HB 511-CERTIFICATE OF NEED PROGRAM Number 0092 CHAIR WILSON announced that the first order of business would be HOUSE BILL NO. 511,"An Act relating to the certificate of need program for health care facilities; and providing for an effective date." JANET CLARKE, Director, Division of Administrative Services, Department of Health and Social Services, testified in support of HB 511 and answered questions from the committee members. She told the members that the administration support HB 511 in its current form which includes one amendment the committee adopted during the first hearing of the bill. That amendment was related to residential psychiatric treatment centers (RPTC) which the department believes strikes the right balance of technical corrections in closing some of the loopholes to make the CON program work better. MS. CLARKE referred to a letter she sent to the member on March 15 which addressed a number of the questions from the members. She commented that Tanana Valley Clinic testified that 99 percent of the CONs submitted have been approved. Ms. Clarke explained that the department did a review of that point and asked the members to look at Attachment 1, Response to TVC Assertions. There were also issues of non-hospital CON approvals and the assertion that the department protects hospitals from competition. Ms. Clarke pointed to the third page of the attachment, Certificate of Need Decisions from 1996- 2003. She noted that the table at the top of the page reflects that 61 percent of the CONs had been approved as requested, 11 percent were denied, 11 percent were partially approved, 6 percent were withdrawn, 14 percent had special conditions attached to their CONs, and 17 percent were shaped by the CON process. In other words, the process provides technical assistance with the application, and the questions that were asked in the CON process helped shape the direction the facilities chose to go. Ms. Clarke emphasized that this is not a rubber stamping process, but a public interactive process. She summarized that she believes the CON process is doing the job the legislature intended. Number 0367 REPRESENTATIVE SEATON commented on the differences between the CON processes in Alaska as opposed to the process in Utah. He said the committee was told that in Utah the department assesses the needs of a community when a CON application comes in. However, in Alaska when a CON application comes in there is a public notice for 30 days where counter proposals can come forward. He asked Ms. Clarke to address this point. MS. CLARK directed the members' attention to Attachment 3, History of Concurrent (Competing) Certificate of Need Reviews. This attachment shows the number of competing CON applications in Alaska since 1982, she said. In the 1980s there were four [competing CON applications], and in the 1990s there were two [competing CON applications]. She agreed with Representative Seaton's description of the way CONs are handled in Alaska. During the 30-day public notice there would be an opportunity for someone to come in with a competing application, she acknowledged. Ms. Clarke commented that the department does not solicit, encourage, or in any way encourage competition to CONs. She summarized that competing CONs have been a very rare occurrence particularly in the last twenty years where it has only happened twice. Number 0544 CHAIR WILSON announce that Representatives Cissna and Wolf have joined the meeting. Number 0561 REPRESENTATIVE CISSNA asked if the CON process is time consuming. MS. CLARKE referred to Attachment 2, Certificate of Need Questions & Answers, and directed the members' attention to the question: "What are the components of the certificate of need (CON) process?" She provided the following list [original punctuation provided]: · Submission of a letter of intent (includes who, what, how large, the cost and timeline); · Letter of intent (LOI) determination - a decision is made as to whether a CON is required; · 60-Day wait - A CON application may be submitted 60 days after the LOI determination; · Completeness Check - The application is checked for completeness, and more information is requested if the application is incomplete. The applicant has 60-days to submit information; · Review Period - The analysis document must be submitted to the Commissioner in 90 days; · Public Notice & Public Comment - Public notice is given at the beginning of a review and the public comment period runs concurrently with the review, · Commissioner's Decision - The Commissioner makes the decision, which is published, and · Appeal - The applicant has 30 days to appeal if dissatisfied. MS. CLARKE added that the commissioner will make a decision, and if an applicant is still unhappy litigation is still an option. Number 0709 REPRESENTATIVE CISSNA asked at what point in the process does the department make the application public. Is it when a submission of a letter of intent is received or later in the process. MS. CLARKE replied that the letter of intent is a one-page document that is public information. REPRESENTATIVE CISSNA asked if the letter of intent is published. MS. CLARKE responded that a lot of things are published on the department's web page, but would have to verify that the letter of intent is one of them. MS. CLARKE summarized information on Attachment 2 which was titled "Certificate of Need Questions and Answers." She explained that the types of projects which require CON are health care facility projects that involve expenditures of $1 million or more for construction, renovation, or the purchase of new equipment. Ms. Clarke told the members that there are other projects which are exempt from CON; for example, if the project costs under $1 million, or is for routine maintenance or repair, or routine replacement of equipment. Specifically, exemptions are for pioneer homes, private physicians' offices, dentists' offices, and any other project that is not included in the definition. Ms. Clarke emphasized that if HB 511 passes the legislature the definition will change to include residential psychiatric treatment centers and independent diagnostic testing facilities. Number 0843 MS. CLARKE explained that the department is required to have a decision on a CON application to the commissioner within 90 days, and then the commissioner can take as long as necessary to make the determination. She added that there is usually a lot of pressure to turn that decision around fairly quickly. MS. CLARKE responded to earlier comments concerning the cost of a CON as being between $5,000 to $100,000 or more, by saying that a lot of the cost depends on the whether the applicant is happy with the decision and if there is a decision to litigate it. However, one example from a group