STAND. COM. REP. NO. 830

Honolulu, Hawaii

RE:    S.B. No. 806

       S.D. 2

Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 806, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE HOSPITAL SUSTAINABILITY PROGRAM,"

begs leave to report as follows:

     The purpose and intent of this measure is to continue the hospital sustainability program for one year.

     Specifically, this measure:

     (1)  Extends the program's sunset date to June 30, 2016; and

     (2)  Amends various provisions of the program by, among other things:

          (A)  Establishing reimbursement percentage rates for inpatient and outpatient uncompensated care costs;

          (B)  Providing that each eligible hospital's quarterly payment shall be equal to one-quarter of its prorated share of upper payment limit payments for the fiscal year in which payment is made;

          (C)  Revising, to an unspecified amount, the amount that the Department of Human Services makes in direct payments to private hospitals to cover uncompensated care costs incurred for serving Medicaid and uninsured individuals during the 2015-2016 fiscal year;

          (D)  Requiring the Department of Health to make direct payments to level two trauma centers designated by the American College of Surgeons and specialty children's hospitals that do not pay both the inpatient and outpatient assessments for fiscal year 2015-2016; and

          (E)  Appropriating funds from the hospital sustainability program special fund.

     Your Committee received written comments in support of this measure from The Chamber of Commerce of Hawaii, Hawaii Health Systems Corporation, Hawaii Primary Care Association, Healthcare Association of Hawaii, and The Queen's Health Systems.  Your Committee received written comments on this measure from the Department of Human Services.

     Your Committee finds that Medicaid payments to hospitals have not always covered the actual costs of care.  The Legislature recognized and sought to remedy that situation by establishing the hospital sustainability program in Act 217, Session Laws of Hawaii 2012, to increase Medicaid payments to hospitals.

     Your Committee further finds that the hospital sustainability program has increased Medicaid payments so that they more closely reflect the actual costs of care.  Your Committee also finds that the program helps ensure that Medicaid patients in the State have access to the hospital care that they need and that it is necessary to extend the program.

     Your Committee has amended this measure by clarifying the language that authorizes direct payments to level two trauma centers and specialty children's hospitals to state that the level two trauma centers must be verified by the American College of Surgeons and designated by the Department of Health in order to qualify to receive direct payments under the hospital sustainability program.

     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. 806, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 806, S.D. 2.

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

________________________________

JILL N. TOKUDA, Chair