HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE April 22, 1999 3:05 p.m. MEMBERS PRESENT Representative Fred Dyson, Co-Chair Representative John Coghill, Co-Chair Representative Jim Whitaker Representative Joe Green Representative Carl Morgan Representative Tom Brice Representative Allen Kemplen MEMBERS ABSENT All members present COMMITTEE CALENDAR CONFIRMATION HEARINGS University of Alaska Board of Regents Frances H. Rose - Anchorage Brian Rogers - Fairbanks Robert A. Malone - Anchorage Joseph E. Usibelli, Jr. - Healy -CONFIRMATIONS ADVANCED SENATE BILL NO. 56 "An Act allowing the disclosure of reports with regard to inspection and investigations of certain health care facilities, home health agencies, hospice programs, and assisted living homes; authorizing the Department of Health and Social Services to license home health agencies; and providing for an effective date." - MOVED CSSB 56(L&C)OUT OF COMMITTEE * HOUSE BILL NO. 187 "An Act relating to the certificate of need program for nursing care facilities and other facilities; and providing for an effective date." - MOVED HB 187 OUT OF COMMITTEE HOUSE BILL NO. 113 "An Act relating to a program of postsecondary education for high school students." - MOVED CSHB 113(HES) OUT OF COMMITTEE * HOUSE BILL NO. 186 "An Act allowing the disclosure of reports with regard to inspection and investigations of certain health care facilities, home health agencies, hospice programs, and assisted living homes; authorizing the Department of Health and Social Services to license home health agencies; and providing for an effective date." - SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: SB 56 SHORT TITLE: HOME HEALTH AGENCIES/HOSPITALS/HOSPICES SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES Jrn-Date Jrn-Page Action 2/08/99 186 (S) READ THE FIRST TIME - REFERRAL(S) 2/08/99 186 (S) HES, L&C 3/03/99 (S) HES AT 1:30 PM BUTROVICH ROOM 205 3/03/99 (S) HEARD AND HELD 3/03/99 (S) MINUTE(HES) 3/08/99 (S) HES AT 1:30 PM 3/08/99 (S) HEARD AND HELD 3/08/99 (S) MINUTE(HES) 3/15/99 (S) HES AT 1:30 PM BUTROVICH 205 3/15/99 (S) MOVED CS (HES) OUT OF COMMITTEE 3/15/99 (S) MINUTE(HES) 3/16/99 562 (S) HES RPT CS 2DP 3NR SAME TITLE 3/16/99 562 (S) DP: MILLER, WILKEN; NR: PETE KELLY, 3/16/99 562 (S) PEARCE, ELTON 3/16/99 562 (S) ZERO FISCAL NOTE (DHSS) 4/08/99 (S) L&C AT 1:30 PM BELTZ 211 4/08/99 (S) MOVED CS(L&C) OUT OF COMMITTEE 4/09/99 (S) RLS AT 12:15 PM FAHRENKAMP 203 4/09/99 (S) MINUTE(RLS) 4/09/99 843 (S) L&C RPT CS 3DP 1NR SAME TITLE 4/09/99 843 (S) DP: MACKIE, TIM KELLY, LEMAN; NR: DONLEY 4/09/99 843 (S) PREVIOUS ZERO FN TO CS (DHSS) 4/12/99 878 (S) RULES TO CALENDAR 4/12/99 4/12/99 881 (S) READ THE SECOND TIME 4/12/99 881 (S) L&C CS ADOPTED UNAN CONSENT 4/12/99 881 (S) ADVANCED TO THIRD READING UNAN CONSENT 4/12/99 881 (S) READ THE THIRD TIME CSSB 56(L&C) 4/12/99 882 (S) PASSED Y19 N- E1 4/12/99 882 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 4/12/99 885 (S) TRANSMITTED TO (H) 4/13/99 786 (H) READ THE FIRST TIME - REFERRAL(S) 4/13/99 786 (H) HES 4/22/99 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 187 SHORT TITLE: CERTIFICATES OF NEED FOR HEALTH FACILITY SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES Jrn-Date Jrn-Page Action 4/09/99 703 (H) READ THE FIRST TIME - REFERRAL(S) 4/09/99 703 (H) HES, FIN 4/22/99 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 113 SHORT TITLE: POSTSECONDARY EDUC FOR HIGH SCHOOL STUDENTS SPONSOR(S): REPRESENTATIVES(S) MASEK, Dyson Jrn-Date Jrn-Page Action 2/24/99 301 (H) READ THE FIRST TIME - REFERRAL(S) 2/24/99 301 (H) HES, FIN 4/08/99 694 (H) COSPONSOR(S): DYSON 4/13/99 (H) HES AT 3:00 PM CAPITOL 106 4/13/99 (H) HEARD AND HELD 4/20/99 (H) HES AT 3:00 PM CAPITOL 106 4/20/99 (H) HEARD AND HELD 4/22/99 (H) HES AT 3:00 PM CAPITOL 106 WITNESS REGISTER FRANCES H. ROSE, Appointee to University of Alaska Board of Regents 900 West Fifth Avenue, Suite 601 Anchorage, Alaska 99501 Telephone: (907) 272-7575 POSITION STATEMENT: Testified as appointee to University of Alaska Board of Regents. BRIAN ROGERS, Appointee to the University of Alaska Board of Regents P.O. Box 80690 Fairbanks, Alaska 99708 Telephone: (907) 452-2461 POSITION STATEMENT: Testified as appointee to University of Alaska Board of Regents. SENATOR GARY WILKEN Alaska State Legislature Capitol Building, Room 514 Juneau, Alaska 99801 Telephone: (907) 465-3709 POSITION STATEMENT: Testified as sponsor of CSSB 56 and on HB 187. ELMER LINDSTROM, Special Assistant Office of the Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811 Telephone: (907) 465-1613 POSITION STATEMENT: Testified in support of CSSB 56. LINDA FINK, Assistant Director Alaska State Hospital and Nursing Home Association 426 Main Street Juneau, Alaska 99801 Telephone: (907) 586-1790 POSITION STATEMENT: Testified in support of CSSB 56 and HB 187. SHELBY LARSEN, Administrator Health Facilities Licensing and Certification Division of Medical Assistance Department of Health and Social Services 4730 Business Park Boulevard, Suite 18 Anchorage, Alaska 99503 Telephone: (907) 561-8081 POSITION STATEMENT: Testified in support of CSSB 56. RICK SOLIE Fairbanks Memorial Hospital and Denali Center 1650 Cowles Street Fairbanks, Alaska 99701 Telephone: (907) 452-8181 POSITION STATEMENT: Testified in support of CSSB 56. JAY LIVEY, Deputy Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811 Telephone: (907) 465-3030 POSITION STATEMENT: Testified in support of CSSB 56 and HB 187. LARAINE DERR, Director Alaska State Hospital and Nursing Home Association 426 Main Street Juneau, Alaska 99801 Telephone: (907) 586-1790 POSITION STATEMENT: