STAND. COM. REP. NO. 2149

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2875
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Health and Human Services, to which was
referred S.B. No. 2875 entitled: 

     "A BILL FOR AN ACT RELATING TO CRITICAL ACCESS HOSPITALS,"

begs leave to report as follows:

     The purpose of this measure is to clarify payments from the
State to critical access hospitals.

     Your Committee received testimony in support of this measure
from the Department of Health, Department of Human Services,
Healthcare Association of Hawaii, Lanai Community Hospital,
Hawaii State Primary Care Association, HGEA-AFSCME, Hawaii Health
Systems Corporation, Hawaii Long Term Care Association, Ka'u
Rural Health Community Association, Inc., Kona-Kohala Chamber of
Commerce, and seventy private individuals.  Testimony in
opposition was received from one individual.

     Critical access hospitals are hospitals included in the
federal Rural Plan by the federal Health Care Financing
Administration and approved as a critical access hospital by the
Department of Health (DOH) in accordance with federal law.  The
Balanced Budget Act of 1997 (Public Law 105-33) established the
Medicare Rural Hospital Flexibility Program (RHFP) to assist
states and rural communities in improving access to essential
health services through the establishment of limited services
hospitals and rural health networks.  The program created the
critical access hospital as a limited service hospital eligible
for Medicare certification and reimbursement.  In response to the

 
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                                   STAND. COM. REP. NO. 2149
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program, the State has developed a rural health plan to guide the
implementation of the RHFP.

     This measure is intended to optimize the benefits of the
RHFP by changing the methodology for calculating Medicaid
reimbursements to critical access hospitals on a cost basis,
using Medicare reasonable cost principles.

     Your Committee has amended this measure by:

     (1)  Including the definition of critical access hospital in
          statute;

     (2)  Clarifying that the State's share of matching funds
          will be provided through the Hawaii Health Systems
          Corporation and other designated critical access
          hospital appropriations, and that if funding is not
          available, Medicaid reimbursement will revert back to
          the existing Medicaid payment methodology; and

     (3)  Making technical, nonsubstantive changes to reflect
          preferred drafting style and for clarity and
          consistency.

     As affirmed by the record of votes of the members of your
Committee on Health and Human Services that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 2875, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2875,
S.D. 1, and be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Health and Human
                                   Services,



                                   ______________________________
                                   SUZANNE CHUN OAKLAND, Chair

 
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