Legislature(2007 - 2008)Anch LIO Conf Rm
09/18/2007 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
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| Start | |
| Certificate of Need Program Work Session | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
JOINT MEETING
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
September 18, 2007
Anchorage AK
1:39 p.m.
MEMBERS PRESENT
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES
Senator Bettye Davis, Chair
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
Representative Peggy Wilson, Chair
Representative Bob Roses, Vice Chair
Representative Anna Fairclough
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES
Senator Joe Thomas, Vice Chair
Senator John Cowdery
Senator Kim Elton
Senator Fred Dyson
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
Representative Mark Neuman
Representative Paul Seaton (via teleconference)
OTHER LEGISLATORS PRESENT
Representative Scott Kawasaki (via teleconference)
Representative Bill Stoltze
COMMITTEE CALENDAR
Certificate of Need Program Work Session
PREVIOUS COMMITTEE ACTION
No previous action to record.
WITNESS REGISTER
RICHARD BENAVIDES
Staff to Senator Davis
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Outlined the purpose of the meeting
ROBERT JAMES CIMASI, President
Health Capital Consultants
St Louis, MO
POSITION STATEMENT: Described the focused research his company
conducted on CON
THOMAS PIPER, Director
Missouri Certificate of Need Program
Jefferson City, MO
POSITION STATEMENT: Delivered a PowerPoint presentation related
to CON
DEAN MONTGOMERY
American Health Planning Association
Falls Church, VA
POSITION STATEMENT: Compared the scope and coverage of the
Alaska CON program with programs in other states
ELMER LINDSTROM, Project Manager
Department of Health & Social Services (DHSS)
POSITION STATEMENT: Described the negotiated rule making process
JEREMY HAYES
Anchorage Director
Advanced Medical Centers of Alaska
Anchorage, AK
POSITION STATEMENT: Described drawbacks related to CON
NORMAN STEVENS, CEO
MatSu Regional Hospital Center
Palmer, AK
POSITION STATEMENT: Offered the view that the proponents of
repealing CON are financially motivated
SHAWN MORROW, CEO
Bartlett Regional Hospital
Juneau, AK
POSITION STATEMENT: Presented experiential evidence from the
Oklahoma CON program
DOCTOR CHAKRI INAMUPDI, President
Alaska Radiology Associates
Anchorage, AK
POSITION STATEMENT: Offered suggestions for changing CON
JEANINE HINMAN, Attorney
Advanced Medical Center of Alaska (AMCA)
Anchorage, AK
POSITION STATEMENT: Supported repeal of CON
JEFF JESSE, CEO
Alaska Mental Health Trust Authority
Anchorage, AK
POSITION STATEMENT: Suggested addition to CON for adolescent
mental health services
KIM BLACK
Alaska Open Imaging Center
Eagle River, AK
POSITION STATEMENT: Spoke in favor of the negotiated rule making
process
LAURIE HERMAN, Regional Director of Government Affairs
Providence Health & Services in Alaska
Anchorage, AK
POSITION STATEMENT: Stated support for negotiated rule making
ACTION NARRATIVE
CHAIR BETTYE DAVIS called the joint meeting of the Senate and
House Health, Education and Social Services Standing Committees
to order at 1:39:06 PM. Present at the call to order were
Representative Gardner, Representative Neuman, Representative
Roses, Representative Fairclough, Co-Chair Wilson, and Chair
Davis.
^CERTIFICATE OF NEED PROGRAM WORK SESSION
CHAIR DAVIS announced that the committee would conduct a work
session on the Certificate of Need Program. The information
that's gathered will be helpful when we return to Juneau and
consider the bills, she added.
1:40:09 PM
RICHARD BENAVIDES, Staff to Chair Davis, explained that the
purpose of the meeting is to bring the CON stakeholders together
to discuss the current and potential impacts related to the CON
program.
MR. BENAVIDES outlined the agenda and introduced the three
invited experts. He explained that Alaskan stakeholders who
testified were asked to follow a format that included:
experience based testimony; aspects that stakeholders would like
to see changed; the positive implications of changing CON; the
negative implications of changing CON; areas open to compromise;
and areas not open to compromise.
CO-CHAIR WILSON commented that this recurring and controversial
issue needs a solution.
1:47:16 PM
ROBERT JAMES CIMASI, President, Health Capital Consultants,
testified via teleconference from St Louis, MO. He described the
focused research his company conducted, which resulted in a
reference manual and sourcebook that encompasses the statutory,
regulatory, administrative, and legal aspects of CON regulation
from inception to the present.