Testified in support of HB 187. DAVID PIERCE, Certificate of Need Coordinator Facilities and Planning Division of Administrative Services Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811 Telephone: (907) 465-3001 POSITION STATEMENT: Provided information of HB 187. EDDIE GRASSER, Legislative Assistant to Representative Beverly Masek Alaska State Legislature Capitol Building, Room 432 Juneau, Alaska 99801 Telephone: (907) 465-3306 POSITION STATEMENT: Presented HB 113. LARRY WIGET, Executive Director Public Affairs Anchorage School District 4600 DeBarr Road Anchorage, Alaska 99519 Telephone: (907) 269-2255 POSITION STATEMENT: Testified on HB 113. ACTION NARRATIVE TAPE 99-41, SIDE A Number 0001 CO-CHAIRMAN COGHILL called the House Health, Education and Social Services Standing Committee meeting to order at 3:05 p.m. Members present at the call to order were Representatives Dyson, Coghill, Whitaker, Morgan and Kemplen. Representatives Brice and Green joined the meeting at 3:06 p.m. and 3:07 p.m. respectively. CONFIRMATION HEARINGS CO-CHAIRMAN COGHILL announced the committee would consider four nominees for the University of Alaska Board of Regents. They would not vote for the nominees but would pass them out of committee for full consideration of the House and Senate. (Resumes were provided for all appointees.) Number 0136 FRANCES H. ROSE, Appointee to University of Alaska Board of Regents, came forward to testify saying she has lived in Alaska for 38 years. She was an employee of the university for 13 years in adult basic education, and she has always had a deep interest in the university. She believes in the university, and the fact that it is the future of the state. The university is educating the future citizens of the state, and they need to have a good, viable, quality university to educate and keep the students in the state rather than sending them all over the country. They need to be able to train them for jobs and for higher education. REPRESENTATIVE KEMPLEN commented that as a member of the Board of Regents she will have an influential role for the university, and he wondered where she is going to take this university. Number 0307 MS. ROSE replied she is not going to take it alone but with everyone's help. She believes the University of Alaska can become a national leader in several areas of education including arctic research, marine biology and mining. She believes that, for a lot of things, the university should be the best, and it can be. She is interested in developing some unique areas where they can excel. She has heard from alumni who said they got good educations at the university. It is important for the students to come home and have jobs. They have to train for jobs, but they also need to have economic development that will create the jobs. Number 687 REPRESENTATIVE KEMPLEN commented that he doesn't see the strong linkage between the university and the private sector for economic diversification in the areas of patents, inventions and license disclosures. He asked Ms. Rose what she is going to do to create the products. MS. ROSE agrees that the university should be making something from the research that has been done and have a partnership with private industry. She doesn't know exactly what she will do, but she will bring this issue to the regents and make sure that they talk about it and do something about it. REPRESENTATIVE BRICE suggested the continuation of programs like the mining cooperative extension programs to ensure strong support. He appreciated her resume and thanked her for her public service. REPRESENTATIVE GREEN asked her if she sees the future of the university continuing to try to educate both academic and skills or vocational types. He asked her if she sees the large umbrella at this great university, or should they concentrate on certain aspects to do better than anywhere else and maybe not have such a broad base. Number 0841 MS. ROSE answered that it is a question of balance. She wasn't happy with the decision to abolish the community colleges but realized the economics of it. There was a promise made then that the mission of the community college would continue, and she doesn't know how much of that mission continues. Because they are one big statewide university in a big state, they almost have to be all things to all people, but they have to have a balance. She will reserve that answer to see how it really is working. She offered to talk to Representative Green about it later. CO-CHAIRMAN DYSON asked Ms. Rose where she would prioritize the university along with roads, police, prisons, health care for the elderly, disabled vets, child protection, foster care and assisted adoption in the limited budget this year. Number 0986 MS. ROSE commented that the investment in the university is a good one and should be pretty close to the top. She doesn't envy their job. She believes the university is important because the people are gainfully employed and educated. If they have a productive, vital citizenship, maybe they won't need as many police. The university is an economic engine; it does promote economic diversity. Maybe if they have economic diversity, they won't have quite the budget crunch. Number 1109 REPRESENTATIVE WHITAKER asked Ms. Rose about the regional politics between the University of Alaska Fairbanks (UAF) and the University of Alaska Anchorage (UAA), and how they can work together to better serve the state. MS. ROSE believes she is the regent for the whole state, and she intends to be fair in that respect. All the campuses serve different needs and students. She will be as fair as she