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House | March 19, 2013 | Committee Room | Health

Full MP3 Audio File

Okay ladies and I can have your kitchen if you have your six it is time will call this meeting of the year has committee on Health and Human Services to order like to recognize there are pages that are with us today if you would stand in be recognized when I call your name we had by Stephen Andreas from wake County sponsored by Rep. Stan we have Leslie Hollingsworth from Cumberland County sponsored by Rep. Floyd welcome to the general assembly and if you're having a great week and it's a good time and a good education for use with welcome to the you committee on Health and Human Services I started it on serving today we have Fred Himes John Brandon Mike Clampett and Wayne Davison thank you serves for your service to the general assembly and for what you enforce every day members just a couple of announcements Aaliyah to have another meeting in here 11 o'clock so we will plan to the concluded our meeting before the him and the of also been asked to remind you if you would let your folders on the on the desk at the end you can take everything is in the photo but they would appreciate if you have the folder so that said we had the one bill and our agenda today we have house bill 83 representative told that you recognize to come and explain your bill ladies and gentlemen we have a PCS before us an hour to accept the notion that we you we take a PCS represented Stevens minutes without objection PCS for house bill 83 representative for Missouri the floor is yours thank you Mr. chairman of the committee before you will have what is it was described as we all know is a simple bill but if you just little bit of background this is a committed bill for member Fred Steen and myself were honored to chair the year committee on certificate late other hospital related issues over the last see 20.23 months it concluded of course as the session began the committee pretty much heard every issue relative to to healthcare and from both the the hospital's perspective the the independent providers perspective from the most important individuals under the status of the great site North Carolina the committee went on three district you would say we went to the ER mountains we had a interesting meeting in Fletcher and I'm somewhat proud to say that we hold the record of attendance at a committee meeting as over 400 concerned citizens more trauma showed up at the committee meeting we then moved to the Piedmont and had a meeting in Mount Holly North Carolina which is have to be my district and then we had our final meeting in Wilmington North Carolina so as you see the committee went heard from all sectors and areas of ingratiate North Carolina we addressed a myriad of topics and concerns we heard issues from hospitals that we thought could best affect them so they could focus on providing healthcare to citizens and not so much on litigation we heard issues from doctors Independents or once again we thought that perhaps some of the a legislation we could enact would perhaps freedom up to practice medicine and not worry so much about litigation and virtually at we had a the a cornucopia of of documents the committee met and formulated one will committee #2 committee draft FISA legislation come forward and this is the first one and just published question we have members from the department here to help answer questions on certificate of need and I have this rally here that will assist us during the process also help explain the bill and with that I will just the I'm assuming everyone's had time to read the bill and if you have any questions I'll give you just a brief synopsis very great our focus and our effort was to number one reduce the litigation in healthcare provision industry so that money that was going to litigation could now be channeled back in healthcare which should be the primary focus

Speaker: Also to reduce the cost of the state that involves very processing of certificate of need on the highlights we found just to a bring it to you attention is noted in the bill is that currently until this bill passes currently if you were heath care provider and currently if you had purchased ten beds for example well lets say now twenty years from now you want to up fit that bed so you want to ?? ten new beds you will have to again go through a certificate of need process we thought for replacement items that was reedy much re dented and is necessary so if this passes all longer be the case that is one of the highlights the other items we touched which is are mentioned here that the ?? have not been address i m gonna address believe it that was eighty's that's what correct ?? so look at the the ?? so we try to bring up in the 21 st century and get them to kinda of more relative to the cause of they are directly impacting with that mystery I'm reedy much gonna step back ?? question perhaps ?? and directed four members of his department , Speaker Changes: again committee members will have some questions and Representative ?? recognize , Speaker Changes: thank you Mr chair ?? public hearings through the state do have any opposition with , Speaker Changes: as we as many of you knows ?? and we had opposition on every issues we have talked we have people that who are proposing every issue that we talk we have both support and negative support on every issue that was a whole process during the committee and this was the synopsis on what was the most favorable outcomes of that committee of which to date on this specific bill i think we have a few suggestion that come from the physician side of house, Speaker Changes: i have been asking ?? to go through the bill force ?? Speaker Changes: Thank you Mr chairman I'll try to make this brief i have been talking from the summary in front of you the bill is one committee substitutes the substitute will make some technical changes caught the few reference that we ??to make and to make the languages more elegant nine few places the section certificate need process is well is one that where state requires any question one willing to offer new institutional heath services which covers multitude of projects on equipments and things must fist acquire a certificate of need from the department health and services so what's this Bill does it goes in and it amends two things one of amends some of the definitional items for what is one of the new institutional heath services second part of the bill deals with the peals process to try to privileged perhaps some ?? for people who want to file privilege design simply for the purpose of delay section 1 of the bill deals with ?? review the department is allowed to do a ?? review when a certificate of review is not competitive as their is no request for public hearing and the agency has not found the public hearing in the public interest currently in the law there is a five million dollar capital expenditure cap on that so any project that comes in were the value of the project more than five million dollars is not eligible for ?? review section 1 simply removes that cap so ? reviews can be for any project many non competitive review with no request from public hearing and the agency found that it is not in the public interest the proposed committee section here divided section 1 as section 1 A and 1 B that is because there was a cross reference we found and 131 E, An 2 which is in 1B that also needed to be updated simple check,