MR. CIMASI highlighted eight points in support of the position
that CON is a failed public health policy: 1)CON has a history
of failure; 2)effects of CON repeal in other states; 3)the
Federal Trade Commission has repeatedly denounced CON; 4)CON has
failed to lower health care costs; 5)CON is anti-competitive;
6)CON is a barrier to health care innovation; 7)CON reduces
access and patient choice; and 8)CON has not improved health
care quality.
MR. CIMASI concluded his testimony with the statement that in
his view it's important to pass bills to repeal CON in Alaska.
There are better ways to control cost and quality. [The full
testimony may be found in the committee file.]
1:58:10 PM
CHAIR DAVIS noted that Representative Seaton was on line and
Senator Dyson and Representative Neuman were represented by
staff.
1:59:09 PM
REPRESENTATIVE CISSNA asked what part of the study had direct
Alaskan research.
MR. CIMASI said his firm has done consulting work in Alaska,
they tracked how CON certificates have been filed in Alaska, and
they have reviewed studies from Washington that focused on
Alaska. They are familiar with the geopolitical subdivisions in
Alaska and they know that there are large provider systems. The
geographic dispersion is a real barrier to entry for providers
to bring in different ways of delivering care that would provide
quality and lower the cost, he stated.
2:01:52 PM
REPRESENTATIVE ROSES asked if in those states that have repealed
CON, there is reduced access to private companies for Medicare
and TRICARE patients resulting in increased burden on the larger
facilities.
MR. CIMASI said his company's review shows no evidence that
repealing CON has resulted in a lack of access for Medicare or
military patients. In fact, there is evidence that health care
is restricted because of the continuation of CON.
CHAIR DAVIS noted that Representative Stoltze had joined the
meeting.
REPRESENTATIVE GARDNER said the argument for retaining CON is
that large providers aren't free market agencies. They have many
government mandates to meet the needs of anyone who walks
through the door.
MR. CIMASI said if the government is placing burden on large and
acute care community hospitals that isn't placed on other
providers, then those hospitals should be paid to provide those
services.
2:06:45 PM
CHAIR DAVIS asked why some states that repealed CON are putting
it back.
MR. CIMASI said it relates to advocacy and not patient care.
2:08:25 PM
CO-CHAIR WILSON noted that the American Health Planning
Association reports that 36 states and D.C. have CONs. None have
gotten rid of CON in the last ten years, but several are
planning to put it back. She asked if his research took
variation between states into account.
MR. CIMASI acknowledged that there are some states where CON has
changed, but the fact is it's a huge lobbying and advocacy
battle that's being waged and it's all about competition.
There's no evidence that CON reduces cost, brings better quality
or prevents physician self-referral.
2:10:48 PM
REPRESENTATIVE WILSON mentioned access problems in rural Alaska
and said none of the ambulatory surgical centers or imaging
center groups have wanted to help with access, which is probably
because of cost. She said she has trouble figuring out how
access is going to be helped if CON is eliminated.
2:12:02 PM
THOMAS PIPER, Director, Missouri Certificate of Need Program,
Jefferson City, MO, delivered a PowerPoint presentation
demonstrating how CON relates to health care market entry,
competition, and protecting public interests. He said he would
cover the topics of health care cost, the CON background, its
concepts, its success, and relationship to competition. Also he
would illustrate the benefits when business measures CON impact,
when the public is assured broad input, and when there is
balance between competing interests. [The full testimony and
PowerPoint may be found in the committee file.]
REPRESENTATIVE ROSES noted that the study shows that New York
and Michigan have much lower costs. Both states are heavily
unionized and negotiate preferred providers for a lower cost. He
asked if there's any differentiation in the information between
that and having the CON.
MR. PIPER said not that he's aware of. Ford Motor Company
indicated that it used comparable compilations in the
composition of their study and that the health care benefits
were comparable.
2:29:10 PM
DEAN MONTGOMERY, American Health Planning Association, Falls
Church, VA, said he would make a detailed comparison of the
scope and coverage of the Alaska CON program with programs in
other states. The information is based on work he did for the
Alaska Hospital and Nursing Home Association. The study looked
at five questions: 1)the scope of the program in Alaska;
2)whether the regulation of the Alaska services is more or less
stringent than others; 3)whether the rules and regulations are
applied equitably to institutional and non-institutional
providers of health services; 4)whether there's a level playing
field; and 5)the implications and ramifications for Alaska
community hospitals. [The full testimony may be found in the
committee file.]