possibly can and try to do away with those turf wars. CO-CHAIRMAN COGHILL asked Ms. Rose if the core curriculum that the university is known for would be diminished because of the specialization. MS. ROSE answered they need to have the core curriculum in all three campuses, and then they can spread out into more specialized things. Number 1266 BRIAN ROGERS, Appointee to the University of Alaska Board of Regents, came forward to testify, saying he has been a resident of Fairbanks for 29 years. Throughout those 29 years, he has been associated with the university as student, part-time faculty member, staffer, administrator, contributor and critic. Being a member of the board allows him to use that experience to try to help the university move forward in the difficult era of diminished resources, trying to accomplish more yet trying to meet the postsecondary needs of the people throughout Alaska. The university has given him a lot, and he would like to give something back and serving on the Board of Regents is a good way to do that. REPRESENTATIVE KEMPLEN appreciates Mr. Rogers' willingness to serve. He asked Mr. Rogers to respond to his previous question he asked Ms. Rose. Number 1344 MR. ROGERS indicated that the university's role in economic development and commercializing technology is an important one. They have had some successes and some failures. He referred to the Fishery and Industrial Technology Center in Kodiak where they developed new technology to detect bones in fish and fish quality as being one of the successes. One of the failures was trying to set up a technology development corporation to take advantage of that. Basically, the volume of patentable ideas versus the cost is a problem for the university. The idea of trying to do it all themselves didn't work. Now they are working cooperatively with other institutions to get assistance to commercialize those technologies. Some things go forward that may not be seen. There was permafrost research at UAF that has led to better road construction, and that cuts the cost of maintenance. That is an example of the university developing knowledge that has contributed to lowering the cost of state government, federal government and improving the roads so there are not quite as many potholes in interior Alaska. There are some things going on, and he would like to see more opportunity to take that technology and do something with it. Number 1435 REPRESENTATIVE KEMPLEN asked Mr. Rogers, with his business of Information Insights perspective, how he sees the field of technology advancing in Alaska. MR. ROGERS agreed it is important, and he hopes the university can move forward in this area because he cannot find enough qualified people to hire. There is a lot of opportunity in Alaska to develop industry around technology, but they need trained people to do it. If students go outside for the training, they will be snapped up by the companies there. Because of technology, Alaska has lost its locational disadvantage in some areas. They can produce software and Internet content and ship it anywhere in the world at no cost. That is different than some of the other industries in Alaska where they have high transportation cost barriers. He would like to use some of his experience from his company at the university because he believes that is how they can ship education around. Number 1582 CO-CHAIRMAN DYSON asked Mr. Rogers how he would prioritize the university with a limited budget. MR. ROGERS believes that educating Alaskans and creating new knowledge and serving the public helps enhance the economic opportunities in Alaska. If they have more economic activity through the existing revenue sources the state has, the state, over time, does better by the presence of a university. He would also place that investment relatively high, but he would put it on equal basis with education at the K-12 level. It doesn't do the university any good at all if they get all the money, and students are not being prepared in grades K-12. Like most Alaskans said in the polls, he would put education at the top. He believes there will be opportunities for the university to find other new revenue sources, and he would like to help in that process. CO-CHAIRMAN DYSON thanked Mr. Rogers for his willingness to serve. Number 1700 REPRESENTATIVE WHITAKER praised Mr. Rogers as an admirable ally and worthy adversary who has good intentions and intelligence and expects great things with his involvement in the university. REPRESENTATIVE BRICE expects Mr. Rogers' expertise will be very valuable to help the university reach a much higher plateau than what it is today and said the same to Ms. Rose. CO-CHAIRMAN COGHILL wondered how the different missions of the university help or hinder them in regard to core curriculum. Number 1793 MR. ROGERS said they need to recognize that this is a multi-mission university with responsibilities at the community college level. It is important that the community college mission is recognized throughout the country for providing job related training, continuing education and for people who aren't in a position to travel somewhere for an education and need to take it over a period of years. It is just as important in a small community as it is in the larger communities. The community college mission requires that they continue to offer education throughout the state. The challenge is to see how they can use technology and distance delivery to moderate the costs and to deliver as much education for the dollar as they can, recognizing that the costs are going to be higher in many respects to reach the people in