Nursing Home Association
18820 Fish Hatchery
Eagle River, Alaska
POSITION STATEMENT: Commented on HB 297.
BARBARA HUFF-TUCKNESS, Director
of Legislative and Governmental Affairs
Teamsters Local 959
520 G Street and 34th Street
Anchorage, Alaska
POSITION STATEMENT: Commented on HB 297.
RICK SOLEY, Director of Community Relations and Planning
Fairbanks Memorial Hospital and Denali Center
Fairbanks, Alaska
POSITION STATEMENT: Commented on HB 297.
JASON ELSON, Fire Chief
City of Kenai
105 South Willow Street
Kenai, Alaska 99611
POSITION STATEMENT: Testified in support of HB 379.
ACTION NARRATIVE
TAPE 00-21, SIDE A
Number 0001
CHAIR JEANNETTE JAMES called the House State Affairs Standing
Committee meeting to order at 8:25 a.m. Members present at the
call to order were Representatives James, Whitaker, Hudson,
Kerttula, and Smalley. Representative Hudson arrived as the
meeting was in progress. Representatives Green and Ogan were
absent.
HB 292-DISCLOSURE OF CRIMINAL HISTORY RECORDS
Number 0016
CHAIR JAMES announced the first order of business is HOUSE BILL
NO. 292, "An Act adopting the National Crime Prevention and
Privacy Compact; making criminal justice information available
to interested persons and criminal history record information
available to the public; making certain conforming amendments;
and providing for an effective date."
CHAIR JAMES said the committee has heard HB 292 several times
and she would entertain a motion to move the bill out of
committee, unless someone offers more discussion.
Number 0085
REPRESENTATIVE WHITAKER made a motion to move HB 292 out of
committee with individual recommendations and attached zero
fiscal note. There being no objection, HB 292 moved from the
House State Affairs Standing Committee.
HB 379-PERS CREDIT:PEACE OFFICERS/FIRE FIGHTERS
CHAIR JAMES announced the next order of business is SPONSOR
SUBSTITUTE FOR HOUSE BILL NO. 379, "An Act relating to credited
service under the public employees' retirement system for peace
officers and fire fighters on leave without pay or receiving
workers' compensation benefits because of certain on-the-job
injuries."
Number 0145
REPRESENTATIVE SMALLEY offered Amendment 1, 1-LS1437\G.1,
Cramer, 3/6/00, which read:
Page 1, line 2:
Delete "on leave without pay or"
Page 1, lines 6 - 12:
Delete "When a member who was employed as a peace
officer or fire fighter in the public employees'
retirement system applies for appointment to
retirement, the member may claim credited service for
days that the member was employed as a peace officer
or fire fighter and was on leave-without-pay status
because of a physical injury incurred while on the
job, or was not employed and was receiving workers'
compensation benefits under AS 23.30 because of a
physical injury incurred while on the job, as a peace
officer or fire fighter."
Insert "When a member applies for appointment to
retirement, the member may claim credited service for
days that the member was not employed and was
receiving workers' compensation benefits under AS
23.30 because of a physical injury incurred while
employed as a peace officer or fire fighter in a
position covered by the public employees' retirement
system."
CHAIR JAMES asked if the amendment actually removes language
from HB 379 and puts in new language. She inquired if she was
correct that the only change is in the title, page 1, line 2,
"on leave without pay or."
Number 0266
REPRESENTATIVE SMALLEY replied that there was also a deletion in
page 1, lines 6-12, and a new insertion. Primarily the
amendment clarifies and references the timeframe in which a fire
fighter or law enforcement officer injured on the job is on
workers' compensation and subsequently terminated. He noted
that the injured person would have expired all his/her personal
leave and sick leave. Due to the fact that the agency or
department needs to either replace the position and terminate
the employee or else the employee makes a self-determination,
the amendment covers only that period of time when the employee
is terminated.
CHAIR JAMES asked what SSHB 379 does.
