Legislature(2003 - 2004)
05/06/2004 05:13 PM Senate HES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
May 6, 2004
5:13 p.m.
TAPE (S) 04-30
MEMBERS PRESENT
Senator Fred Dyson, Chair
Senator Lyda Green, Vice Chair
Senator Gary Wilken
Senator Bettye Davis
Senator Gretchen Guess
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 511(HES) am
"An Act relating to the certificate of need program for health
care facilities; and providing for an effective date."
MOVED SCS CSHB 511(HES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 511
SHORT TITLE: CERTIFICATE OF NEED PROGRAM
SPONSOR(s): REPRESENTATIVE(s) SAMUELS
02/16/04 (H) READ THE FIRST TIME - REFERRALS
02/16/04 (H) HES, FIN
03/02/04 (H) HES AT 3:00 PM CAPITOL 106
03/02/04 (H) Heard & Held
03/02/04 (H) MINUTE(HES)
03/04/04 (H) HES AT 3:00 PM CAPITOL 106
03/04/04 (H) Heard & Held
03/04/04 (H) MINUTE(HES)
03/18/04 (H) HES AT 3:00 PM CAPITOL 106
03/18/04 (H) Moved CSHB 511(HES) Out of Committee
03/18/04 (H) MINUTE(HES)
03/24/04 (H) HES RPT CS(HES) 3DP 1DNP 2NR
03/24/04 (H) DP: KAPSNER, CISSNA, WILSON; DNP: WOLF;
03/24/04 (H) NR: GATTO, COGHILL
03/29/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/29/04 (H) Heard & Held
03/29/04 (H) MINUTE(FIN)
03/31/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/31/04 (H) Moved CSHB 511(HES) Out of Committee
03/31/04 (H) MINUTE(FIN)
04/01/04 (H) FIN RPT CS(HES) 4DP 2NR 2AM
04/01/04 (H) DP: MEYER, HAWKER, HARRIS, WILLIAMS;
04/01/04 (H) NR: FATE, FOSTER; AM: STOLTZE, CHENAULT
04/26/04 (H) MOVED TO BOTTOM OF CALENDAR
04/26/04 (H) NOT TAKEN UP 4/26 - ON 4/27 CALENDAR
04/27/04 (H) NOT TAKEN UP 4/27 - ON 4/28 CALENDAR
04/28/04 (H) TRANSMITTED TO (S)
04/28/04 (H) VERSION: CSHB 511(HES) AM
04/29/04 (S) READ THE FIRST TIME - REFERRALS
04/29/04 (S) HES, FIN
04/30/04 (S) HES AT 1:30 PM BUTROVICH 205
04/30/04 (S) Heard & Held
04/30/04 (S) MINUTE(HES)
05/03/04 (S) HES AT 1:30 PM BUTROVICH 205
05/03/04 (S) Heard & Held
05/03/04 (S) MINUTE(HES)
05/04/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
05/04/04 (S) <Pending Referral>
05/05/04 (S) HES AT 1:30 PM BUTROVICH 205
05/05/04 (S) Heard & Held
05/05/04 (S) MINUTE(HES)
05/06/04 (S) HES AT 5:00 PM FAHRENKAMP 203
WITNESS REGISTER
MR. JOEL GILBERTSON, Commissioner
Department of Health and Social Services (DHSS)
PO Box 110601
Juneau, AK 99801-0601
POSITION STATEMENT: Presented information pertaining to HB 511.
MS. JANET CLARK
Department of Health &
Social Services
PO Box 110601
Juneau, AK 99801-0601
POSITION STATEMENT: Answered questions on HB 511.
MR. GEORGE LARSON, CEO
Valley Hospital
515 E. Dahlia Ave.
Palmer, Alaska 99645
POSITION STATEMENT: Answered a question pertaining to HB 511.
ACTION NARRATIVE
TAPE 04-30, SIDE A
CHAIR FRED DYSON called the Senate Health, Education and Social
Services Standing Committee meeting to order at 5:13 p.m.
