SB2031 SD1.DOC

SECTION 1. The legislature finds that medicare beneficiaries in Hawaii are experiencing a reduction in access to quality care as a result of the change in the way medicare purchases its durable medical equipment and prosthetics, orthotics, and supplies. The second round of medicare's durable medical equipment competitive bidding program began July 1, 2013, in the city and county of Honolulu. The unintended consequences of the implementation of this national program in Honolulu have been detrimental. Only thirteen of the ninety-seven vendors selected through the competitive bidding program are located within Hawaii. The vendors do not have special phone or service hours to accommodate the time difference, which means the offices are closed when medicare beneficiaries in Hawaii call for services.

Without access to timely, local services, medicare beneficiaries in Hawaii have been forced to forego necessary durable medical equipment devices. This restricted access to care has led to reductions in quality of health, increases in preventable hospital admissions and readmissions, increases in costs to beneficiaries and the medicare system, and decreases in quality of life for medicare patients.

The legislature further finds that the national bidding program has the laudable intention of cutting down on fraud and abuse and reducing medicare costs nationally. However, a reduction in cost by twelve to fifty-six per cent in Hawaii is unsustainable given the local fixed costs that businesses face such as higher rent, utility, and shipping costs. Hawaii's fees are now on par with fees in the Washington, D.C. area, even though the cost of living index in Honolulu is 21.4 per cent higher than in Washington, D.C. A review of 2011 fee-for-service medicare spending for durable medical equipment shows that Hawaii has the lowest per capita durable medical equipment cost in the nation. On average, each Hawaii beneficiary consumes only $82.54 in durable medical equipment, compared with $230.16 nationally. Furthermore, the total medicare cost for a Hawaii beneficiary, on average, is only $530.98, compared with $792.99 nationally.

The following are examples of the significant barriers to accessing doctor-prescribed equipment and services on account of the bidding program in Honolulu and surrounding areas:

(1) Delayed discharges from hospitals, long term care facilities, and hospice facilities;

(2) Delayed wait times for physician-ordered medicare hospital beds and wheelchairs, which is four to eight weeks for patients in Hawaii;

(3) Delayed access to oxygen, continual feeding, and other life-sustaining equipment and replacement parts, which is typically two to four days for patients, because there is no same day or overnight express shipping option to Hawaii;

(4) Inability of selected mainland suppliers to subcontract with local vendors because the prices are below cost of supplying equipment in Hawaii once shipping costs are taken into account;

(5) Furloughing of employees at local durable medical equipment suppliers due to the decrease in medicare reimbursement rates; and

(6) Possibility of local businesses with a substantial number of medicare customers shutting down completely, which will further limit access to care in the State.

The purpose of this Act is to require durable medical equipment suppliers to meet state licensing and business registration requirements to ensure that Hawaii's durable medical equipment patients have access to the critical, life sustaining medical supplies they need.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

DURABLE MEDICAL EQUIPMENT SUPPLIER LICENSING AND PATIENT

SAFETY PROGRAM

§ -1 Definitions. As used in this chapter, unless the context requires otherwise:

"Appropriate physical location" means a physical facility within the State that meets the following requirements:

(1) The facility is staffed during normal business hours by at least one employee;

(2) The facility has adequate square footage to store durable medical equipment inventory for sale and distribution within the State;

(3) The facility maintains a working business telephone line for customer service and sales;

(4) The facility maintains an inventory of durable medical equipment sufficient to meet fifty per cent of anticipated quarterly demands for products offered for sale or distribution within the State;

(5) The facility is in a location that is:

(A) Accessible to the public; and

(B) Maintains a permanent visible sign in plain view and posts hours of operation; provided that if the supplier's place of business is located within a building complex, the sign must be visible at the main entrance of the building or the hours can be posted at the entrance of the supplier; and

(6) The facility meets all county and state regulatory requirements, including but not limited to zoning requirements, for operation as a durable medical supplier doing business in the State.

"Durable medical equipment" means equipment that can stand repeated use, is primarily and customarily used to serve a medical purpose, is generally not useful to a person in the absence of an illness or injury, and is appropriate for use in the home.

"Supplier" means a durable medical equipment supplier participating in the nationwide competitive bidding program for durable medical equipment, prosthetics, orthotics, and supplies established by Section 302 of the Medicare Modernization Act of 2003.

§ -2 Licensing. All suppliers shall be licensed. A supplier shall be deemed licensed if:

(1) The supplier maintains an appropriate physical location within the State;

(2) The supplier meets all applicable requirements under federal law, including but not limited to title 42 Code of Federal Regulations section 424.57 and title 42 Code of Federal Regulations section 424.58; and

(3) The supplier complies with all state legal requirements for a business engaged in the sale of goods in the State, including but not limited to:

(A) Business registration;

(B) Payment of taxes; and

(C) Maintenance of proper accreditation and credentialing for participation in the nationwide competitive bidding program for durable medical equipment, prosthetics, orthotics, and supplies established by Section 302 of the Medicare Modernization Act of 2003.

§ -3 Violations; complaints. (a) A supplier that engages in the sale of durable medical equipment in violation of this chapter commits an unfair and unlawful business practice pursuant to section 480-2.

(b) Complaints of violations of this chapter shall be filed with the office of consumer protection.

§ -4 Severability. If any provision of this chapter or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect the other provisions or application, and to this end the provisions of this chapter are severable."

SECTION 3. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2031
TWENTY-SEVENTH LEGISLATURE, 2014		S.D. 1
STATE OF HAWAII