REPRESENTATIVE SMALLEY answered that SSHB 379 allows an
employee, fire fighter or law enforcement officer, who is
injured on the job to purchase the time period when he/she was
on workers' compensation, but terminated from employment, and
credit it toward his/her retirement. While the employee is on
approved leave but leave expires and he/she is still employed,
he added, and on worker's compensation from that injury, the
employee is covered by employer and employee contribution. He
said that SSHB 379 only applies to that period of time when the
employee is unemployed but still on worker's compensation from
an injury suffered in the line of duty.
Number 0427
CHAIR JAMES asked if the state pays or the employee pays for
SSHB 379.
REPRESENTATIVE SMALLEY replied that the employee pays for
his/her entire retirement credit.
CHAIR JAMES said she understood that the employee pays in that
window of time. Since there is no cost to the state, there is a
zero fiscal note.
REPRESENTATIVE SMALLEY said in 1999 there were 42 employees in
this category who applied for disability; of those, 18 were
approved and 9 were denied. He noted that there is no cost to
the state for SSHB 379, and that it actually allows compensation
to an employee who has been injured while performing a duty for
the state or the city.
CHAIR JAMES noted that Representative Hudson had just arrived.
For his benefit, she explained that the amendment redefined SSHB
379 in language that met the sponsor's intent regarding when the
window of opportunity is available to an injured employee.
Number 0626
JASON ELSON, Fire Chief, City of Kenai, and a representative of
the Alaska State Fire Chief's Association, testified via
teleconference from Kenai. He said that he and his association
support SSHB 379. He explained that he thinks that public
safety officers, fire fighters, and police officers are
deserving of this credit. He asked for committee support of
SSHB 379.
Number 0682
REPRESENTATIVE HUDSON made a motion to adopt Amendment 1 [text
provided previously]. There being no objection, Amendment 1 was
adopted.
REPRESENTATIVE HUDSON made a motion to move SSHB 379, as
amended, out of committee with individual recommendations and
the attached zero fiscal note; he requested unanimous consent.
There being no objection, CSSSHB 379(STA) moved from the House
State Affairs Standing Committee.
HB 297-CERTIFICATE OF NEED PROGRAM
Number 0771
CHAIR JAMES announced the next order of business is HOUSE BILL
NO. 297, "An Act relating to the certificate of need program;
and providing for an effective date."
CHAIR JAMES read the new sponsor statement as follows:
The current version of HB 297 is quite different from
the original, because after a great deal of discussion
we have found a solution to the immediate problem
without raising the $1,000,000 floor.
This version allows relocation of a health care
facility to a new site in the same community without a
certificate of need (CON) as long as there is no
increase in the services offered.
It disallows use of the vacated site for another
health care facility without a CON.
All parties still admit that Alaska's CON process
needs a thorough examination and possible changes, and
I am committed to spending the next two years doing
that.
Number 0904
REPRESENTATIVE HUDSON made a motion to adopt the proposed
committee substitute (CS) for HB 297, version 1-LS1303\M,
Lauterbach, 3/15/00, as a work draft. There being no objection,
proposed CSHB 297, Version M, was before the committee.
Number 0929
CHAIR JAMES noted that the difference in the proposed CS from
existing language is new subsection (c); it allows a facility to
move to a new site in the same community without obtaining a CON
as long as services are not expanded. No one can use the
vacated site again for a health care facility without a CON
because that would be increasing services. She understood that
the CON determines whether or not there is a need for services
so someone should be able to move their facility without a CON
because they are not increasing services. The proposed CS
precludes setting up another health care facility in the vacated
building.
REPRESENTATIVE WHITAKER quoted from the new sponsor statement as
follows: "The current version of HB 297 is quite different from
the original because, after a great deal of discussion, we have
found a solution to the immediate problem..." and commented he
is puzzled. He said he does not know what the immediate problem
is.
Number 1114
CHAIR JAMES explained that in Anchorage a [health care facility]
wants to move because it needs parking space and doctors'
offices, neither of which requires a CON. She commented that
she has reviewed CON timeframes for the last five years from the
beginning and end of a CON application; she has found that CON
time frames are extensive. She mentioned that when a facility
plan a move there are timelines and commitments; based on past
experience, the CON could not be finished in the proper length
of time. The idea that the proposed CS was drafted to fix
someone's problem is not the issue with her; rather, she thinks
it is good legislation. There may well be someone else who
might want to move tomorrow, and it can be argued that a CON is
needed, but she says a CON is not needed as long as services are
not expanded. She acknowledged that the Anchorage situation
would benefit from passage of the proposed CS.