rural Alaska. The people in rural Alaska who have jobs and are looking for additional training, have fewer choices than people in urban Alaska. That job training is just as important as the four-year mission and the research mission. Number 1881 CO-CHAIRMAN COGHILL recommended that all four appointments to the University of Alaska Board of Regents be moved along to the floor. SB 56 - HOME HEALTH AGENCIES/HOSPITALS/HOSPICES Number 1906 CO-CHAIRMAN COGHILL announced the next order of business as Senate Bill No. 56, "An Act allowing the disclosure of reports with regard to inspection and investigations of certain health care facilities, home health agencies, hospice programs, and assisted living homes; authorizing the Department of Health and Social Services to license home health agencies; and providing for an effective date." He announced the committee would be addressing CSSB 56 instead of the companion bill HB 186. Number 1919 SENATOR GARY WILKEN, Alaska State Legislature, sponsor, presented CSSB 56 saying that the bill comes out of the Long-Term Care Task Force (LTCTF) Report and is the result of their recommendation number three. Since the early 1980s, the Department of Health and Social Services (DHSS) has annually inspected hospitals, nursing homes, assisted living care facilities and passed a recommendation as to their fitness to provide those services. Under current law, those inspection reports are not available to the public. Simply, SB 56 sets forth in law, that after the final report is finished and sent to the facility, it will be made available to the public within 14 days of that date. This bill formalizes the authority of the DHSS to license home health agencies. CO-CHAIRMAN DYSON asked Senator Wilken if there was any opposition to this bill. Number 2030 SENATOR WILKEN answered not that he was aware of. They had some input from different groups, and the amendments in the Senate took care of that. REPRESENTATIVE GREEN asked what has changed in the Senate version from the House version of the bill. SENATOR WILKEN answered that the major change had to do with defining what a final report was and allowing the caregiver to respond to that report before it was made public and a technical change which the department can explain. Number 2116 ELMER LINDSTROM, Special Assistant, Office of the Commissioner, Department of Health and Social Services, came forward to testify in support of SB 56. He informed them that the licensing report element is the significant change. The other technical amendment only relates to the department's ability to license home health agencies. They license and have statutory authority on a number of things, but they did not have specific statutory authority for home health agencies. Senator Wilken correctly described the one substantive change in the Senate bill that resulted in the committee substitute (CS), and it was to clarify that the DHSS would release the final report 14 calendar days after it had been made available to the facility. He believes that allayed the concerns of the Alaska State Hospital and Nursing Home Association. Number 2180 LINDA FINK, Assistant Director, Alaska State Hospital and Nursing Home Association (ASHNHA), came forward to testify. She acknowledged that they did have a concern about the final reports being disclosed and that was addressed, and they do support the legislation as it is. Number 2212 SHELBY LARSEN, Administrator, Health Facilities Licensing and Certification, Division of Medical Assistance, DHSS, testified via teleconference in support of SB 56. He hopes the House version will reflect the changes in the Senate version. Number 2248 CO-CHAIRMAN DYSON made a motion to move CSSB 56(L&C) from committee with individual recommendations and zero fiscal note. There being no objection, CSSB 56(L&C) moved from the House Health, Education and Social Services Standing Committee. HB 187 - CERTIFICATES OF NEED FOR HEALTH FACILITY Number 2266 CO-CHAIRMAN COGHILL announced the next order of business as House Bill No. 187, "An Act relating to the certificate of need program for nursing care facilities and other facilities; and providing for an effective date." Number 2300 SENATOR WILKEN presented HB 187 which is the companion bill to SB 59 which has to do with the Certificate of Need (CON). The DHSS reviews all nursing home expansions over $1 million because when they add those facilities to the inventory of caregiving facilities, there is a Medicaid impact, of which the state pays 40 percent. Under current law, there are two tests that the DHSS applies to new facilities: factors of accessibility and quality. If they pass those two tests, the CON is granted, and the state assumes the obligation of the 40 percent toward Medicaid. The two bills, HB 187 and SB 59, add a new standard to this test which has to do with cost effectiveness of the new facility, and that becomes and test upon which new facilities are graded. TAPE 99-41, SIDE B Number 2357 REPRESENTATIVE BRICE asked Senator Wilken to discuss the amendment on day surgery. The amendment has not been offered, but it is in the packets. SENATOR WILKEN deferred to the department. Number 2292 RICK SOLIE, Fairbanks Memorial Hospital and Denali Center, testified via teleconference from Fairbanks in support of HB 187 as it is currently written. This legislation will allow the state to meet the need of an aging population, as well as to try to contain the cost to the state in Medicaid dollars. He is concerned with the amendment relating to imaging services and day surgeries as an exemption from the CON laws. He spoke against that amendment. The