HOUSE BILL 528 "An Act relating to applications for certificates of need and licensing of nursing homes; amending the standard of review for certificates of need for health care facilities in the state; establishing a moratorium with respect to new applications by prohibiting the issuance of a certificate of need or a license for additional nursing home capacity in the state until July 1, 1998; and providing for an effective date." CLIFF ORME, (TESTIFIED VIA TELECONFERENCE), CHIEF EXECUTIVE OFFICER, VALLEY HOSPITAL ASSOCIATION, MAT-SU, voiced support for a one year moratorium on applications for certificates of need and licenses for nursing home capacity. He added his support of a working group being created for studying and issuing a report on long term care. Mr. Orme agreed 13 with the primary substance of the legislation, although, did not agree with Section 1, the Findings, indicating that the State has a problem with the distribution of nursing home beds. He thought that the most cost effective way of addressing the concerns would be to affiliate long term care services with a hospital association. Representative Martin asked why the moratorium should be limited to one year. Mr. Orme noted that a one year moratorium would in effect be a two year moratorium because of building stipulations. MIKE MILLER, ALASKA COMMISSION ON AGING, JUNEAU, stated that the Alaska Commission on Aging is in support of HB 528. That group would prefer the original bill which provided for a two year moratorium. He concurred that the resolution stated "it all". The availability of nursing home beds in many areas does exceed the actual need. CONNIE SIPE, DIRECTOR, DIVISION OF SENIOR SERVICES, DEPARTMENT OF ADMINISTRATION, spoke in support of the legislation and of the two year moratorium as indicated in the original legislation. She requested that a study be provided determining the areas where additional nursing home beds were needed. (Tape Change, HFC 96-114, Side 2). Ms. Sipe continued, "home and community-based services" enable elderly Alaskans to entirely avoid or postpone nursing home placement. These are programs specifically designed to keep seniors out of nursing homes. A two year moratorium on long-term care beds would allow time for the community based service programs to more fully develop. Also, it would allow the Department of Health and Social Services (DHSS), Division of Senior Services, time to create a plan for the orderly development and proper mix of community based services and long-term care beds. Co-Chair Hanley pointed out that once the beds are built, they will need to be paid for. This is a formula-funded concern and the Department will be required to pay at that level. He reminded Committee members that there are competing needs for Medicaid dollars, both nursing homes and hospital bases. The moratorium would provide the nursing home group time to reevaluate their needs. JAY LIVEY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, commented that the Department generally supports HB 528, and that it would be essential in controlling Medicaid costs. The average Medicaid cost per 14 person per year is approximately $86 thousand dollars. A patient can be kept in a home-based community setting for approximately $30 thousand dollars per year. About 85% of the private nursing home revenues originate from Medicaid dollars. Mr. Livey pointed out that there are one hundred forty-seven (147) proposed new beds to be built around the State in the next five years. If all those beds were built, the cost to the Medicaid program would be nearly $57 million dollars, with $28 million dollars in general funds. He stated that the Department does not know how the Medicaid budget could absorb that amount of money. There are basic issues within the Medicaid program which need to be addressed. * Nursing care is a mandatory service. * Medicaid patients enjoy freedom of choice. * All costs must be incurred by an efficient and economically operated facility. If a bed is built and receives a certificate of need, the State would end up paying the bill which will create a serious situation for the Medicaid budget over the next five years. Mr. Livey pointed out that there is no facility in the State that currently looses revenue and that no current facilities will be harmed by the proposed legislation. The Department supports the original language of the bill including a two year moratorium. The Department also recognizes that this is only a temporary measure. Medicaid has the responsibility to provide long-term care services to older Alaskans. Representative Martin asked who authorizes the certification. Mr. Livey replied that the certificate of need comes to the Department, where it is reviewed and if the project meets the criteria, the certificate of need is then granted by the commissioner. Representative Martin asked the cost of empty beds. Mr. Livey responded that the total cost of running a nursing home is spread across the total number of Medicaid patients who are in the home. Currently in Alaska, there exists one hundred fifteen (115) vacant beds. Representative Martin inquired if the increased number of seniors currently living in the State has resulted from a migration north or the natural aging of current residents. Ms. Sipe stated that it was difficult to track migration. She added, studies do exist which demonstrate what Alaska is 15 experiencing; this is called "new elders". Alaska finally has elders staying in the State, aging in place and not moving away. More people are staying longer, many elders are living longer and the life expectancy has increased dramatically in the last ten years. Representative Martin suggested that the State of Alaska has too many generous programs for seniors, thus encouraging out-of-state seniors to move to Alaska. HB 528 was HELD in Committee for further consideration.