Number 1247
REPRESENTATIVE SMALLEY asked how doctors' offices could be
increased at the new facility in Anchorage and not increase
services, as precluded by the proposed CS.
CHAIR JAMES replied that expansion of doctors' offices or
parking lots is not included in health care services that
require a CON. She acknowledged that a question arises as to
greater size of the new facility to which the health care agency
moved coming from a smaller facility. She said that if a health
care agency had only one of something, they can only have one of
something in their new facility. She stated that the new
facility could be bigger, but it cannot add more services than
it had before.
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,
Department of Health and Social Services, confirmed Chair James'
belief that the proposed CS is quite different from the
original. He said in one sense it is more restrictive than the
previous bill; in another sense, it is more expansive. He noted
that under previous legislation, HB 297 spoke to a threshold of
$7 million under which either a new entrant into the medical
market could be exempt from a CON, or someone who had an
existing facility could relocate or expand without a CON if they
were under the $7 million threshold. He explained that the
proposed CS no longer speaks to a changed financial threshold
but rather is limited in its application to entities who are
currently lawfully operating a health facility as described in
statute. He commented that the proposed CS is limited to people
who are already in business and would have no impact on people
who wanted to enter a new market.
MR. LINDSTROM mentioned that the proposed CS is more expansive
in the sense that without the financial threshold, it applies to
all acute care facilities under the CON law, large as well as
small, free-standing outpatient facilities as well as hospitals.
He indicated that the department has no objection in attempting
to solve the problem as described by the sponsor in the
situation of a facility wanting to relocate but not to increase
capacity.
MR. LINDSTROM informed the committee that to the department,
capacity means things like additional surgery suites and
magnetic resonance imaging (MRI) units. Capacity does not speak
to a relocated facility that happens to have greater square
footage, and he believes that everyone has a common
understanding. He acknowledged that over time all terms used in
the proposed CS would be subject to interpretation and
discussion, for example, words like "community," "capacity" or
"greater." He is comforted in that Chair James indicated she
will continue to review the [CON] statute.
MR. LINDSTROM said the first thing that occurred to him
regarding expansion of the proposed CS is that his department is
considering relocating the Alaska Psychiatric Institute (API),
and API is now in negotiations with Charter North. He cited API
as an example where the proposed CS language would come into
play. He does not know what the ramifications would be but
doubts that the proposed CS will affect negotiations.
Number 1695
CHAIR JAMES said it seems the proposed CS rules would apply if
the department wants to relocate API. If API is making a deal
with Charter North, which results in expanded services, then API
must obtain a CON. However, if API will not be bigger, no CON
is required.
MR. LINDSTROM said he understood that API would be downsized by
relocating into the Charter North facility so perhaps API would
not be required to obtain a CON. He noted that there is a
letter of intent on file from Charter North to build a new
facility but maybe they would not be required to obtain a CON
because API would be backfilling the existing facility. He
cited this situation as an opportunity where the proposed CS
would come into play, but it clearly would not have under the
previous version of HB 297.
CHAIR JAMES explained that she does not think the proposed CS
will change the [CON] situation much but will only limit change
to expansion of services. She suspected that if API had wanted
to move before the proposed CS was presented, it would have had
to obtain a CON even if it is downsizing. Charter North also
would have had to obtain a CON because it wants to move, and no
health facility can move without a CON. She envisioned that if
API downsized and moved into the Charter North facility, API
would not have to obtain a CON under the proposed CS.
Number 1859
MR. LINDSTROM agreed that if Charter North chose to build a new
facility, it would have to obtain a CON, whereas API would not
if it moved into Charter North's facility unless renovation
exceeded $1 million.
CHAIR JAMES said she felt the proposed CS is a benefit in that
situation because it means one less CON.