MR. MONTGOMERY concluded his testimony with the statement that
it's relatively easy to establish new services in Alaska
compared to other states. That has substantial implications for
community hospitals in Alaska that are small, have fewer back up
services, higher emergency case loads, and high charity-care
case loads. Clearly, the free standing facility has a
substantial advantage, he said.
2:43:05 PM
ELMER LINDSTROM, Project Manager, Department of Health and
Social Services (DHSS), opined that the two differing positions
that have been described are well reflected in the state.
Clearly this has been an ongoing controversy, and it's a very
contentious program area for DHSS.
MR. LINDSTROM related that in 2004 the legislature amended the
CON statute modestly to add CON coverage for two facilities.
They were independent diagnostic testing facilities and
residential psychiatric treatment centers. Legislative intent
directed the department to rewrite the regulations and develop
comprehensive standards such that CON program applicants would
understand the measures used to evaluate the applications. The
intent language also directed DHSS to have a public process to
aid in developing the standards.
MR. LINDSTROM explained that over the course of 18 months,
multiple public comment opportunities were provided and the
standards and regulations were developed. Although no one at
DHSS though that everyone would be satisfied, he and others
thought that the controversy would die down over time.
Unfortunately, it hasn't worked out that way, he said. After the
department put out a modest set of regulations, the public
pointed out lots of problems with the CON program and the
underlying statute.
MR. LINDSTROM said that at that point Commissioner Jackson
decided to take a different approach. After consulting with the
governor's office, Anna Kim was selected to be a convener to
speak to the various parties to see if there was interest in
pursuing a negotiated regulation process. That statutory process
is designed to bring consensus on controversial issues that can
eventually result in new regulations. The statute gives the
commissioner the power to ask the group to look beyond the
regulations and he believes that she will be interested in that
provision. He knows there is a desire that the timeline for this
new approach be short, so that the process is finished by the
first of the year.
2:52:30 PM
REPRESENTATIVE GARDNER asked if patients would be considered
stakeholders.
MR. LINDSTROM said the statute envisions, and the commissioner
believes, that the interested parties are the entities that are
subject to the CON program. However, the process will be open
and transparent to the public. Responding to a question, he said
that the meetings would be publicly noticed and that the
legislative committees would be alerted.
CO-CHAIR WILSON suggested he consider what other states have
done to avoid the perception of any conflicts of interest.
2:58:28 PM
MR. LINDSTROM responded to a question about how many changes
might be expected and advised that there are strongly held
feelings on this topic. There is no silver bullet.
CHAIR DAVIS asked if he had information on the proposed ballot
initiative.
MR. LINDSTROM said the initiative is sponsored by private
individuals and he understands that it's been certified.
Nevertheless the commissioner intends to move forward toward a
negotiated regulation project.
REPRESENTATIVE LYNN disclosed that he is a co-sponsor of the
initiative. That process would bring in Alaska stakeholders, he
added.
3:02:47 PM
JEREMY HAYES, Anchorage Director, Advanced Medical Centers of
Alaska, reported that Alaska has the most expensive health care
costs in the nation and the second poorest access to health
care. It also has the most restrictive CON program of any state.
There is no evidence that CON has done anything to control costs
in Alaska and it thwarts entrepreneurial competition, he said.
MR. HAYES said ideally, the CON program should be repealed.
However, it's probably more realistic to reevaluate the current
system relative to states that are comparable demographically.
He highlighted four aspects of CON that warrant re-evaluation.
1)the $1,150,000 threshold for requiring CON approval; 2)the
threshold items including but not limited to value of land
acquisitions, net present value of the lease, and other line
items; 3)the appeals process; and 4)the general & concurrent
review standards.
MR. HAYES said he supports the establishment of a negotiated
regulation committee. He would be willing and honored to
participate. [The full testimony may be found in the committee
file.]
MR. HAYES responded to questions and said it's his contention
that CON regulations are the largest barrier to access, but
transportation and access do present problems. He also said he
has spoken with economists and that the lack of access to
facilities and the lack of physicians in the state contribute to
the lack of access for patients. He believes that the CON
process contributes to physicians' unwillingness to come to
Alaska. He agrees that getting rid of CONs isn't the answer to
all the problems with regard to cost.