section two of the bill corrects the citation to the code of the federal regulation section three is the one that it increases the capital expenditure for major medical equipment the purchase of major medical equipment is considered a new institutional health service it is designed as a single unit or system of components with related functions used to provide medical and other health services currently they cost more than seven hundred fifty thousand dollars section two amends that expenditure threshold from seven hundred fifty thousand to one point five million section four of the bill amends the definition of the new institutional health service as regards the general capital expenditure threshold will increases that threshold to two million to four million dollars in the ?? committee substitute we look further at the definition of what is considered determining the actual cost of the project and the actual cost of the project in the current law includes replacement equipment since we are eliminating the capital expenditure taking the replacement equipment out of certificate league review remove the inclusion cost for replacement equipment out of the calculation as to what a project cost for this expenditure threshold section five deals with replacement equipment again replacement equipment is that which is purchased for the sole purpose of replacing company medical equipment currently in use which will be sold or otherwise disposed of or when replaced section five renews the two million dollar capital expenditure threshold ?? the purchase of replacement equipment is not an institutional health service and does not require a certificate of ?? from the department section six of the bill ??this is an conform of the amendment amends exemptions from certificate league review to reflect the increase in the capital expenditure threshold from two million to four million section seven gets into the amendments bond requirements on appeal two levels of appeal the first is to contest the case hearing people may be found happy with the contest or result or decision of the administrative judge that's in appeal to the court of appeals but both levels the bond cap is now being increased from fifty thousand to one-hundred thousand dollars and it is also set at five percent of the cost of the proposed institutional health service for each approved application sometimes certificate renewed applications have several applications that come through we might have five or six come through ?? full approved the old bond used to be just on one of those each decision that's appealed you have to post a bond at five percent of the cost of the proposed new institutional health service with a cap of one-hundred thousand for each application that is appealed these new caps are put in both to contest the new cap hearing level at the court of appeals level in addition, at the court of appeals level if the court of appeals rules that a action was broughtfor the purposes of delay if was just a frivolous appeal they can remand back to the Superior Court for a hearing and if the court does find for purposes of delay the court must order the payment for attorney fees and cost section seven allows or provides for attorney fees to be awarded when a contested case hearing is brought for frivolous reasons or for the purpose of delay I hope I made that clear ?? section eight deals with the provision certificate league law that's no longer necessary sorry it dealt with HMOs the bill is effective October first twenty-thirteen applies to applications received on or after that date[SPEAKER CHANGES]members are there any questions for Ms Riley this time[SPEAKER CHANGES]Representative Avila I heard you first[SPEAKER CHANGES]thank you Mr chairman I have a couple of areas where I heard that some