MR. LINDSTROM reiterated that he was not saying the proposed CS
is a barrier to the department, just that the proposed CS will
probably impact the department's plans for API. He noted that
another issue that has been raised because of the proposed CS is
the impact to those facilities subject to the Medicaid rate-
setting system, in that the proposed CS may change the way
facilities' capital expenditures flow through the rate-setting
system as it exists today. He explained that he understood that
a facility expanding or relocating a function obtains a CON and
can then capitalize the costs immediately in the next rate-
setting cycle whereas if the proposed CS were to become law,
recapture of capitalized costs would be delayed.
Number 1963
CHAIR JAMES stated that the Medicaid rate-setting argument does
not sell with her. She reiterated that her belief is that the
CON exists to ensure that health care services are needed.
Therefore, she added, if services are needed and there is a
problem with the way Medicaid rate setting is done, the
legislature needs to fix that problem too, which is part of her
two-year commitment to review the CON. She said she does not
share the fear that Mr. Lindstrom has expressed.
MR. LINDSTROM reiterated that he does not suggest that the
proposed CS is a barrier, it is simply an imponderable because
he does not understand all the possible implications. He said
the indeterminate fiscal note will likely remain as is because
of the imponderables and lack of knowledge about which
facilities in which communities may or may not choose to use the
proposed CS.
Number 2065
REPRESENTATIVE KERTTULA noted that right now the proposed CS is
written not requiring a CON for relocation or if bed capacity
and health care categories do not increase. She explained that
the language is a little bit different by definitely limiting
bed capacity and health care categories. She commented that the
[CON] statute now says "as long as there is no alteration of bed
capacity" which means no addition or elimination of a category.
She said that the proposed CS might be able to eliminate a
category, and she does not know whether that is a real concern.
MR. LINDSTROM replied that it was the department's suggestion
that the proposed CS limit its application to situations where
there would be increased capacity as the department is not
concerned about less capacity.
REPRESENTATIVE HUDSON recognized that a CON is a community
assessment of services legitimately needed. He mentioned that
the department may not want to diminish services in view of the
assumption of why a CON exists. Maybe the current statute is
correct in not allowing neither increase nor decrease.
Number 2201
MR. LINDSTROM indicated that it is the department's preference
to keep the language as is in the proposed CS because the
department is not concerned about decrease in services. He
reiterated that the imponderables are going to be driven by the
situation in each individual community. Recently the federal
government passed a new law creating a new type of hospital
called a critical access hospital. He said that the new law was
driven by circumstances in the Lower 48 where many small rural
community hospitals were having a tough go and many were
disappearing.
MR. LINDSTROM noted that the federal government wanted to
support those small rural facilities but also give them some
flexibility where the facility did not have to have all the
"bells and whistles" that a regular hospital would have. He
commented that his department is pursuing that option here in
Alaska through regulation to allow facilities to be licensed as
critical access hospitals, and he believes some communities may
be interested. When those communities do replace their existing
facilities, they may very well downsize the number of beds and
become critical access hospitals, thus removing the need for
obtaining a CON. While community hospitals may downsize number
of beds, they may want to expand into other services that they
previously did not have, such as greater outpatient capacity,
which would require a CON. He emphasized that the CON
discussion is driven by the fact that the practice of medicine
has changed dramatically since the CON law was originally
drafted. He acknowledged that hospitals are moving to do more
outpatient services, and many free-standing outpatient
facilities are doing things that historically would have only
been done in a hospital. He reiterated that changing dynamics
of the industry and technology is really driving the [CON]
discussion.
Number 2342
CHAIR JAMES agreed that health care services are delivered today
differently than 20 years ago. She emphasized that the
committee must not forget who the patients are because giving
the best service, and treating patients when they need treatment
is the issue. She reiterated that it is not easy to think about
patients without thinking about money, but public health needs
must be met; that should be the driving force behind
legislation.
REPRESENTATIVE WHITAKER inquired as to where Mr. Lindstrom was
in thought process regarding Medicaid capitalization and what is
happening [in that area].
MR. LINDSTROM advised that the department has been discussing
theories with the Alaska State Hospital & Nursing Home
Association (ASHNHA) and both share a desire to review the rate-
setting system with a goal of simplification. He said that part
of the concern he feels about the proposed CS language relates
to the rate-setting system because he fears it might create
another issue that must be solved.