in the state of Washington that has done consulting in the state of Alaska and has done at least four CON applications charges $15,000 per application. She said she believes that is a good independent assessment of the cost. MS. CLARKE summarized that the department supports HB 511 and urged the members to pass it from committee. CHAIR WILSON commented that an amendment will be presented shortly that will remove residential psychiatric treatment centers (RPTC) from the bill and asked Ms. Clarke to comment on the purpose of including them. Number 0933 REPRESENTATIVE WOLF moved Amendment 1. He told the members that many communities are looking at adding RPTC's and this bill simply adds one more layer of bureaucracy. He pointed out that Ms. Clarke stated the cost could be between $15,000 to $100,000 to obtain a CON. Number 0977 REPRESENTATIVE KAPSNER objected for purposes of discussion. She explained that in her area a tribal health consortium, Yukon- Kuskokwim Health Corporation, is planning on building a RPTC for Native kids. She added that there are no RPTCs in Rural Alaska, so most of these kids get shipped out of state. Representative Kapsner said that there is concern that a for-profit hospital could come into the area and take that option way from the tribal health consortium. Number 1024 MS. CLARKE responded that the department opposes Amendment 1. She explained that there is an effort to bring the 500 children who are currently placed in out of state facilities back to Alaska. Ms. Clarke told the members it is the department's wish to do this in a planned community-based way where many smaller facilities would be constructed throughout Alaska if needed. She emphasized that it is important not to over build the system. The department wants a three-pronged approach where there would be a gate keeping system in place to ensure that kids are going to the right place. It is important to make sure that RPTCs are built in the right locations so kids can be as close to home as possible. Kids who are not close to their parents do not receive the same benefit as those who are. It is also important these facilities not be large. Ms. Clarke added that while there are 500 kids out of state, the department does not believe it would be prudent to build 500 beds in Alaska. Instead, the department believes having a smaller number of beds with a variety of options will be helpful in making the kids successful. MS. CLARKE noted that three of the members of the House Health, Education and Social Services Standing Committee are on the House Finance Budget Subcommittee which deals with this issue. She told the members that this is one of the fastest growing areas of the Medicaid budget. She explained that the budget is now well over $40 million and is growing rapidly every year. It is important that as the kids are moved back to Alaska, they are provide with better treatment, and that the Medicaid budget is not broken. Ms. Clarke explained that the administration wishes to work with Tribal partners because there is 100 percent federal funding available for those services, and it is important to do it in a planned manner. Number 1153 REPRESENTATIVE CISSNA commented that she understands that there is legislation currently moving through the process that would removed reimbursement to this kind of program. She added that she hopes there is some coordination to ensure that the community-based RPTCs are paid enough to remain open. MS. CLARKE replied that she believes Representative Cissna is referring to some cost containment regulations that are currently out for public comment. Number 1199 REPRESENTATIVE GATTO asked for clarification on residential psychiatric treatment center. In this context what does the word "residential" mean. "Is this a locked-down facility," he asked? MS. CLARKE replied that some of the facilities will be locked facilities; however, some are secured facilities. By that she said she means the facility is secured by staff; it is not like a locked cell. REPRESENTATIVE GATTO asked if there is 100 percent control. MS. CLARKE responded that there are a whole array of residential facilities including many levels of security. She clarified that RPTCs are one step away from an inpatient psychiatric hospital. REPRESENTATIVE GATTO asked how many kids the department plans on bringing back to Alaska. MS. CLARKE replied that it is the intention to bring back as many children as will benefit from returning to the state of Alaska. There are some specialized facilities in the Lower-48 that deal with for example, fire starters. That program cannot be replicated in every state. Ms. Clarke emphasized that the department wants to stem the tide of kids going out of state and bring some back to the appropriate placement. Number 1383 REPRESENTATIVE WOLF pointed out that the committee has heard from a program in Southeast Alaska [Crossing Wilderness Expeditions for Youth, Overview, 1/29/04] that has a remote program, yet it would be considered a residential facility which would fall under the CON process. MS. CLARKE responded that there is no retroactive clause in HB 511. There are a couple of facilities, in Anchorage and Palmer, that have the designation of RPTCs. She emphasized that not all residential centers will fall under the CON process. Many communities have residential homes that fall under a different program and CON does not apply to them. REPRESENTATIVE WOLF said that the members were told the CON process would apply to the program he is referring to. Unless Ms. Clarke can confirm that it does not apply, he will assume it does. MS. CLARKE responded that she would have to look at the program to determine the level of care and intensive services that are being provided. Number 1405 REPRESENTATIVE COGHILL commented that the budget debate has made it clear that there needs to be management of RPTCs because they are largely publicly funded. He told the members that he opposes the amendment even though he struggles with the idea of the state managing many of these programs. CHAIR WILSON agreed with Representative Coghill's comments. She pointed out that there are many companies in the Lower-48 who know the current problems Alaska is experiencing and without the CON process these companies could come up here and build many facilities as a way to make money. Number 1441 A roll call vote was taken. Representative Wolf voted in favor of Amendment 1. Representatives Cissna, Kapsner, Gatto, Coghill, and Wilson voted against it. Therefore, Amendment 1 failed to be adopted by a vote of 1-5. Number 1508 REPRESENTATIVE COGHILL moved to report HB 511 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 511(HES) was reported out of the House Health, Education and Social Services Standing Committee.