3:15:08 PM
NORMAN STEVENS, CEO, MatSu Regional Hospital Center, offered the
view that the proponents of repealing CON are financially
motivated. He relayed that the hospital went through the two
year process, followed CON rules, built a new $101 million
facility, and brought world-class health care to MatSu citizens.
He commented on physician recruiting and said he has yet to have
a physician bring that topic up as an issue. He believes that
boutique providers carve off the more profitable programs such
as surgery and radiology and they skew public opinion about
costs. He contends that most private providers are exempt from
joint commission oversight and their quality is no better. [The
full testimony may be found in the committee file.]
MR. STEVENS emphasized that hospitals are at significant risk
nationwide. He asked the committee to look at motivations, at
protecting communities, and make sure that community hospitals
are open and operating in the future.
3:24:39 PM
SHAWN MORROW, CEO, Bartlett Regional Hospital, Juneau, presented
experiential evidence from the Oklahoma CON program, which
includes only long-term care. Oklahoma does not have CON
programs for diagnostic imaging, surgery centers, and hospitals.
MR. MORROW relayed that since 1990, 13 hospitals have closed and
some communities have had to institute a sales tax to keep their
hospitals viable. He said that the lack of CON regulations for
acute care has played a part in: 1)deteriorating the financial
stability of community-based hospitals; 2)weakening access to
health care services; and 3)increasing the tax burden on
Oklahomans.
MR. MORROW expressed the view that when specialty providers
carve out high profit margin services, less money is available
to hospitals to off-set basic and essential services that lose
money. If CON is repealed in Alaska, he believes that physician
and investor owned specialty facilities would proliferate.
Although he isn't saying that eliminating CONs will cause
hospitals to close, he does believe that their financial
stability will be weakened and they'll be vulnerable to changes
in reimbursement aimed at lowering costs. [Full testimony is
available in the committee file.]
REPRESENTATIVE ROSES referenced the hospital closures and asked
if there were changes in the health care delivery systems or
insurance programs other than the elimination of CON that
affected that situation.
MR. MORROW said absolutely. In 1985 the major reimbursement
method became DRG-based [diagnosis-related group] and in 1997
there was the Balanced Budget Act. "Again, CON I do not think
alone…resulted in the closure of so many hospitals…, but…I do
affirm that it was a contributing factor," he stated.
3:29:01 PM
DOCTOR CHAKRI INAMUPDI, President, Alaska Radiology Associates,
stated that his experience relates to imaging only. He explained
that his facility has nine board certified radiologists and two
nurse practitioners. The group has been practicing diagnostic
and interventional radiology in Alaska for nearly thirty years
and it cares for over 100,000 patients a year
DOCTOR INAMUPDI said his group would like certain aspects of the
CON policy changed to close loopholes.
· Remove the exemption for imaging in physician offices and
establish the same criteria for receiving a CON as is used
for hospitals and independent diagnostic testing
facilities.
· Reduce the dollar limit for establishing the need for CON
for imaging equipment and construction costs to $500,000
from the current $1,000,000. This would address the issue
of purchase and use of less expensive, outdated and
substandard equipment to avoid the CON process.
DOCTOR INAMUPDI outlined the following positive implications of
changing the CON policy:
· It would reduce the proliferation of unnecessary imaging.
The groups that are exempted by the CON are ordering the
imaging exams for their patients and they use their own
expensive equipment.
· It would control health care costs for employers. He cited
a Ford Motor Company study that indicates health care costs
that are 160 percent higher in non-CON states compared to
adjacent CON states.
· Lowering the threshold to $500,000 would reduce the
incentive for facilities to purchase older and poor-quality
imaging equipment.
DOCTOR INAMUPDI said his group doesn't believe that Alaska
residents would be negatively impacted by the suggested changes.
In fact future potential litigation and appeals could be
reduced.
DOCTOR INAMUPDI said his group would compromise on the suggested
$500,000 threshold and on permitting the physician exemption
provided the parameters are clearly defined. His group is not
willing to compromise on the total elimination of CON or on any
facet of a regulation that jeopardizes the quality of patient
care.
3:36:07 PM
REPRESENTATIVE ROSES asked if he would favor doing away with CON
if all physicians and health care providers were required to
post prices.
DOCTOR INAMUPDI said the Medicare and Medicaid prices are fixed
and he doesn't believe that would change. "Eliminating the CON
would actually hurt by proliferation of imaging services."