Number 2448
CHAIR JAMES asked Mr. Lindstrom if it was true that all issues
of the Medicaid rate setting ought to be addressed and if the
proposed CS brings this issue to light, that is not bad. She
said she understood that the department wanted to make the [CON]
issue simpler, but she also suspects that it wanted to make it
less, and her personal opinion is that less is not where the
state needs to go. She explained that she wants [Medicaid] to
be right and balanced with what other folks pay so that the cost
of Medicaid is not balanced on the backs of people who have no
insurance or who have private insurance.
Number 2490
MR. LINDSTROM commented that it is the rule of the road, at
least from the department's perspective, that a new system must
be cost neutral. It is not the department's desire to use
discussion results as a means to reduce reimbursement to
hospitals. It is also the department's belief, in view of the
financial environment, that rate-setting discussions should not
be a tool to greatly increase expenses. He acknowledged that it
is difficult to maintain a cost-neutral discussion when any
system is reconfigured in the context of cost neutrality because
there will inevitably be winners and losers.
CHAIR JAMES reiterated that cost is not an issue with her, and
she is not willing to say that discussions will be cost neutral
or a reduction or an increase.
MR. LINDSTROM replied that all discussions until now have been
in the context of what can be done in a regulatory framework and
by the time the committee finishes discussion today regarding
the proposed CS, the committee will be looking at statutory
changes. He stated that he hoped that everyone cooperates and
comes back with something that makes the most sense but he does
not underestimate the difficulty of reviewing the rate-setting
system.
Number 2595
LARAINE DERR, President/CEO, Alaska State Hospital and Nursing
Home Association, testified in opposition to HB 297. She said
she had received the proposed CS draft and spoken several times
with Chair James, but she continues to oppose HB 297 and so
states by a letter dated March 15, 2000 written to
Representative James because ASHNHA feels that the whole [CON]
process should be reviewed. She agreed with Mr. Lindstrom that
doing anything in health care without the CON creates problems
with the Medicaid rate-setting system.
Number 2663
SHARON ANDERSON, Alaska State Hospital and Nursing Home
Association, said she is pleased that the subcommittee is
studying all the issues concerning the [CON] because it is an
interrelated issue and complicated. She noted that one of the
factors to be considered in the whole domino effect is the new
proposed regulations that will impact the Medicaid rate-setting
system. She explained that one of the proposals is that non-CON
replacement items or capital issues will not be recoverable
through the rate-setting process. She mentioned that the
proposal is an indication that the state does use the CON
process to contain costs, albeit not a perfect one.
REPRESENTATIVE HUDSON asked Ms. Anderson to cite a few examples
of replacement items that would not be recoverable.
MS. ANDERSON replied that an example might be that a facility
replacing an operating room which historically capitalized out
at $200,000 for depreciation schedule purposes. She said that
if the operating room was replaced without a CON at a cost of
$700,000, the facility would be held at its historical cost
[$200,000] rather than the new cost. She noted that the
facility would not be able to depreciate at the higher rate
without a CON and maybe some other costs would not be allowed at
all because of perceived potential increased volume.
Number 2806
REPRESENTATIVE HUDSON asked who would make that decision.
MS. ANDERSON answered that the decision is part of the
negotiation that goes on between the facility and the Medicaid
rate-setting process made up of the Medicaid Advisory Commission
and the Department of Health and Social Services wherein the
department actually sets the rate.
Number 2825
REPRESENTATIVE HUDSON inquired as to any federal law on Medicaid
that would be instructive to the committee.
MS. ANDERSON replied that is part of the negotiation that is on-
going in the process that came about from last year's
discussions through the legislature when the task force was
formed, having all parties at the table. She said that there
are federal guidelines for Medicaid but because each state
handles their Medicaid system a little bit differently, there is
leeway at the state level.
REPRESENTATIVE HUDSON asked if state negotiations were
subjective to the federal agencies.
MS. ANDERSON answered in the affirmative.