amendment goes contrary to the bill before them. In this sense, it would exempt these areas from the CON requirements. Currently, if someone wanted to build a service which includes a health care facility, like radiation therapy, mental health or ambulatory surgery, he believes, if they were to exempt that, it would not hit the mark on what the CON law is intended to do. People can argue about whether the government should be in the business of regulating this, but he believes that to piecemeal exempt is not a prudent approach. There is still some benefit to the idea of a CON whether or not it controls costs; it also has an ability to impact quality and access of the services that are offered as well. CO-CHAIRMAN DYSON asked if Mr. Solie thought that the state isn't currently doing a good enough job of making sure that medical providers are fit and able. MR. SOLIE believes that the state is doing an adequate job in inspecting facilities for fitness and ability. This amendment would take away the oversight that the state currently has in this area. Day surgery and imaging centers would no longer be required to present a CON application to the DHSS as they currently are. To pull out pieces of the CON law doesn't make good policy without some substantial study. CO-CHAIRMAN DYSON said it seemed that Mr. Solie's objection to the amendment would be his objection to competition and maybe diversified options for the patients. Number 2005 MR. SOLIE remarked that he hit on the crux of the issue. It relates to whether or not the state should be involved in determining a need and allowing for new capacity being constructed in this particular area, and that is the debate nationally whether competitive forces should be allowed to prevail. It is an interesting issue and some of it has been involved in the debate over competition in other sectors of the economy. Health care is not the same kind of commodity that toothpaste, widgets, telephones or even electricity are. There are issues of cross subsidies when certain components of hospital business are able to support other components of it, particularly when they are dealing with sole providers. The issue of whether or not they want to allow a community hospital to have "profit pockets," to support areas of that facility that may not be a profit pocket, is a philosophical and community debate. CO-CHAIRMAN DYSON asked if he was inferring that if they allow too much competition, the quality of service will go down. MR. SOLIE was hesitant to say that. Quality is related to the provider and their ability to provide the necessary aspects of health care which includes the facility, but more importantly includes the physician. He wonders if it makes sense to exempt out these services from the current system of state oversight that is there to, not only determine quality, but also access and determine that they don't end up with excess capacity which ultimately the consumers pay for. Number 1865 CO-CHAIRMAN DYSON asked if he means that government needs to protect the private sector from getting over committed. He asked Mr. Solie why should a local physician who wants to open a "Doc in a Box" day surgery center have to jump through an extra set of hoops to get a CON to provide those kinds of services. Number 1829 MR. SOLIE answered that in respect to Fairbanks. Anchorage has two hospitals; Fairbanks has one supported by the community. Day surgery and imaging centers tend to be more profitable services. They are the ones being heavily competed for. In Anchorage, there are a number of ambulatory surgeries. When they get competition in those areas, they would like to see prices fall; he suspects what occurred in Anchorage is that the gross charges for the two hospitals have gone up to cross subsidize their outpatient costs. There is Medicaid data available that shows the history in Anchorage over the last five years, that there was a 20 percent increase in the gross charges of the two hospitals there; in Fairbanks, the gross charges have gone up 3 to 4 percent. He argues that what happens is cross subsidies from the inpatient costs protect outpatient services that aren't profitable. MR. SOLIE indicated that no one is going to come to Fairbanks now and try to take away the monopoly that the hospital has on mental health because that has never been a profitable service to the hospital. They have been concerned for a long time about their ability to continue it. Their ability to pay for services like mental health, drug and alcohol treatment and some others that are not profitable, relate sometimes to the other services that may be able to support some kind of a profit. To a degree, it is a community decision about whether they want to have a hospital with some of these profit pockets, and the extent to which those profits are appropriate is also a community decision. He suggested that in this case, a for-profit, stand-alone center would not be doing anything but taking the profits to wherever, which is fine, but that is part of what a community hospital will often use to support its non profitable operations. It is an issue that is significant, and he would be concerned if, at this late date, the legislature chose to get into it, particularly while there are CONs pending. Number 1668 JAY LIVEY, Deputy Commissioner, Department of Health and Social Services, came forward to testify in support of HB 187. They believe HB 187 will help them to in the future cost manage the Medicaid expenditures for long-term care. Given the long-term care population in Alaska (above 85 years old) over the next 10 or 20 years, they are going