Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Health and Human Services, to which was referred H.B. No. 296, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to require that Medicaid payments by the State to providers be in an amount sufficient to cover actual costs.

Your Committee received testimony in support of this measure from the Queen's Medical Center, Kapiolani Medical Center, Kaiser Permanente, Healthcare Association of Hawaii, Hawaii Health Systems Corporation, Hawaii Long Term Care Association, Hawaii Primary Care Association, Kohala Hospital, St. Francis Healthcare System of Hawaii, Crawford's Convalescent Home, North Kohala Community Hospital, and Rehabilitation Hospital of the Pacific. Testimony in opposition was received from the Department of Human Services (DHS) and Department of Budget and Finance.

Your Committee finds that the QUEST program has for years negotiated with health plans to provide health care for a set rate per person per month, without inflationary adjustments. In addition the State has reduced its Medicaid payment formulary to hold down costs. The result is that the quality of care has been compromised, and there are fewer providers willing to take QUEST patients. In the past, health care facilities could balance their finances by cost shifting from patient groups that paid more than actual costs to patient groups that did not pay enough to cover actual costs, such as Medicaid patients. In other words, non-Medicaid patients would pay more than Medicaid patients. Your Committee believes that the State should finance more of the Medicaid patient costs.

This measure would redress the inequities by requiring the DHS to submit a proposal to the federal Health Care Financing Administration to revise Hawaii's Medicaid plan to set payments at a level sufficient to at least cover actual costs.

Your Committee has amended this measure by:

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 H.B. No. 296, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 296, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.