Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2867 entitled:

begs leave to report as follows:

The purpose of this measure is to set Medicaid payments at a level closer to the actual costs of care provided.

Specifically, this bill prohibits the Department of Human Services from implementing Medicaid plan amendments that reduce Medicaid payments until the federal government approves a state Medicaid plan amendment to raise reimbursements to providers closer to actual costs of care provided. This bill also requires the Department to set implementation dates for the elimination of certain payment-reducing components and for a program to raise reimbursements to providers closer to actual costs of care provided. In addition, the bill requires the Department, in future health plan contract negotiations, to propose adjustments within the limits of appropriations to the per capita payments based on an increasing factor.

This bill appropriates $3,400,000 in general funds and $4,387,448 in other federal funds in fiscal year 2002-2003 to raise provider reimbursements closer to actual costs of care for aged, blind, and disabled Medicaid recipients. Finally, this bill appropriates or authorizes $3,636,119 of general funds and $4,725,500 in other federal funds in fiscal year 2002-2003 for an increasing factor for health care payments for the QUEST program.

Your Committee finds that a financial crisis exists in the State's Medicaid payment system to reimburse providers adequately in order to maintain access to essential health care services.

Upon further consideration, your Committee has amended this bill to delete the appropriations made in section 5 of the bill relating to an increasing factor for health care payments for the QUEST program, by amending the appropriated amounts in section 4 of the bill to blank amounts for the purpose of promoting further discussion, and by renumbering the remainder of the bill appropriately.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2867, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2867, S.D. 1.