STAND. COM. REP. NO. 2767

Honolulu, Hawaii

RE:    S.B. No. 2467

       S.D. 2

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 2467, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HOSPITALS,"

begs leave to report as follows:

     The purpose and intent of this measure is to ensure access to health care for medicaid recipients.

Specifically, this measure:

     (1)  Establishes a hospital sustainability fee assessed on provider fees on health care items or services provided by hospitals; and

     (2)  Establishes a hospital sustainability program special fund to receive moneys from the hospital sustainability fee to receive federal medicaid matching funds under the QUEST expanded medicaid section 1115 demonstration waiver.

     Your Committee received written comments in support of this measure from the Department of Human Services.  Your Committee received written comments on this measure from the Department of Budget and Finance; Hawaii Medical Service Association; and the Hawaii Health Systems Corporation.

     Your Committee finds that federal funding to help sustain Hawaii's hospitals may be accessed through a provider fee like the one now assessed in forty-six states and the District of Columbia.  In Hawaii, provider fees would increase the State's ability to draw down additional matching federal funds at a time when constraints on the State's budget have forced a reduction in payments and benefits.  The additional federal matching funds obtained under the fee program would reduce the amount of losses incurred by hospitals.

     Your Committee notes the concerns of the Hawaii Health Systems Corporation and Healthcare Association of Hawaii, including:

     (1)  The nearly three month lag time to recoup the amount of the sustainability fee paid from the enhanced reimbursements from QUEST and QEXA plans;

     (2)  The lack of deadlines for the draw down of federal funds, payment of enhanced capitation rates to QUEST and QEXA plans, and enhanced reimbursements from QUEST and QEXA to the providers;

     (3)  Specification of the data source used to assess the hospital sustainability fee;

     (4)  Receipt of enhanced reimbursements by hospitals that are not participating providers for QUEST and QEXA; and

     (5)  The possibility that the Department of Human Services may impose an administrative assessment in an amount that exceeds the actual cost of administering the fee program.

     Your Committee has amended this measure by:

     (1)  Correcting the citation to the definition of "hospital" in the Hawaii Administrative Rules; and

     (2)  Making technical nonsubstantive amendments for the purposes of style, clarity, and consistency.

     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. 2467, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2467, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair