SB 22-MEDICAID COVERAGE FOR BIRTHING CENTERS  RICHARD BENAVIDES, staff to Senator Davis, advised that Senator Davis is the primary sponsor of SB 22. He said the bill would add birthing centers to the definition of health facility in statute so that Medicaid could reimburse them. It also would create a cost savings to the state when it comes to facility reimbursement. He continued: According to a check that we did last year, the average cost of a natural birth from four different hospitals in Anchorage, Fairbanks, and Juneau is approximately $3,667. And conversely, the facility fees for three different birthing centers averages approximately $1,400. So there is a savings of approximately 3 percent. CHAIR DYSON interrupted to clarify the costs, and also that Mr. Benavides was just talking about the facility charges. MR. BENAVIDES answered yes, but the bill gives families that are covered by Medicaid the added option of using a birthing center for delivery. He maintained that birthing centers have long been recognized as providing a positive, safe, friendly, and family oriented experience. He said they feel it would be a win-win situation. CHAIR DYSON asked specifically: Nothing we are doing here would change who is eligible for the Medicaid, it only, and by implication anyone who is Medicaid eligible is going to pay one or the other. So, it's not increasing the population of the people who would be getting Medicaid reimbursement for their birthing services, it's only adding another (which you represent is often better) and cheaper option. It has been represented to me that some people who are Medicaid eligible, when they are making their choices, when they realize that the birthing center option can't get reimbursed, and they have limited funds, feel they are being forced to choose the hospital option because of this problem that you are trying to solve. Is that correct? MR. BENAVIDES affirmed that Chair Dyson understood the bill. SENATOR GREEN asked where the fiscal note was. CHAIR DYSON said the fiscal note was zero. LAURA GORE identified herself as someone who has been affiliated with birth centers in Anchorage for approximately 10 years. She stated that a lot of their clients have to choose hospitals due to finances although it is not what they want. Over the years she has seen an increase in people who can't afford to use the birthing center. She stated that operating a birthing center takes a certain amount of staff and they require reimbursement to keep operating. 3:24:45 PM CHAIR DYSON asked for questions. KAREN BROWN, co-owner of the Geneva Woods Birth Center affirmed that they are seeking birth center reimbursements so clients could have more choices. 3:25:26 PM SHARON EVANS, Mat-Su Wifery, offered her support for the bill. She reported that currently Medicaid pays facility fees in 12 states. She maintained that birth center facility fees are substantially lower than hospital facility fees. She said birth centers offer safe, cost effective alternatives to the escalating maternity care fee seen throughout nation. If SB 22 were adopted, the state would allow needy families to have access to the same options for birth as families with insurance. She maintained that by adopting SB 22, the state would save a large amount of Medicaid funds. SENATOR GREEN questioned whether the federal government participates in states where Medicaid is available. SHARON EVANS replied each state pays on it's own. 3:27:18 PM JUDY DAVIDSON, owner/operator of Mat-Su Midwifery, thanked the legislators for the excellent midwifery standards in Alaska. Birth centers have proven to be cost effective and moms are at lower risks when attended by the same midwife. Many insurance companies recognize the lower cost of the care and pay 100 percent of birth center fees while hospital fees are normally 80 percent covered. SENATOR GREEN said she read a HESS report summary regarding number of births in Alaska over the last few years. Home delivery was going up and birthing centers were going down. "Do you know why that is," she asked. MS. DAVIDSON answered they haven't seen that in her area. In her experience, more than three-fourths of their clients are birth center deliveries and one-fourth is home delivery. She said home deliveries are traditionally about 1 percent of the population. In Alaska, since they now have seven birth centers, rates should go up. SENATOR GREEN said she read there was a trend away from birth center births and more toward home deliveries. She asked if that was possibly because of rising health care costs. MS. GORE said she has seen two birth centers in Anchorage that closed down due to financial reasons. Both facilities did a fair amount of deliveries. 3:30:55 PM JACK NIELSON, Department of Health and Social Services representative, stated the department is neutral on the bill but they had a few items to consider. The bill adds birthing centers to the list of health services that Medicaid is required to pay by statute to be established based on reasonable costs related to patient care incurred by the facility. The bill doesn't seem to add birthing centers as a Medicaid service authorized by state law to be offered by the program. That list of authorized services is at the end of Alaska Statute 47.07.030. If the authorization to cover birthing centers were in all three it would make it absolutely clear that they can cover using Medicaid and it would help in dealing with a potential federal issue that they might have. There is a question whether birthing centers are an allowable Medicaid service that the federal government will participate in financially. Although some states have obtained federal participation in the past, the federal criteria are not clear. There is need to define the federal guidelines. The type of federal approval that is gained could also guide the methodology to calculate payment rates for the birthing centers. Until they have written approval from the federal agency, they wouldn't know for sure the answer to some of the federal type questions, he said. 3:34:03 PM In 2004 there were 10,000 births in Alaska, 50 percent of which were Medicaid. Overall, 2 percent were in birthing centers. He said other factors would include that birthing center fees are lower than hospital payments. He referred to a departmental independent study showing at least a 22 percent savings when a person chooses a birthing center. They should also consider costs from transferring a patient from a birthing center to a hospital, if it's needed. The department believes there would be no overall cost increase. CHAIR DYSON asked Mr. Nielson for his comments in writing. Chair Dyson announced they would take SB 22 up again once the costs were researched more thoroughly. He encouraged the sponsor to work with Mr. Nielson to get contingency language regarding failure of the federal government to fund the charges. 3:37:15 PM CHAIR DYSON asked Mr. Nielson whether the department had completed the regulations for birthing centers. MR. NIELSON advised there are some regulations set but he was not qualified to answer. SENATOR DAVIS asked Mr. Nielson whether it would be a cost savings if the federal government picked up the funds. MR. NIELSON answered the state would be paying 10 percent of the bill rather than 50 percent. Again, he said, the independent study showed 22 percent savings. The federal match for Medicaid for 2006 is around 50 percent. CHAIR DYSON held SB 22 in committee. There being no further business to come before the committee, Chair Dyson adjourned the meeting at 3:40:22 PM.