And many two support at which you refer two EMI theme of them discussion and they'll pay half the first on S and am willing raising back to the level of expenditure in section 4 to 4,000,000 dollars isn't that happens in fact, it's the miracle happens to somebody can live in what's called on U.S. official Health Service for less than that what is the procedure colleagues like the anything less is over four million dollars to any clarification and OK, (SPEAKER CHANGES) Stephen Neal understand and I know that the department's unified against the weeds but there are many things in the finest U.S. official Health Service they would include are services such as a dialysis services nursing homes are again and I fear the things that they are required to have a stupid of me I believe regardless of project cost but if a hospital room and find the Health Healthcare Service as a project that they propose that is under the four million dollar special that is what would be exempt from state to give them enough to think that's because clarification (SPEAKER CHANGES) only adventure was an exemption at once and you can do this if it's not a certain amount of Colton at the second issue hasn't to thank you miss chairman of the second issue has to do with the bonding is are administrative law judge for from other person that was mentioned and they're the hearing officer you got 5200 thousand that kind of discretion in decision-making does that particular person be used in determining boxes of cake and eat up two until have an appeal that's about the huge conglomerate hospital and they can afford to wait to talk if you have an appeal from about the smaller practice or a Dr. Something like that the detectives at taking into account when they set the bond amount (SPEAKER CHANGES) I believe the setting of the Bonham Less 5 percent of the newest proposed costs and institutional service Whose it is an initiative $50,000,000 project from 8 to 5% of that would probably exceed $100,000 but there's a cap of $100,000 so does not go beyond that level CC discretionary is 5% of the cost of the new official Health Service captain $100,000 , it's volatile nine D still run into the issue that (SPEAKER CHANGES) if it's a very expensive proposition 5 percent to $200,000 are a captive 2050 and hundred KB in the with some the size of some institutions or is this a thing if you can afford it should be played in the pond of the Dataquest written about that she recalled a committee of sitting on a committee that met that (SPEAKER CHANGES) decision was called back and forth , but there's not a solid answer to that other than that we try to make it so it was just more and more in Indian in turning with today's dollars that there was no solid core unless the actual 10% one or even the top $50,000 it already arrived at a meeting could just as easy than 25 receiver of the committee altered option to go to the higher rate of $100,000 out of money might be a good explanation as to one to this share question, for only the FM account for others in the industry said the comments of this book is a public hearing if there's some issues include seven who can we can we hear from them we are, but not been made aware specifically about it some ways here was a staple given up the represent or business sharecropping aspects of span of a church in one of his staff that he would, the third and they just address the S80, 1100 thousand level the second-acre please identify yourself in the represent end of the recognizer the star trek to Brenda, director (SPEAKER CHANGES) of the additional search regulation from a delicate further questions to Craig Smith arts ceiling section chief to Mr. Smith if you are hereby come forward and again for the record if you would identify yourself Craig Smith and two switching to the new surgeon of the first sale of safety, down from the microphone and the two that if there is a product that is to nine and there's no computer application ……..

Then there is no bond requirement and only times a bond requirement his sister competing applications for the same servers and one is the more you spend a day facility is approved it for a project and a competitor did not follow the application wants to follow appeal after his favorable decisions when I said, thank u sir ( SPEAKER CHANGES) that they have a concussion and question the end of the three say that no one really anticipated that just my question is FBI and Jackson is because the bonds two, I'd like to hear their side of the story of the year their argument for why are 100,000 I inhibits someone being able to follow the second fund the bond amount that's the thing I ever happened to me by a president like to speak to that question can see them on two of the recognize represented the deepest time that come to your question that you must issue chairman (SPEAKER CHANGES) do love to have an idea may be made him part number of hungry people actually take this process to the court of appeals in action when lee and saw their appeal this Chairman Kirk two of Craig . (SPEAKER CHANGES) Extra together they cannot use of command for the record the actual to go directly to the answer should election are that would be less than 5% of the those cases going to make a decision from a list from pursuing the case that that represented a sighted if I can just clarify that 275 percent of people can't go there to appeal it made a decision that should come a winning decisions that correct sir the districts are that the disarm or 55 a lot of times I would venture to say that the people who do appeal the south valley way and come with five Atty. are two and spent a lot of money too often the only way and said Castillo police do you have one site of the outlets this person appealing was any other site in this area any any air requests are for something of two challenge these folks that the minimum for all this procedure and ultimately they lose it to share that, (SPEAKER CHANGES) they said that when she been traveling the store last 20 months that the issue that is yes. There is recourse, this bill actually provide some of that wasn't in place seven, hope that answers your question for the comments and questions from members of the committee that said the comments from ms at the public concert, recognize yourself from African and warnings to apply under excellent relations with the north, (SPEAKER CHANGES) the study and performs to replace to recognize 1,000,084 members of the chance to meet with us about our concerns we currently a close this bill because of thresholds being shaken sections 1345 was fresh olds make what we can search the affable system even further , unfair, we specifically quailed these things can cause, during a conversation with a committee that person for Cheer we had a star stations as well and before the things over Mozambique 84 with Physician's Office but will the north, site of this grief with lavish to four of past the change will be considered for this film is four represented Ask question, in response to the goals are as important as saying we agree we like to reduce litigation and call since they represent battles question was about the formidable officials the station 24000000 dollars changing could things can go below deck and guess they can go below according to the sea levels but consumers to why you're part of a license to work to do anything without equivocation purchased work to do any other services into a provide anything to license without anesthesia for me to reduce a qualified for shoulders above they're in some regard of otherwise, we think the appeal bond in milliseconds changes are appropriate for this from…..