to have to figure out how to serve them that is different than the way they do it now. They believe that this bill helps the department to have some tools to cost manage the Medicaid program in the future. CO-CHAIRMAN DYSON asked if the local inference here is that if they can keep down the competition, they can allow the people who have the monopoly to get more of a market share and therefore, be able to do the cross subsidization for the people who can't pay their way or aren't covered by insurance out of the programs. There is kind of a restriction of trade and some kind of soft monopoly in order to help out the cross subsidization they need to do in order to accomplish a public purpose. MR. LIVEY said the issues are a bit different on the long-term care side than on the acute-care side. The amendment that is being considered pushes the issues together. The DHSS believes that right now there is not much competition in long-term care. They are a payer of long-term care through Medicaid. For institutional care in Alaska, they probably pay 80 to 85 percent on average in a year for all the long-term care that is provided in facilities because Medicaid is the only thing that pays for long-term care; it is too expensive in this state for those who privately pay to go into a nursing home. From their perspective, this legislation offers the DHSS criteria that they can use in the future to allow them to develop alternatives and to allow some competition for long-term care to develop, because all the resources won't be going in to one type of care; they can develop some home- and community-based alternatives that are less expensive and use their money more efficiently. Number 1515 CO-CHAIRMAN DYSON asked what does a "Doc in a Box" exemption do that is negative for long-term care. MR. LIVEY answered that that is really unrelated to the long-term care legislation that came out of the LTCTF. The Committee took an at-ease from 4:17 to 4:18 p.m. Number 1428 MR. LIVEY said within the CON statute, they offer CONs to two different kinds of facilities: long-term care and acute care. The state has a different level of interest in long-term care than in acute care. Primarily because Medicaid is paying a much higher percentage of the long-term care bill than they are paying on the acute-care bill. As it currently stands, he doesn't believe that the "Doc in a Box" does not need a CON. The two kinds of services that are raised in this amendment do require a CON, but they are not necessarily an urgent care center. Number 1337 MR. LIVEY indicated that if the bill as proposed were to pass, they believe it would create more alternatives to long-term care: assisted living, home and community based kinds of care where an individual is served in their home or community without having to go into a nursing home. They believe the bill will create alternatives for care. CO-CHAIRMAN COGHILL asked if the amendment opened more alternatives. Number 1303 MR. LIVEY said the amendment is very specific to imaging centers and day surgery and really has nothing to do with the long-term care aspect of the original bill. It all deals with the CON program, but it is different kinds of services. REPRESENTATIVE BRICE observed that the amendment is like "putting a fish tail on a duck." It doesn't quite fit into the argument. He suggested that if they keep their focus on HB 187, a lot of the confusion will dissipate. Number 1205 LARAINE DERR, Director, Alaska State Hospital and Nursing Home Association, came forward to testify. She liked the analogy of "putting the fish tail on a duck." They support HB 187 as originally drafted. They do not support the amendment for reasons they have already heard. It is mixing something different into what the original legislation intended. Number 1167 CO-CHAIRMAN DYSON asked Ms. Derr why they would suggest this bill when it would keep them from making more money. MS. DERR answered they think there should be legislation that addresses the hospitals outside of the nursing homes. CO-CHAIRMAN DYSON asked her why they want to get a CON before they install new equipment in their facility that will allow them to charge more money. Number 1129 MS. DERR said the hospitals do not want that. They would rather not have a CON to install new equipment. This CON addresses nursing home beds so it is a different issue. She doesn't believe that a CON allows the nursing homes to charge more money. CO-CHAIRMAN DYSON believes the opposite. If they have to get a CON before they can enhance their facility, which will allow them to build more at a higher rate, this bill works against their interest. Number 1065 LINDA FINK said she doesn't believe it works against them. It does put more controls on when beds can be built, but a large portion of their funding comes from Medicaid, and they support controlling those costs as much as possible. MS. DERR said nursing homes don't usually have a lot of equipment. They don't usually have the imaging equipment; that is usually in the hospitals. The majority of the nursing homes in the state are co-located with a hospital, so if nursing home patients need that service, they go to the hospital. Nursing homes don't usually have more than $1 million pieces of equipment. CO-CHAIRMAN DYSON asked how they can enhance the rate they charge the state. Number 1010 MS. DERR said the way the rates are set are a cost-reimbursable basis. If they wanted to enhance their rates, they give their patients more services. But that is all reviewed by the DHSS in an auditing process, and they would see that and would not pay. CO-CHAIRMAN DYSON said hospitals can