Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Human Services, to which was referred H.B. No. 1060, H.D. 2, entitled:

begs leave to report as follows:

The purpose of this measure is to allow the Department of Human Services (DHS) to apply for waivers of applicable federal laws and regulations, following legislative approval.

Your Committee received testimony in support of this measure from Hawaii Primary Care Association and Hawaii Government Employees Association. Testimony was received in opposition to this measure from the Department of Health, DHS, and the Attorney General. Comments were received from Hawaii Medical Service Association.

Your Committee finds that federally qualified health centers (FQHCs) and rural health centers (RHCs) provide health care to thousands of needy residents covered by Medicaid who do not have primary care physicians, and who would not otherwise have access to health care. Section 6404 of the Omnibus Budget Reconciliation Act of 1989 (P.L. No. 101-239) provides Medicaid reimbursement to FQHCs and RHCs for medical services and ambulatory services.

In January 2005, the DHS submitted a Section 1115 Waiver Amendment Application to the Centers for Medicare and Medicaid to provide services offered by FQHCs and RHCs only through managed care providers. Should a managed care provider choose not to contract with a FQHC or RHC, the unintended result of the waiver is the exclusion of services provided by FQHCs and RHCs from being eligible for Medicaid reimbursement, to the detriment of the beneficiaries of the FQHCs and RHCs. This measure protects the FQHCs and RHCs reimbursement through Medicaid and will clarify that the health centers may continue to serve the needy in the community.

Your Committee has amended this measure by deleting subsections (a) and (b) of the new section added to chapter 346, Hawaii Revised Statutes, and retaining language pertaining to preserving the eligibility for reimbursement of FQHCs and RHCs, and by changing the section title accordingly.

As affirmed by the record of votes of the members of your Committee on Human Services that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1060, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1060, H.D. 2, S.D. 1, and be referred to the Committees on Judiciary and Hawaiian Affairs and Ways and Means.