Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1240, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to require the Department of Human Services to increase medicaid provider reimbursement payments to more closely approach the actual cost to providers of providing quality health care.

Specifically, this bill requires the Department of Human Services to withdraw its proposed amendments to the state medicaid plan that would:

(2) Discontinue the return on equity (ROE) program; and

thereby restoring the full DRI and ROE factors to the formula for calculating medicaid payments for the aged, blind, and disabled in the state medicaid plan. The Department of Human Services is also required to submit a proposal to amend Hawaii's medicaid plan that would, at a minimum, cover the actual costs of quality care provided, including:

(1) Increased payments for mental health services;

The Department of Human Services must also propose annual inflationary adjustments to the per capita payments, based on a factor that is generally accepted nationally. Finally, the bill appropriates or authorizes funds for fiscal year 2003-2004 and fiscal year 2004-2005 for one-half of the DRI inflation factor and the return on equity factor components of health care payments for aged, blind, and disabled medicaid recipients.

Your Committee has amended this bill by changing the appropriated amounts to blank amounts for the purpose of promoting further discussion.

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. 1240, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1240, S.D. 2.