enhance their rate by adding more services and fancier machines. They can do that to be a better service to their clients. They can also bill at a higher rate. He asked if there was nothing the long-term care facilities can do to enhance the rate they charge, like adding more beds, more cable TV. Number 0954 MS. DERR agreed they could make more money by adding more beds. But that is when they have to go to the CON process for long-term care. They agree that there should be more control. REPRESENTATIVE BRICE asked Mr. Livey what the state's financial responsibility is per bed when it comes on-line after construction. MR. LIVEY answered that when a new nursing home bed is built and certified, if a Medicaid-eligible patient moves into that bed, then Medicaid is required to pay the bill. Number 0926 REPRESENTATIVE BRICE asked if there are requirements for the state to pay for empty beds. MR. LIVEY answered that the way the rate setting system works is that they pay what it costs a nursing home to provide the care. To the extent that there are fixed costs included in paying for an empty bed, they do. For example, they have to have a nurse whether the beds are full or not. REPRESENTATIVE BRICE asked how successful the DHSS has been in regulating the cost of ensuring appropriate levels of long-term care through use of the CON process. Number 0771 MR. LIVEY answered that over the past 10 years, there have been a number of nursing home beds that have expanded recently. He believes the DHSS should have been more successful in controlling the number of beds. Their concern in controlling the number of nursing home beds is not to control access to long-term care; it is to be able to provide a less expensive kind of long-term care and more alternatives. With the number of people coming through the system in the future, they simply cannot afford to provide care to those people in nursing homes. There is not enough money. Number 0698 DAVID PIERCE, Certificate of Need Coordinator, Facilities and Planning, Division of Administrative Services, Department of Health and Social Services, came forward to answer questions. Since the inception of the CON program in 1979, there have been over 200 nursing home beds that were not built as a result of that program. Within the last two years, there were 60 beds that were not built; some were denied, and some just didn't go through the process. In some cases, there were concurrent reviews where several entities were trying to build in the same place, and one was chosen over the others. Ten beds will cost approximately $1 million dollars a year to operate and for depreciation expense. A 60-bed facility will cost Medicaid about $3 million. For every ten beds, it is about $1 million dollars in Medicaid, and about 50 percent of that will be state funds. CO-CHAIRMAN COGHILL asked Mr. Pierce if this legislation does not make it, how would that affect the availability and the vision of long-term health care. Number 0559 MR. PIERCE said the trend now is moving away from institutionalizing people to letting them stay in their homes as long as possible. There is going to be an increase in the number of people who are going to need some kind of care; however, they don't have to be in expensive long-term care institutions. They can stay at home. This legislation will help the DHSS make determinations regarding whether new institutional beds are needed or not, or whether more people could stay at home who are going to be served. Number 0501 CO-CHAIRMAN DYSON made a motion to move the amendment which read: Page 3, line 3: Delete "A" Insert "Except as provided in (c) of this section, a [A] Page 3, following line 14: Insert a new bill section to read: * Sec. 4. AS 18.07.031 is amended by adding a new subsection to read: (c) A certificate of need is not required for the (1) construction of a day surgery center or imaging center; (2) alteration of the bed capacity of a health care facility if the alteration is necessary solely to accommodate the addition of day surgery or imaging services to the facility; or (3) addition of day surgery or imaging services to a health care facility." Renumber the following bill sections accordingly. Page 7, line 3: Delete "a new paragraph" Insert "new paragraphs" page 7, following line 3: Insert new paragraphs to read: (13) "day surgery" means surgery performed on a patient who arrives at the surgery facility on the day of surgery and is not expected to remain overnight at the facility after the surgery is performed; (14) "imaging" means diagnostic testing, such as fluoroscopy or an x-ray, computerized axial tomography (CAT scan), bone scan, ultrasonography, scintigraphy, or magnetic resonance imaging (MRI), that produces a picture or conception with a likeness to an objective reality by providing clarity, contrast, and detail through the use of colored fluids, radionucleides, or other materials introduced to the human body; ionizing or nonionizing radiation; or an external magnetic field;" Page 7, line 4: Delete "(13)' Insert "(15)" REPRESENTATIVE BRICE objected. A roll call vote was taken. Co-Chairman Dyson voted for the amendment. Representatives Whitaker, Brice and Coghill voted against it. Therefore, the amendment failed by a vote of 3-1. Number 0390 CO-CHAIRMAN DYSON made a motion to move HB 187 from the committee with individual recommendations and attached fiscal note. There being no objection, HB 187 moved from the House Health, Education and Social Services Standing Committee. The Committee took an at-ease from 4:39 to 4:40 p.m. HB 113 - POSTSECONDARY EDUC FOR HIGH SCHOOL STUDENTS Number 0260 CO-CHAIRMAN