Present at the call to order were Senators Davis, Wilken, Green,
and Co-Chair Dyson. Senator Guess arrived while the meeting was
in progress.
HB 511-CERTIFICATE OF NEED PROGRAM
The committee took up CSHB 511(HES)am.
SENATOR LYDA GREEN referred to page 1, line 4 and offered a
conceptual amendment. She reported that information from around
the nation reveals that more than half of the CON programs have
a category for medical equipment. The capital investment on the
facility itself is another category. She said she doesn't
understand "net present value" and wants to ensure that a
barrier hasn't been built for someone who might need equipment
replacement, expansion, and upgrade. She offered an amendment
[Amendment 1] whereby there would be an additional $1 million
provided for medical equipment. She said she wasn't sure if
medical equipment was the correct word, or if it needs to be
limited to a certain type of facility. She said the intent was
to have a category for medical equipment of $1 million, as well
as a facility category of $1 million.
CHAIR DYSON asked if that was a motion
SENATOR GREEN confirmed this was a motion to adopt the
amendment.
SENATOR DAVIS objected, wanting further discussion to better
understand the amendment. She asked if this amendment was
related to the work being done by Senator Guess.
The committee took a brief at-ease.
CHAIR DYSON asked Senator Green to withdraw her [motion to adopt
the amendment].
SENATOR GREEN said she would be delighted, and withdrew the
motion.
CHAIR DYSON said the committee would take up Senator Guess's
amendment, designated as Amendment 4.
SENATOR GUESS moved Amendment 4.
SENATOR WILKEN objected [non-verbally].
SENATOR GUESS explained Amendment 4.
A M E N D M E N T 4
OFFERED IN THE SENATE BY SENATOR GUESS
TO: CSHB 511(HES) am
Page 2, lines 4 - 5:
Delete all material and insert:
"(e) In (a) of this section, "expenditure" includes
the purchase of property occupied by or the equipment
required for the health care facility and the net present
value of a lease for space occupied by or the equipment
required for the health care facility; "expenditure" does
not include costs associated with routine maintenance and
replacement of equipment at an existing health care
facility."
SENATOR GUESS said "expenditure" had been defined in the bill as
only the net present value of lease equipment, which leaves open
several questions. For example, is purchasing the equipment an
expenditure? The Legislature's intent is that a purchase or a
net present value of a lease be considered as an expenditure.
Also, what's not included goes according to regulation. She
said if someone is trying to replace a piece of equipment, it's
not the purpose of the CON to indicate that a new CON is needed.
The capacity is the same. She said she just included what was
in regulation to be clear that if someone was replacing
equipment, that's not part of the CON process.
SENATOR WILKEN asked Senator Guess which part of the amendment
was in existing regulation/law.
SENATOR GUESS replied line 6, "'expenditure' does not include"
is current regulation; the rest is not current regulation or
law, as expenditure has not been defined. HB 511 defined it
only as the net present value of the lease, without discussing
the purchase.
SENATOR GREEN asked for the effect of Amendment 4.
SENATOR GUESS said her intent is to clarify what she thought the
committee had previously expressed, which is a CON is currently
needed on $1 million or more for either the purchase or lease of
equipment for a health care facility, but this is not for
replacement or for routine maintenance; there needs to be
clarity around expenditure.
MR. JOEL GILBERTSON, Commissioner of the Department of Health
and Social Services (DHSS), commented that this amendment does
clarify "expenditure," and it is correct that if an MRI machine
needs to be replaced or there is replacement of equipment, a new
CON is not required, so this would simply put in statute the
current CON regulation/operation.
SENATOR WILKEN asked how lines 3, 4,and 5 differ from how things
currently operate today.
MS. JANET CLARK, Division of Administrative Services, DHSS, said
"net present value" is in the current version of HB 511.
Basically the biggest change is that "expenditure" is not
defined in statute.
COMMISSIONER GILBERTSON added that factoring in lease cost as a
companion to either purchase of equipment or capital - it's the
same - whether leasing for something of a net present value of
$1 million, or purchasing that equipment; that would be treated
fairly and equally. That is a change.