would just ask for further consideration on these ?? before you move forward. I’m happy to answer any questions. [SPEAKER CHANGES] Thank you, Representative Torbett. Would you like to address the concern raised of the thresholds? [SPEAKER CHANGES] Chip brought those forward in committee. They were thoroughly vetted. He brought them alight to the committee also through some handouts. I think it was last week. The committee thoroughly examined those and I even mentioned that if there objections to it that perhaps an amendment could be offered and having seen none or offered none, we pretty much just moved forward with the bill as it is in front of you today. I would encourage your support. [SPEAKER CHANGES] Representative Avila is recognized for a question. [SPEAKER CHANGES] Thank you, Mr. Chairman. I guess my question is not really a question, but it’s to have the department clarify, in fact, if you don’t spend $4 million on a new institutional health services, you can’t get licensed, but you could still be offering an institutional health service. [SPEAKER CHANGES] Would you speak to that again sir and again recognize yourself for the record. [SPEAKER CHANGES] Yes, my name is Craig Smith. I’m chief of the certificate need section. A facility that is proposing to renovate or modernize right now is limited to any project over $2 million requires a certificate of need. Unless it involves replacement equipment and then that equipment is also subject to a $2 million threshold. If there’s an existing facility that wants to renovate, then or modernize with the new threshold that would be raised to $4 million for the facility renovation and there would be no limit on the cost of the replacement equipment. [SPEAKER CHANGES] Further comments, Representative Avila. [SPEAKER CHANGES] Thank you, Mr. Chairman. At no point in that answer did you mention the word license and that’s what my question had to do with. The objection that Mr. Baggett had was that at $4 million, we’re talking new, not renovation, not conversion, we’re talking new institutional services, you have to have a license at $4 million and above. Do you have to have a license if you’re going to do something as a new institutional service below $4 million? [SPEAKER CHANGES] Craig Smith. For some services a license is required. For other services, a certification by Medicare and Medicaid is required. But a diagnostic center which exists, which wishes to add medical equipment, would now be subject to a $1.5 million threshold. A diagnostics center which wants to replace its equipment would have no replacement threshold. A diagnostic center, and these are all not license, diagnostic centers are not licensed by the state. A diagnostic center which wants to relocate and modernize would not be subject to the threshold unless it exceeded $4 million. [SPEAKER CHANGES] Representative Avila. [SPEAKER CHANGES] Thank you, Mr. Chairman. I’m really still not sure you answered my question. If somebody who doesn’t have a bed, doesn’t have a facility, starts one, and for some major miracle, it’s $3.5 million, can they do that? [SPEAKER CHANGES] Excuse me, Craig Smith, certificate of need. All development of new institutional health services that deal with beds, operating rooms, or dialysis stations require a certificate of need review, and they require a license. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Are there any services that somebody could open at $3.5 million that they would need a license for, but because of the way that this section 4 is worded, they haven’t spent $4 million and they couldn’t get a license, which is what I understood Mr. Baggett saying was the issue at hand. [SPEAKER CHANGES] Craig Smith, certificate of need. Maybe Mr. Baggett needs to clarify what service he specifically is discussing because most services do require licenses except diagnostic centers.