CHAIR JAMES said that the case Ms. Anderson is talking about
does not apply to this bill, and if it does, Ms. Anderson can
indicate why. Chair James noted that Ms. Anderson is talking
about replacing things in a hospital, but the proposed CS is
talking about relocating to some other facility. Chair James
explained that hospitals are treated differently on the Medicaid
rate than are free-standing ambulatory surgery centers. The
hospital is paid a percentage of capital costs as well as other
fixed and variable costs of Medicaid treatments are reimbursed
to the hospital whereas free-standing ambulatory centers are
reimbursed a percentage of fee for service. Therefore, she
added, free-standing centers are not reimbursed directly for
capital costs.
CHAIR JAMES mentioned that under the proposed CS there might be
some hospitals that would like to relocate. She indicated that
Charter North might not have to obtain a CON, but she had
forgotten to ask them if it did want a CON because it might want
to apply for one in order to be in compliance with Medicaid.
She informed the committee that she does not think there is
anything in the proposed CS that precludes someone from applying
for a CON since approval of a CON means approval of depreciating
capital costs. She reiterated that the particular language in
the proposed CS does not apply to things that a hospital would
be doing because she does not see them physically moving their
facility. She asked Ms. Anderson to give her an example where
that did happen.
TAPE 00-21, SIDE B
Number 2906
MS. ANDERSON answered that HealthSouth is trying to interpret
how the proposed CS will impact member facilities in the future
when faces change and interpretations are different. Referring
to the example of relocation of Charter North, the current plan
is to relocate to another area in Anchorage servicing the same
population and maintaining the same number of beds but designing
the facility to care for the adolescent and child population.
In going by the proposed CS, it is not clear to her whether or
not the new facility will be in the Medicaid rate calculation.
She explained that she does not know if Charter North will be
considered a replacement facility or a relocation and how that
might impact the whole reimbursement schedule. While Medicaid
is a small portion of reimbursement (20 percent) for the state,
the question might come to mind that if Charter North is not
going to be able to recoup capital costs for relocation, or if
the state determines that it is a replacement, what would be the
reason for Charter North to want to do a deal with the state.
MS. ANDERSON posed another question: "What would be the impact
to insurers such as Aetna, Blue Cross, and the State of Alaska
who self insures patients?" Under the Medicaid rate-setting
system, sometimes costs are calculated in a three-year cycle and
added to the base year. In those cases where the three-year
cycle applies to recoup costs to Medicaid, it is a sure bet that
in most instances the facilities will not be able to wait three
years and as a consequence rates that go up in a hospital
setting will be passed on to insurers and patients. She stated
that she is not saying that is what is going to happen, she is
just saying that it may be part of the domino effect.
Number 2756
MS. ANDERSON asked if Bartlett [Regional] Hospital planned to
relocate within its facility, would the proposed CS relocation
definition work. She noted that the intent of the proposed CS
may not be the above, but people in positions of authority may
change so future intent has to be considered.
CHAIR JAMES quoted from the proposed CS as follows: "...
services of that facility to a new site in the same community
...." She suggested it is clear. Therefore, moving things
around from one side of the hospital to the other does not
qualify because the proposed CS is talking about moving to a new
site.
Number 2700
MS. ANDERSON indicated one of ASHNHA's concerns was the
definition of "community." She asked if that meant that a
facility in Anchorage could move from one community council to
another community council.
CHAIR JAMES replied that "community" means service area of the
hospital. She remarked that the legislature would not allow
someone to move from Anchorage to the Matanuska-Susitna Valley
or vice versa. However, a facility already in Anchorage could
move anywhere in the Anchorage area because it is still
addressing the same community need, and she thinks the
department could identify the area of need by the CON.
MS. ANDERSON said she wanted the intent to be clear on each of
these issues.
REPRESENTATIVE HUDSON asked if everybody out there at the
present time would have filed a CON and be operating under one.
Number 2613
MS. ANDERSON answered that an issued CON allows a project to
commence and once it is completed, the CON cannot be modified.
REPRESENTATIVE HUDSON asked whether, if Bartlett [Regional]
Hospital (BRH) decided to move out to the valley, it could do so
under the proposed CS, assuming that BRH's CON had a specified
client base. He explained that the original CON would have
identified the area of need. If BRH decided to move into
someone else's territory, he suggested it would affect that
other CON; he said he understood that cannot be done without
applying for a CON.