SENATOR WILKEN clarified that under current law, if there is a
purchase, it becomes an asset. That is calculated in the CON.
If one takes this same equipment space and leases it under
current law, that instrument is transparent in the CON
consideration.
COMMISSIONER GILBERTSON confirmed this was correct.
SENATOR GREEN asked if this would make it so that an applicant
would get to $1 million faster; would it count differently?
COMMISSIONER GILBERTSON responded that the rate has changed in
this language. The net present value issue is already addressed
in the bill, but this clarifies it. That is the greatest change,
and it would get one closer to the $1 million threshold if the
current proposal is to lease the equipment as opposed to
purchasing it. Counting that lease as part of the overall cost
of the project - if the remainder of the project is below $1
million but also has a lease - if that lease was counted through
its net present value with the capital construction, would get
one over $1 million. Theoretically that could move one closer to
being subjected to CON requirements. In all practicality, this
looks at single transactions and where they currently could be
exempt from CON. Because of being handled through the lease
arrangement, they would now go through CON as would a purchase
of that equipment or that capital space.
SENATOR GREEN wondered if compared to the way it is done today,
this could conceivably get one to the $1 million more quickly.
COMMISSIONER GILBERTSON replied it wouldn't be quicker but it
would enable transactions that currently would not be under CON,
those done through a lease arrangement, to be treated in the
same manner that a purchase transaction would be treated.
MR. GEORGE LARSON, CEO, Valley Hospital, said what was being
grappled with was that under the current CON, there are
capitalized leases that fall under the CON right now. The
operating leases do not. This amendment pulls the operating
lease into the CON process. It has been a loophole that many
people, hospitals and non-hospitals have been using to get by
the CON process.
SENATOR GREEN asked Chair Dyson if he had an opinion about this.
CHAIR DYSON replied that one way to accomplish what is desired
is to take out the words, "leased equipment" because that leads
back to facilities, leaving what the Commissioner is after,
which is the nursing homes and adolescent treatment centers. It
would leave the diagnostic centers still having to count a lease
for property, and facilities counted as net present worth, and
would exclude leases for equipment, which would work as an
operating expense.
SENATOR GREEN said she probably agree. It looks like there's
been a dollar amount in statute since the mid-80s, and this
essentially lowers or changes that calculation. She commented
that any new participant coming in or applying for a CON gets
past $1 million more quickly, while she prefers to go the other
direction. She said she is comfortable with this language if
the dollar amount could be changed on the other side.
CHAIR DYSON replied he was making an argument that the deputy
commissioner made to him which was "the portion that the
department wants to get - feels strongly a need to get in the
planning process now - are these new nursing beds, and the
adolescent treatment centers," and they are adding relatively
small capital costs to do their projects. If that is raised too
much, it allows much bigger nursing homes or adolescent
treatment centers to be built. It's important to be careful of
raising the limit. He said his suggestion of just taking the
equipment out of this, taking the leasing of equipment out of
the formula, doesn't hurt what the commissioner wants to do with
the adolescent treatment centers or nursing homes, and still
leaves the diagnostic centers with being able to lease equipment
and stay below the $1 million threshold on facilities. He
acknowledged heads nodding in the audience, and noted that there
will be a strong argument from the hospital community against
this.
SENATOR GREEN asked if the same exclusion for equipment applies
to a hospital, in the quest to get new equipment.
CHAIR DYSON said he thought so, and that Senator Guess's new
paragraph is transparent as to whether it's for a hospital or a
diagnostic center or anything else. "So if you want to take the
equipment piece out of hers, I think you would accomplish what
you're interested in."
SENATOR GUESS said she could not support taking "lease
equipment" out because it will tilt the business economy. She
asked why, in that situation, would one purchase anything? This
builds a false economy and moves everyone into leasing instead
of purchasing, and causes more problems. She said from a
perspective of good policy, she's not sure why one would say,
"Purchasing is o.k. if equipment goes under this, but leasing
goes under that."