Follow up. Representative Avila. [SPEAKER CHANGES] If I could hear Mr. Baggett's explanation, because that’s exactly what I understood him saying the problem with $4 million is. If he can clarify that to where I could understand that, I’d appreciate it. [SPEAKER CHANGES] Mr. Baggett, you are recognized to address this concern. If you would once again recognize yourself for the record. [SPEAKER CHANGES] Thank you, Mr. Chairman. Chip Baggett with the North Carolina Medical Society. Representative Avila, I don’t have a specific concern. Many, many things require a license in order to provide that service through Medicare, being recognized through Medicare. I’m not looking at one specific thing. I’m not pointing out diagnostics centers specifically or am-surgery centers specifically or hospital services in specific. I’m just saying in general, many things require the license and if you require the license and that’s part of getting licensure is the requirement of certificate of need then the threshold is a threshold you have to meet. [SPEAKER CHANGES] Further comments from the committee? Representative Jackson. Microphone please [SPEAKER CHANGES] I had a question for staff, I guess, about section four and five. The change as far as what replacement equipment is. I wasn’t on the CON committee and haven’t the heard the discussion but am familiar with other areas like a restaurant. It’s easier to buy an existing restaurant and change it over if you don’t ever shut it down that it is to open a new restaurant because of health codes and things of that nature. My question is, on this replacement equipment, is it limited, he said beds, I believe ten beds, is it limited that definition in 10A NCAC. Is it very limited? Or can hospitals or other entities go out and just purchase somebody who’s on the ground and say, okay, now we’re going to convert it. We’re going to replace everything, we’re going to change the nature of it, or is the nature of it going to required to remain the same? [SPEAKER CHANGES] If I understand your question correctly, the nature is going to have to remain the same. In other words, you’ve got an old x-ray machine and it’s out of date and you want a new x-ray machine, it’s something comparable to what you already have but more...it’s newer, it works better. [SPEAKER CHANGES] Follow up, Mr. Chairman. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Is that in that definition that was added to 22A here on the committee substitute. [SPEAKER CHANGES] The definition of replacement equipment did not change except for the fact that any reference to a capital expenditure threshold was removed. We go on to make it clear that replacement equipment is not subject to certificate of need requirements. [SPEAKER CHANGES] Follow up, Mr. Chairman. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] In section 22A, as defined by 10A NCAC14C, that was added in the committee substitute. That was not in the original bill. I didn’t have a chance to pull that before today, and that’s what I’m really asking. If you say that it’s just tightening up the language, I understand, but that’s just what I’m trying to… [SPEAKER CHANGES] In section 1A and 1B, we’re dealing there with expedited reviews. The expenditure cap for an expedited review and not replacement equipment. An expedited review is one that the department can do more rapidly. An expedited review does not require a public hearing and in section 1A we took the $5 million capital threshold cap for expedited reviews off, but there was another reference to expedited reviews in 131E185A2 that we had not originally caught, so we had to make that change so they were the same in both places. That’s what 1B is. [SPEAKER CHANGES] Mr. Chairman. Follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] I apologize, maybe I wasn’t...I’m talking about page 3 of the committee substitute, section 5, subsection 22A. We added a section of NCAC to the definition that was not in the original bill. [SPEAKER CHANGES] We’re saying page 3… [SPEAKER CHANGES] Of the committee substitute. [SPEAKER CHANGES] What line? [SPEAKER CHANGES] Line 8, beginning of line 8. But it’s specifically line 11 is the code I’m asking about. [SPEAKER CHANGES] I see where we are. I don’t have an answer for you right off the top of my head. I did not draft the original and I don’t have the administrative code reference here.

At hand. [SPEAKER CHANGES] Can I jump in there? [SPEAKER CHANGES] Yeah. [SPEAKER CHANGES] Representative Torbitt. [SPEAKER CHANGES] Thank you, Mr. Chairman. Representative Jackson, I'm just going to go on an assumption here that that reference was put in there that is already defining medical equipment. [SPEAKER CHANGES] Representative Torbitt, I think Miss Paula has an answer. [SPEAKER CHANGES] Mr. Chair, the reference to the NCAC or the North Carolina Administrator Code just clarifies, it's just a clarifying, it's saying this is the definition of replacement equipment that the statute is referring to is the definition replacement equipment that appears in the North Carolina Administrative Code and that's just a reference to the whole definition without inserting the entire definition in this statute. [SPEAKER CHANGES] Members, further comments or questions. The chair would be prepared to entertain a motion if someone has one. Representative Earl you're recognized. [SPEAKER CHANGES] Whatever proper language is to move for a favorable report. [SPEAKER CHANGES] Representative Earl moves for a favorable report for the House Committee Substitute for House Bill 83, unfavorable as to the original. All members if favor signify by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed no. In the opinion of the chair the ayes have it. The ayes do have it. This meeting is adjourned. Thank you. [SPEAKER CHANGES] Thank you, Mr. Chairman, members of the committee.