COGHILL announced the next order of business as House Bill No. 113, "An Act relating to a program of postsecondary education for high school students." Number 0210 EDDIE GRASSER, Legislative Assistant to Representative Beverly Masek, came forward to present the committee substitute of HB 113, version K. The first change is on page 1, line 12 where they added language consistent with the U.S. codes which deal with the Americans for Disability Act (ADA). The next change is on page 2, line 4, where they replaced the words "eleventh and twelfth grades" with "otherwise receiving a secondary school education as described in AS 14.40.010(b)(1) or (10) - (12)." They also added language there "who is under 20 years of age" to prevent students remaining in the secondary school situation and purposely flunking the standards test or a course required for graduation, so they won't ever graduate and can stay in the high school and manage to get a college education basically free through the foundation formula. The next change is on page 2, lines 16 and 17, which allows the school district to make arrangements with the postsecondary institution to work out agreements where the instructor may actually teach the course in the secondary school, rather than the student going to the university. TAPE 99-42, SIDE A Number 0036 REPRESENTATIVE BRICE asked if that section means the secondary students cannot take postsecondary classes if they are offered at the high school. Number 0077 MR. GRASSER answered that the intent is to allow students to remain in the high school, even though the postsecondary school has the adjunct professor coming into the high school to teach the course, and that is the language that the drafter came up with. Section 2 in the original draft that had to do with the credits being given was deleted. MR. GRASSER told them the next major change is in Sec. 14.30.780, the funding section. This language has shifted the funding to the school district, but it also allows the school district to negotiate with the postsecondary institution. There is a percentage in the foundation formula that is set aside for the school districts for special needs children which would include the gifted children. They figure many of the students taking advantage of this program will be the gifted students. He commented that the school districts don't like this funding section, and he recognizes that there are problems with the section. The section with a formula that the DOE would reimburse the district for these students was deleted, and that was why there was an indeterminate fiscal note. There probably still will be an indeterminate fiscal note because part of the foundation formula still goes toward these special needs students. Number 0505 CO-CHAIRMAN COGHILL mentioned that in Valdez the students were bearing some of the cost of the courses, but there was also a scholarship program for those who couldn't pay. MR. GRASSER said the money for the students who couldn't afford to pay was coming out of the foundation formula. CO-CHAIRMAN COGHILL suggested it might be possible for the students to pay the tuition. Number 0572 MR. GRASSER said that has been part of the discussion, but then that leaves out those who cannot afford to take advantage of the program. Different arrangements already exist throughout the state, and they are trying to allow enough flexibility within the district to negotiate arrangements with the university on how it would happen. CO-CHAIRMAN DYSON asked what the districts don't like in this bill. Number 0641 MR. GRASSER said the districts didn't like the section on the funding because they have to pay, and there is no provision for the state to give money to the districts for the tuition costs. MR. GRASSER referred them to page 3, line 24 where the language was cleaned up on what fees would be paid for attending the postsecondary institution. On page 3, line 29, it inadvertently did not get changed from "nationally" to "regionally" accredited. Other than the funding section, if the committee is otherwise comfortable with this bill, he advised them that the sponsor would like to see it moved on to the Finance Committee and try to work out the funding arrangement there. Number 0776 CO-CHAIRMAN DYSON made a motion to amend CSHB 113 on page 3, line 29 from "nationally" to "regionally." CO-CHAIRMAN COGHILL asked whether there was any objection. There being none, the amendment was adopted. REPRESENTATIVE BRICE suggested that there could be clearer language on page 2, lines 15, 16 and 17, and they could deal with it some place else. Number 0854 MR. GRASSER understood his concern and agreed they both had the same intent there. Number 0880 LARRY WIGET, Executive Director, Public Affairs, Anchorage School District, came forward to testify and said he hasn't had a chance to look at this bill, but he would send it back to his school board to see if they have any concerns about the funding level or Section 2(b). CO-CHAIRMAN DYSON told Mr. Wiget if they do have concerns after looking at HB 113, he will move to rescind their action and change them on Tuesday, if they pass this bill out today. Number 0948 CO-CHAIRMAN DYSON made a motion to move CSHB 113, 1-LSO461\K, Ford, 4/22/99, as amended, out of committee with individual recommendations and indeterminate fiscal note. There being no objection, CSHB 113(HES) moved from the House Health, Education and Social Services Standing Committee. ADJOURNMENT Number 0989 There being no further business before the committee, the House Health, Education and Social Services Standing Committee meeting was adjourned at 4:59 p.m.