3:39:02 PM
JEANINE HINMAN, Attorney, Advanced Medical Center of Alaska
(AMCA), Anchorage, said she is also talking as the wife of a
physician. She said if she were convinced that repealing CON
would cause hospitals to suffer in a significant way, then she
wouldn't support the repeal. "But I don't believe it," she said.
The four CONs that have been approved are hospitals, and she
believes that the profit margin at Providence Hospital is plenty
high.
MS. HINMAN said she doesn't think she and her husband would have
moved here, if they'd known about the hostile legal environment
that uses CON as a vehicle for litigation. Knowing that it's
hamstrung AMCA in three different markets, she said there
probably is a recruitment problem in the state.
MS. HINMAN pointed out that CON doesn't address access to health
care in rural areas so the idea that maintaining the status quo
will help access doesn't track. She suggested that a truly
mobile ambulatory surgery center where doctors go out to
villages is another avenue to consider.
MS. HINMAN responded to a question about timeframes and
explained that she returned to Alaska a month ago, but she's
been working for AMCA on CON related legal issues longer than
that. She made the point that litigation doesn't add value to
health care, it just adds cost.
3:47:37 PM
JEFF JESSE, CEO, Alaska Mental Health Trust Authority,
Anchorage, said he brings the perspective of children and
adolescent mental health services. Several years ago residential
psychiatric treatment centers were added to the CON process and
that's been a tremendous benefit for the "Bring the Kids Home"
(BTKH) initiative. He noted that three years ago 428 youths were
housed out of state and now the number is under 250. This year
home and community-based services will be reviewed to help kids
before they reach the point that they need to be placed in
residential facilities, he said.
MR. JESSE suggested that the CON process needs to cover two
areas in addition to residential psychiatric treatment centers.
The first is acute care facilities for adolescents needing
mental health services. The second is called conversion.
Briefly, that's where a provider could start lower levels of
care and convert them to CON covered services without going
through the CON process.
REPRESENTATIVE GARDNER asked if companies are willing to build
residential treatment facilities because they feel the
investment would be protected.
MR. JESSE said no; "It isn't so much that we need to encourage
providers to invest in that higher level of care, we need to
limit the number of beds that are there."
REPRESENTATIVE GARDNER said she's looking for the empirical
data.
MR. JESSE explained that at the beginning of the BTKH process,
DHSS looked at the Alaskan adolescents who were in RPTC
[residential psychiatric treatment center] level care in the
Lower 48. They learned that the reason many were in that level
of care was because lower levels of care weren't available
within Alaska.
REPRESENTATIVE GARDNER commented that it isn't necessarily a CON
issue.
MR. JESSE said he agrees but the point is, that was the default
placement when lower level care wasn't available in the state.
"We don't want to duplicate that problem with our in state array
of services," he said.
3:54:49 PM
KIM BLACK, Alaska Open Imaging Center, Eagle River, spoke in
favor of the negotiated rule making process. She highlighted
that the statute needs clarification because radiologists are
currently left out of the physician exemption in the CON. Alaska
Open Imaging Center does have physician owners who are on the
premises when patients come in, she said.
3:56:42 PM
LAURIE HERMAN, Regional Director of Government Affairs,
Providence Health & Services in Alaska, Anchorage, stated for
the record that Providence is very pleased with the innovative
step that Commissioner Jackson has suggested with regard to
negotiated rule making.
CHAIR DAVIS expressed hope that the process would be successful.
CO-CHAIR WILSON opined that more regulations aren't always the
best answer. It's a good idea to look at everything as a whole
and see if changes are needed.
REPRESENTATIVE GARDNER said she looks forward to seeing the
process move forward.
REPRESENTATIVE LYNN said he feels that monopolies aren't in the
best interest; the patient is who really matters; competition
tends to lower prices; he is not necessarily opposed to the
negotiation process; and he would like to see the related bills
move forward.
CHAIR DAVIS stated that the bills will proceed when the
legislature is in session.
REPRESENTATIVE CISSNA said one fix could be to keep people
healthy from the start.
REPRESENTATIVE FAIRCLOUGH said she appreciates the opportunity
to learn more about CON in Alaska and is pleased to see all the
interest.
REPRESENTATIVE ROSES said he hopes the negotiations go well and
that stakeholders come to some agreement.
There being no further business to come before the committee,
Chair Davis adjourned the meeting at 4:03:52 PM.
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