SB 62-REPEAL CERTIFICATE OF NEED PROGRAM  1:41:17 PM CHAIR COSTELLO announced the consideration of SB 62 and noted the proposed committee substitute (CS). 1:41:59 PM At ease 1:42:21 PM CHAIR COSTELLO reconvened the meeting. SENATOR MEYER moved to adopt the CS for SB 62, version 30- LS0502\O, as the working document. CHAIR COSTELLO objected for an explanation of the changes. 1:42:54 PM NATASHA MCCLANAHAN, Staff, Senator Mia Costello, Alaska State Legislature, Juneau, Alaska, paraphrased the following explanation of changes between versions D and O of SB 62: Version O allows for an exemption from the certificate of need program if the new construction of a healthcare facility, alteration of bed capacity, or addition of a category of health services is in a location that is over 75 miles from another healthcare facility. This is a change from 100 miles in Ver. D to 75 miles in Ver. O. The change assists more communities that are currently struggling to attract and retain healthcare services to better provide equal access to care for all Alaskans. CHAIR COSTELLO removed her objection and asked if there was further objection. 1:44:04 PM SENATOR GARDNER asked the rational for selecting 75 miles from another health care facility. CHAIR COSTELLO said individuals, especially from Delta Junction, testified that the community had been unsuccessful going through the CON process even though the closest health care facility was 100 miles away. The reason for selecting 75 miles was that it is about an hour away under good driving conditions. She noted a map in the packets that shows which Alaskan communities would be affected. 1:46:29 PM SENATOR GARDNER removed her objection. CHAIR COSTELLO stated that without further objection, version O was adopted. SENATOR MEYER observed that the fiscal notes would probably need to be updated. CHAIR COSTELLO asked if he would like Margaret Brodie to comment on the department's response to the committee substitute. SENATOR MEYER said yes. CHAIR COSTELLO asked Ms. Brodie to speak to the fiscal impact and the department's response to the committee substitute. 1:47:21 PM MARGARET BRODIE, Director, Division of Health Care Services, Department of Health and Social Services (DHSS), Anchorage, Alaska, explained that the CS will result in a zero fiscal note because the department already does this work. She said the department was "fine" with the CS. SENATOR GARDNER asked if the department had a position on the current draft of the bill. MS. BRODIE clarified that the department would support this change and the bill. 1:48:55 PM SENATOR MICCICHE asked how the CS changes the Certificate of Need Program other than exempting a facility that is 75 miles from another health care facility from the CON statutes. MS. BRODIE deferred the question to Donna Stewart. 1:49:38 PM DONNA STEWART, Executive Director, Office of Rate Review (ORR), Department of Health and Social Services (DHSS), explained that ORR currently reviews all applications that fit the criteria of the statute. The current draft of the bill allows an exemption for facilities that are built 75 miles away from an existing [CON] facility. Theoretically, the department would see fewer applications. Over the last eight to ten years, the few small communities that applied for a certificate of need all had additional circumstances attached so they would have still gone through the CON process. Delta Junction would be the first community that would fall under the new requirement of 75 miles from another CON facility. SENATOR MICCICHE posed the hypothetical situation of a for- profit facility opening in Delta Junction next door to the nonprofit facility that opened under the proposed exemption. He asked if the second health care facility would be required to obtain a certificate of need. MS. STEWART said it would depend on the timing. Until the nonprofit receives certification that it is an active and viable hospital, it could be in jeopardy of having a competitor open next door. 1:53:16 PM SENATOR STEVENS said he was uncomfortable with the amendment because he wasn't sure whether the hospitals that objected to the original version would be placated by the current draft. 1:54:09 PM CHAIR COSTELLO asked Jean Mischel to comment on Senator Micciche's question. 1:54:17 PM JEAN MISCHEL, Legislative Counsel, Legislative Legal Services, Legislative Affairs Agency, Alaska State Legislature, Juneau, Alaska, said the statute is drafted to mean that the expenditure of $1 million plus the inflation adjustment would trigger the need for the certificate of need. Once the nonprofit spent what is now equivalent to $1.4 million, it would have a good argument that it had vested its interest in the health care facility enough to meet the exception standard before the for-profit hospital comes in. However, if the nonprofit came in under the exception and later decided to expand services, it would need a certificate of need. Also, if the nonprofit beat the for-profit facility within the 75-mile radius, the for-profit facility would be required to meet the standard for the certificate of need for that area. CHAIR COSTELLO said that was her understanding; page 2 talks about where the health care facility is initiated. She thanked Senator Micciche for the question. SENATOR MICCICHE expressed a little confusion about how a facility that was exempted from the CON process could ever qualify for CON protection. "It keeps pointing back to [AS 18.07.031] and we just changed .031" MS. MISCHEL said .031(a) doesn't just provide the exception for the 75-mile radius. It also prohibits a person from expending $1 million or more for the three types of facilities and that would still apply to facilities that have initiated construction. 1:58:04 PM At ease 1:59:45 PM CHAIR COSTELLO reconvened the meeting. She found no further questions and solicited a motion. 1:59:57 PM SENATOR MEYER moved to report the CS for SB 62, version 30- LS0502\O, from committee with individual recommendations and forthcoming revised fiscal note(s). CHAIR COSTELLO found no objection and announced that CSSB 62(L&C) moved from Senate Labor and Commerce Standing Committee.