STAND. COM. REP. NO. 2449

Honolulu, Hawaii

RE:    S.B. No. 2031

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committees on Human Services, Health, and Economic Development, Government Operations and Housing, to which was referred S.B. No. 2031 entitled:

"A BILL FOR AN ACT RELATING TO HEALTH,"

beg leave to report as follows:

     The purpose and intent of this measure is to require vendors who have been awarded contracts through the Centers for Medicare and Medicaid Services durable medical equipment, prosthetics, orthotics, and supplies bidding program to provide supplies to the residents of the State to have a physical presence in Hawaii.

     Your Committees received testimony in support of this measure from the Healthcare Association of Hawaii, The Queen's Health Systems, and two individuals.  Your Committees received testimony in opposition to this measure from the Department of the Attorney General, Department of Human Services, and Hawaii Medical Service Association.

     Your Committees find that the Medicare Modernization Act of 2003 established requirements for a new competitive bidding program for certain durable medical equipment, prosthetics, orthotics, and supplies.  Under the program, suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas.  The Centers for Medicare and Medicaid Services awards contracts to enough suppliers to meet beneficiary demand for the bid items.  Your Committees received testimony on this measure from the Department of the Attorney General expressing concern that this measure may be preempted by federal regulation that allows state regulation of durable medical equipment suppliers only through licensing requirements.  The Healthcare Association of Hawaii provided your Committees with suggested language to address the concerns raised by the Department of the Attorney General.

     Accordingly, your Committees have amended this measure by adopting the language submitted to your Committees by the Healthcare Association of Hawaii.  Specifically, that language amends this measure by:

     (1)  Deleting its contents and inserting language that:

          (A)  Requires all suppliers of durable medical equipment in the State to be licensed;

          (B)  Establishes licensing requirements, which include maintaining an appropriate physical location within the State and complying with all federal regulations pertaining to the sale of durable medical equipment and all state legal requirements for a business engaged in the sale of goods in the State;

          (C)  Defines "appropriate physical location", which requires having a physical facility within the State, visible signage, and posted hours of operation; and

          (D)  Establishes a process for reporting violations and complaints against durable medical equipment suppliers; and

     (2)  Inserting an effective date of July 1, 2050, to encourage further discussion.

     As affirmed by the records of votes of the members of your Committees on Human Services, Health, and Economic Development, Government Operations and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2031, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2031, S.D. 1, and be referred to the Committee on Judiciary and Labor.

Respectfully submitted on behalf of the members of the Committees on Human Services, Health, and Economic Development, Government Operations and Housing,

____________________________ JOSH GREEN, Chair	____________________________ SUZANNE CHUN OAKLAND, Chair
	____________________________ DONOVAN M. DELA CRUZ, Chair