MR. ANDERSON replied that under current law if BRH moved and
expended more than $1 million, BRH would go through a CON to do
that. Under the proposed CS, she interprets that the relocation
would not require a CON regardless of the dollar amount as long
as BRH was relocating and not using the vacated space as a
licensed health care facility. She noted that ASHNHA does
support the concept of studying the CON and is concerned about
access for all Alaskans.
Number 2458
CHAIR JAMES recognized that people do not accept change readily;
in fact, people usually resist change as much as possible. It
takes a broad perspective to see the benefits of change, and
there will always be negatives to change; therefore, it is good
to discuss the negatives, but the positives are extremely
important as well. There is a big change in the way health care
services are delivered today. Thus fixing the Medicaid rate-
setting system becomes very important now because a system is
needed that will move into the future to meet demand for
services. Ultimately health care systems are here to provide
the best services for the patient in the best way. She
explained it takes an open mind and resistance to fear to make
the necessary changes.
MS. ANDERSON commented that change is a part of daily life of a
hospital administrator because one regulation is implemented and
another regulation is published right on the heels of the first
one. She emphasized that ASHNHA's preference is that the fix be
applicable and work for the entire system to benefit all
Alaskans.
Number 2284
BARBARA HUFF-TUCKNESS, Director of Legislative and Governmental
Affairs, Teamsters Local 959, testified via teleconference from
Anchorage. She said she had originally been on record not
supporting HB 297 and now she wants to go on record as removing
that objection after reviewing the current proposed CS. Since
there is latitude to refrain from applying for a CON, she asked
if there was also latitude to apply for CON if an entity so
desired.
CHAIR JAMES replied in the affirmative. She, in turn, asked if
Ms. Huff-Tuckness was withdrawing her opposition to HB 297.
MS. HUFF-TUCKNESS answered yes.
CHAIR JAMES asked Mr. Lindstrom to answer Ms. Huff-Tuckness's
question. Chair James had made the comment that if the CON does
affect the Medicaid rate-setting, even though CON is no longer
required for some things under the proposed CS, an entity can
apply for a CON if they want to. She asked Mr. Lindstrom if the
proposed CS would allow that.
Number 2153
MR. LINDSTROM replied that he guesses the dynamic will be that
the department will choose not to require a CON if it is not
required under HB 297. He acknowledged that first he needs to
check with the Department of Law. He further speculated that
the Medicaid Advisory Rate Commission staff, who do depend upon
[CON] information for some aspects of the rate-setting system,
would think it a good idea if the department continued to
require a CON. He said he needed to get more information and
sort those things out.
REPRESENTATIVE KERTTULA stated that she would like to hear the
answer to Ms. Huff-Tuckness's question before the committee
moves the proposed CS. The answer is important and she wants to
hear from the Department of Law. She explained that the answer
would go a long way to resolving her community's concern
[regarding the CON].
CHAIR JAMES said she had promised the members of the HESS
Committee that she would discuss the proposed CS with them
before submitting the final product to the Chief Clerk's Office.
She noted that if the House Health, Education and Social
Services Standing Committee does answer the review and the
proposed CS needs to be modified, this committee could rescind
its action.
Number 1998
REPRESENTATIVE HUDSON asked if Representative Kerttula could
speak more specifically to the concern about the proposed CS.
REPRESENTATIVE KERTTULA commented that what she has heard today
is that there is latitude to come back and obtain a CON if it is
needed for the Medicaid rate. It seems to her that the proposed
CS goes further toward meeting community concern but she does
not see it in the language. She agreed with the Department of
Health and Social Services (DHSS) that someone really is not
going to want to do this [a CON] if it is not in the proposed CS
language. She suggested that the committee go to the Department
of Law immediately and ask them whether there has to be language
for the proposed CS to resolve that issue and bring it back for
the committee to discuss. She remarked that it is cleaner to do
it up front in this committee.
Number 1932
REPRESENTATIVE HUDSON asked if Mr. Lindstrom was bringing
information to the prime sponsor of the proposed CS. If there
is a need to add language, the Chair has indicated she is
willing to entertain added language. He said he felt
comfortable enough to offer a motion to move the proposed CS.
