CSHB 528(FIN) NURS.HOME MORATORIUM/CERTIFICATES OF NEED  CHAIRMAN GREEN brought CSHB 528(FIN) before the committee as the final order of business. JAY LIVEY, Deputy Commissioner, Department of Health & Social Services, said the legislation will establish a approximately 20- month moratorium on the granting of a certificate of need to construct a nursing home, or the licensing of a certificate of need, or the licensing of a nursing home bed. There are two ways that nursing home beds essentially can be created in Alaska. A new facility can be built, and, if the building of that facility costs more than $1 million, then a certificate of need is required. Or an existing bed can be converted to nursing home usage, and, if that conversion costs less $1 million, it can be done without a certificate of needs. HB 528 would be a moratorium that would stop both the conversion of beds that cost less $1 million, as well as the granting of a certificate of need for a facility or a changeover that costs more than a $1 million. This moratorium would be in place until May 1, 1998. Mr. Livey said the department supports this legislation because it believes it is essential for controlling Medicaid costs. There are potentially 147 nursing home beds that could come on line over the next three to four years. If all of those beds were to come on line, it would cost the Medicaid program approximately $57 million over those seven years. Medicaid pays from 85 to 90 percent of the cost of these beds if they are built. The average cost of nursing homes in the state of Alaska ranges from about $75 thousand to $134 thousand per bed per year. The average cost of home community-based care is about $30,000, so there are less expensive alternatives out there. Mr. Livey pointed out that current general fund dollars in the Medicaid program total about $155 million. If there were a five percent growth over a 5-year period, it would mean an additional $43 million to pay for that growth. If these nursing home beds were added to the mix of the services they have, that number jumps from $43 million to approximately $75 million. The department does not believe that building these beds is cost effective in terms of that kind of growth when there are less expensive alternatives that provide the same level of care. It was also pointed out by Mr. Livey that there is no facility currently providing service that will lose any money under this bill. This bill just addresses how future revenues will be divided up and what services they are willing to purchase. Further, this is a temporary measure. Number 373 SENATOR LEMAN observed that if the act takes effect immediately and it goes to May 1, 1998, that would be a 24-month moratorium. MR. LIVEY agreed with his observation. Number 400 GLADYS JUNG, representing the Senior Center in Bethel testified from Bethel in support of HB 528. She suggested there should be a needs assessment on this issue and a study done that looks at the entire state and what impact all the areas have on the state. She agreed that the legislation will not harm their plans in Bethel for caring for their elders, and she acknowledged there are alternatives for serving people other than just a regular nursing home. Number 410 JIM BECK, testifying from Mat-Su in support of HB 528, agreed that if HB 528 does not pass, Medicaid costs will definitely increase. He noted the state has an excellent Medicaid waiver program in place, but these waivers are underfunded as it is. The current long-term care system is very unbalanced in favor of institutions because it limits peoples' choices and it wastes a lot of money. He noted there are many people in the state who are under the age of 65 that are stuck in nursing homes and would much rather take advantage of community-based care but are unable to because all of the Medicaid money is being diverted to nursing homes. Mr. Beck cited a case filed by an individual against the state of Pennsylvania's Department of Public Welfare, which the state lost. The Unites States Third Circuit of Appeals found that the states cannot fund nursing home incarceration while, at the same time, cutting funding for community-based program. He asserted that by not passing HB 528, it will put Alaska at the top of the list to be next in line to lose a similar suit. Number 471 HARLAN KNUDSON, representing the Alaska State Hospital and Nursing Home Association, stated the nursing homes in Alaska have a lot to be proud of. He added there is no question that probably everybody in the state prefers home and community-based care. It's the way to go and the association endorses it heartily. Mr. Knudson pointed out that Section 3 of the bill, which calls for the study, was put in the bill by the providers who agree the need to identify the long-term care needs in this state, where they are, and what it is going to cost to provide those cares, and HB 538 will provide some of that badly needed information. Mr. Knudson said there is very serious study out, and anybody who thinks that to move from nursing home care to home and community- based care and save money should step back as the AARP has done and take a look the cost of providing home and community-based services. He observed it is not going to be a cost free catchall for meeting patient needs. Mr. Knudson said the only argument the association has with the bill is the length of the moratorium. They believe that a study on long-term care can be accomplished in a year, however, they are willing to live with the bill and support its concept if the legislature decides it should be two years. Number 504 MARY LOU MEINERS, representing the American Association of Retired Persons, stated their support for CSHB 528(FIN). Number 508 CONNIE SIPE, Director, Division of Senior Services, Department of Administration, informed the committee that the Commission on Aging has been on record for five years in favor of a moratorium. Ms. Sipe noted that Medicaid has been paying for nursing home beds for nearly 30 years, and Medicaid has only been paying for comprehensive home care waivers since 1980 in some states and in Alaska only two years. So there is a faster growth in home community care costs in expenses and use, but there is some catching up to do. There are approximately 147 elders who are nursing home level qualified and could walk into a empty nursing home bed today under Medicaid who are instead receiving care. Their annual total Medicaid costs are about $4.3 million a year. If these individuals were in 147 nursing home beds, their annual cost today would be at least $12.8 million, and, depending on which area of the state they went into nursing home beds, it would be more. Ms. Sipe said the state's nursing homes are important and they are good nursing homes, but things are changing, and once the state commits to a nursing home, it is committed for 30 or 40 years. She noted there are nursing homes in the state where we pay in Medicaid costs over $100 a day per bed just for financing of the interest on the mortgage of the building. She said it is an important franchise decision whether or not to build more or whether to see if the communities can have time to respond. Ms. Sipe said home and community-based services are developing, they need some time to develop and the communities, as well as the industry, need some time to really participate in this study. Concluding, she stated the Division of Senior Services supports the bill with the two-year moratorium. Number 551 PAUL GREGORY, testifying in support of HB 528, stated he was representing the senior citizens of Alaska. Having been born in Alaska, as well as working with the seniors for the last 60 years of his life, he feels bad when he sees seniors put into nursing homes in areas that are unfamiliar to them and where no family members reside. By having an intermediate center, people will begin to live longer, and people want to take care of their own if possible. He said the seniors of the Yukon-Kuskokwim Delta are in support of a study to determine where the greatest need is going to be. TAPE 96-35, SIDE B Number 005 SENATOR GREEN advised that she filed a bill earlier in the week that repeals the certificate of need process, and her reason for doing so is so that hearings can be held in the interim to determine what other states are doing and what Alaska might need to do to change so that there isn't this debate every other year and then having to come back in with another moratorium. She added that she has no intention of attempting to repeal the certificate of need, but took that approach to get the discussions going. Number 025 KIMBERLY DUKE, staff to Representative Mark Hanley, who is the prime sponsor of HB 528, said Representative Hanley is very supportive of the legislation and that he introduced it on behalf of the department to give the community-based services a chance to develop in areas where they haven't been located before. He believes it is a service more people would prefer rather than being in the nursing home setting; the intent of the bill is to give a period of time for that to develop. She said Representative Hanley supports the length of the moratorium, which was changed in House Finance to May 1998, to allow for the construction season. Number 063 SENATOR GREEN noted that Senator Miller had expressed the possibility of proposing an amendment to the legislation, but that it could be dealt with in Senate Finance, so it was her intent to pass the bill out of committee with the understanding that there is the likelihood of some changes that may come forward. She then asked for a motion to move the bill out of committee. SENATOR LEMAN moved that CSHB 528(FIN) and the accompanying zero fiscal note be passed out of committee with individual recommendations. Hearing no objection, it was so ordered.