STAND. COM. REP. NO. 1551

Honolulu, Hawaii

RE:    H.B. No. 581

       H.D. 1

       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 H.B. No. 581, H.D. 1, 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 ensure that Medicaid patients have access to hospital care.

     More specifically, the measure:

     (1)  Continues the Hospital Sustainability Program for an additional year;

     (2)  Specifies that the inpatient hospital sustainability fee shall not exceed 2.400 percent of net inpatient hospital service revenue;

     (3)  Specifies that the Department of Health shall use moneys from the hospital sustainability program special fund to make direct supplemental uncompensated care and upper payment limit payments to private hospitals based on the amount made available by the State's section 1115 waiver to cover the uncompensated care costs incurred by private hospitals for serving Medicaid and uninsured individuals during fiscal year 2015-2016;

     (4)  Specifies that level II trauma centers shall receive increased Medicaid reimbursements for each Medicaid day reported;

     (5)  Specifies that specialty children's hospitals that are exempt from the inpatient and outpatient hospital sustainability fee assessments shall receive increased Medicaid reimbursements for each Medicaid discharge reported; and

     (6)  Appropriates funds from the hospital sustainability program special fund for fiscal year 2015-2016.

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

     Your Committee finds that Medicaid payments to hospitals continue to be less than the actual costs of the care that the hospitals provide.  The Legislature created the Hospital Sustainability Program by enacting Act 217, Session Laws of Hawaii 2012, to increase Medicaid payments to hospitals to ensure that Medicaid patients have access to the hospital care that they need.

     Accordingly, your Committee finds that continuing the Hospital Sustainability Program will benefit Hawaii residents by ensuring more sustainable hospitals and increased access to necessary medical care.

     Your Committee has amended this measure by:

     (1)  Specifying that the inpatient hospital sustainability fee shall be 1.892 percent of net inpatient hospital service revenue;

     (2)  Providing that any hospital that was not in private operation during 2014 shall be exempt from hospital sustainability fees on inpatient and outpatient care services;

     (3)  Providing that direct payments from the hospital sustainability program special fund to private hospitals shall be $88,000,000 to cover uncompensated care costs;

     (4)  Providing that direct payments from the hospital sustainability program special fund to designated level II trauma centers shall be $3,975,442;

     (5)  Clarifying that the Department of Health shall designate the level II trauma centers and specialty children's hospitals to which direct upper payment limit payments shall be made with hospital sustainability program special fund moneys;

     (6)  Specifying that eligible hospitals shall receive payments from the hospital sustainability program special fund based on their medicaid utilization; and

     (7)  Making technical nonsubstantive changes for purposes of clarity, consistency, and style.

     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 H.B. No. 581, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 581, H.D. 1, S.D. 2.

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

________________________________

JILL N. TOKUDA, Chair