SENATOR GREEN commented that she couldn't support something that
reduces the $1 million when she would expand it, not so that it
harms what the commissioner wants. Maybe there is some way to
make a separate category that increases equipment only.
CHAIR DYSON asked Commissioner Gilbertson if he had any
suggestions as to how to do this with the least damage.
COMMISSIONER GILBERTSON said this amendment in no way decreases
the CON threshold for equipment purchases or any other purchase.
It clarifies that whether through a lease or a purchase, a set
transaction will be subject to CON. It clarifies equal
treatment of either transaction. In neither case does it reduce
the $1 million amount.
CHAIR DYSON said this may be true but it closes what one would
consider to be a loophole where people have been avoiding the
threshold by going to lease instead of purchase. Senator Green
is saying with that loophole closed, the threshold is lowered.
COMMISSIONER GILBERTSON said it would lead to transactions
currently structured to avoid CON having to go through the CON
process like those who follow the business model that was
expected for those transactions. It does not lower the CON
threshold, it just makes sure that there is fair treatment of
each transaction. He said he respectfully disagreed.
CHAIR DYSON said he didn't want to raise the threshold for the
CON limit for adolescent treatment and nursing homes because he
was persuaded by Commissioner Gilbertson's argument. He asked
how Senator Green could raise the threshold for the equipment
portion of diagnostic imaging and testing equipment without
doing damage to the $1 million facilities threshold.
COMMISSIONER GILBERTSON acknowledged he was put in an unusual
position, as the $1 million threshold is as important and viable
as the $1 million for either capital or equipment; they are both
appropriate dollar amounts. The committee probably doesn't want
to debate the entire CON process or policy. It is certainly
within the Legislature's purview to set a different dollar
threshold for various types of health care purchases. The
department and administration position is that the $1 million
threshold is appropriate and does benefit the health care
system, not just in the case of facilities and capital, but also
for equipment.
SENATOR GUESS stated she doesn't think it's about how
"expenditure" is defined; regarding the amendment, she suggested
re-vamping AS 18.07.031.
SENATOR GREEN asked for clarification.
SENATOR GUESS said, "I don't think this amendment has anything
to do with the way you guys are talking about it, I was just
trying to say it nicely."
SENATOR GREEN said she wanted to be sure that this didn't
artificially change something, acknowledging that it does count
more things.
CHAIR DYSON asked if the objection to Amendment 4 was
maintained. [It was not.] Seeing and hearing no objection,
Amendment 4 was adopted.
5:50 p.m.
SENATOR GREEN said she was not sure what to do regarding
entering the language and the change. She said she appreciates
the dilemma regarding paying for an unlimited numbers of beds.
She stated there is a disparity between a new entity and an
established metropolis on a hospital campus, and thinks that
essentially things are being kept from happening versus being
allowed to happen, and that bothers her.
CHAIR DYSON said one option is on page [4, line 17] to take out
the phrase, "independent diagnostic testing facility," as then
they're outside of the CON process, and that still addresses
[Commissioner Gilbertson's] concerns. This may result in there
being more diagnostic centers, which could be looked at as
providing services that are not now available in some
communities, or of robbing some hospitals of a significant part
of their financial base.
COMMISSIONER GILBERTSON said, as a point of clarification, he's
heard it said that the department's sole interest is in the RPTC
[residential psychiatric treatment center] language. He wanted
to clarify for members that the administration and department
are not interested only in that portion of this legislation, but
support the entire bill and believe the imaging provisions are
key, just as other provisions in the bill, to ensuring that
there is (indisc.) in process.
The committee took an at-ease.
6:25 p.m.
CHAIR DYSON re-stated that there was no objection and that
Amendment 4 was officially adopted. He asked for the will of
the committee.
SENATOR DAVIS moved to report [SCS CSHB 511 (HES)] out of
committee with individual recommendations and attached fiscal
notes.
CHAIR DYSON asked if there was any objection. Seeing and
hearing none, it was so ordered.
There being no further business to come before the committee,
Chair Dyson adjourned the meeting at 6:28 p.m.
| Document Name | Date/Time | Subjects |
|---|