REPRESENTATIVE KERTTULA stated she was going to sign that the
proposed CS needs an amendment and then she was not sure what
she would do when it is heard by the entire House.
RICK SOLEY, Director of Community Relations and Planning,
Fairbanks Memorial Hospital and Denali Center, said that ASHNHA
spoke clearly to what his view is as far as how to fix the CON
since it needs additional study. He reminded the committee that
when it started with HB 297 it suggested that it would find a
fix that would be satisfactory for all Alaskans. He noted that
the proposed CS is not satisfactory to all Alaskans or to
Fairbanks Memorial Hospital (FMH) because it is a piecemeal
approach to the CON program. He is concerned that the committee
wants to move a bill that clearly has a myriad of problems.
MR. SOLEY commented that under the definition of "community,"
FMH could move hospital beds to Delta because FMH calls its
service area the entire northern half of Alaska. He suspected
that DHSS would have very great concerns about FMH's ability to
do that as far as the implications on Medicaid reimbursements
but FMH has the bed capacity. He added that if the nuclear
missile defense system went through that is not an absurd
reading of the language of relocation and has great financial
consequences to the state.
MR. SOLEY mentioned FMH has an outpatient surgery center that
operates in Fairbanks, meeting what he believes is the
community's needs for outpatient surgery. He indicated that if
FMH chose to relocate a portion of that outpatient surgery
center across town, FMH could do so without a CON. He informed
the committee that when the committee had started the proposed
legislation, he had heard much about the need for competition in
the marketplace and had heard much debate about what competition
is and whether it truly exists in the health care environment.
He emphasized that the committee should know that there is
potential for this proposed CS to allow FMH to move across town
to set up a surgery center without a CON, whereas the current
law would require another individual who might want to build a
surgery center to obtain a CON. It is a huge issue, and it is
another reason why this committee should not pass the proposed
CS out of committee. There are still many questions, and he is
concerned that the other legislative committees will not have
the time or interest to really look at serious issues to fix the
proposed CS.
Number 1684
MR. SOLEY said he thinks the committee needs to look at the
proposed CS, as did the legislature when they set up the Long-
Term Care Task Force. At that time, the legislature reviewed a
host of issues with a broad array of public providers: [people
from] medical care, the state and DHSS. He said the proposed CS
does not address outstanding issues now but people have been
told that the issues will be addressed in the future. Now is
the opportunity to work on the issues and he prefers that the
committee continue the diligent work it has started. He
emphasized that HB 297 started out as a bad bill for his
community, and he has a stack of letters that suggests it is a
bad bill. The committee should not move the proposed CS
forward; rather the committee should continue to work on it. He
said that the Fairbanks Chamber of Commerce has been reviewing
the CON issue because of the significance and has a resolution
in the works to ask the committee to continue a rigorous,
thorough study of HB 297 and present a recommendation within 18
months. He noted that there is much concern that if something
is done with the CON, unintended consequences will result.
Number 1515
CHAIR JAMES said she would have to ask DHSS if Delta would be
considered the same community as Fairbanks. She noted that
under Medicaid rate-setting she thinks FMH would rather obtain
a CON for any move to Delta it might contemplate. She explained
that as far as the surgery center is concerned, FMH can move it
across town if it wants to, but she cannot believe that FMH
would want to do that. She mentioned that there is an advantage
concerning the way hospitals obtain payment for surgery centers
as opposed to free-standing centers. Free-standing centers are
paid fee for service, and she is still trying to figure which is
the best way of obtaining payment. The Tanana Clinic folks
would probably like to have an FMH surgery center closer to
them. She emphasized that HB 297 is a good bill because it
solves many problems for DHSS and for the public. The CON is
here to make sure that new services are not added in excess of
what is needed, and she is committed over the next two years to
review all of the issues.
REPRESENTATIVE HUDSON asked Mr. Soley to provide recommendations
for the proposed CS to the chair; for example, perhaps the
committee needs a definition of "community" or "area of
responsibility."
CHAIR JAMES announced that the meeting was recessed until 3 p.m.
this afternoon, March 16, 2000.
ADJOURNMENT
The House State Affairs Standing Committee meeting was recessed
at 9:45 a.m. until 3 p.m., March 16, 2000.
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