STAND. COM. REP. NO. 421

Honolulu, Hawaii

, 2023

RE: H.B. No. 1368

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committees on Human Services and Health & Homelessness, to which was referred H.B. No. 1368 entitled:

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

beg leave to report as follows:

The purpose of this measure is to preserve access to health care for Medicaid recipients and strengthen the Hospital Sustainability Program by:

(1) Amending the definition of "private hospital";

(2) Clarifying the uses of the Hospital Sustainability Program Special Fund;

(3) Increasing the Hospital Sustainability Fee cap for various facilities;

(4) Requiring the Department of Human Services to consult and negotiate with the hospital trade association in Hawaii regarding Hospital Sustainability Fee participation and rates;

(5) Clarifying the circumstances under which the Hospital Sustainability Fee shall be discontinued and the distribution of remaining funds;

(6) Repealing the sunset dates of Act 217, Session Laws of Hawaii 2012, and Act 123, Session Laws of Hawaii 2014, thereby making the Hospital Sustainability Program permanent and permanently exempting the Hospital Sustainability Program from the central service and administrative expenses assessments; and

(7) Appropriating funds out of the Hospital Sustainability Program Special Fund.

Your Committees received testimony in support of this measure from the Department of Human Services, Kaiser Permanente Hawai‘i, Hawai‘i Primary Care Association, Hawai‘i Pacific Health, The Queen's Health System, and Healthcare Association of Hawaii.

Your Committees find that the Hospital Sustainability Program (Program) began over ten years ago and has been highly successful in helping support hospitals' ability to continue to provide services to Medicaid recipients. The Hospital Sustainability Program Special Fund receives money from the Hospital Sustainability Fee, which is then used to match with federal Medicaid matching funds. In turn, these monies are used to increase reimbursements to hospitals and payments for performance to the hospitals, which ensures that hospitals in Hawaii can continue to be a critical part of the safety net. The Program has proven successful for providers, beneficiaries, and the State, given that it uses no state general funds. Your Committees believe that the Program has contributed to the overall sustainability of the health care system in Hawaii and should therefore be continued permanently.

Accordingly, this measure ensures the continued success of the Program by repealing the sunset dates of Act 217, Session Laws of Hawaii 2012, and Act 123, Session Laws of Hawaii 2014, thereby making the Program permanent. Repealing the sunset dates also ensures that the Program is permanently exempted from the central service and administrative expenses assessments, which are estimated to save around $5,000,000 in central services expenses assessments and $1,000,000 in administrative expenses each year.

Your Committees have amended this measure by:

(1) Clarifying that the Department of Human Services may modify, add to, or exclude facilities exempt from the Hospital Sustainability Assessment if necessary for Centers for Medicaid and Medicaid Services approval and if the modification is otherwise consistent with the Hospital Sustainability requirements;

(2) Clarifying that the Department of Human Services may impose the Hospital Sustainability Fee on a monthly basis and the timeframe in which the fee must be paid;

(3) Changing the appropriation to an unspecified amount;

(4) Changing the effective date to June 30, 3000, to encourage further discussion; and

(5) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

Your Committees respectfully requests your Committee on Finance, should it deliberate on this measure, consider an appropriation amount of $200,000,000.

As affirmed by the records of votes of the members of your Committees on Human Services and Health & Homelessness that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1368, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1368, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Human Services and Health & Homelessness,

____________________________ DELLA AU BELATTI, Chair

____________________________ JOHN M. MIZUNO, Chair