Sen. Stokes opened the meeting explaining that this meeting had a "tight agenda" with a number of presentations to be made. This Study Committee is to evaluate the key issues and is to hear background on healthcare issues impacting today’s market. Sen. Stokes also explained that, as a member of the National Conference of State Legislators, she will be attending a Chairs Committee meeting next month in Denver and will gather additional information on what other states find as challenges and possible solutions to healthcare issues.

Cathey Steinberg, Georgia’s Consumers’ Insurance Advocate, was the first speaker on the agenda. Ms. Steinberg explained her role in serving as the Chair of the Governor’s Taskforce on the Uninsured. Her Taskforce is reviewing trends and looking at the private sector as well as the public sector. Some of the concerns are small group insurance rates, obtaining health insurance with pre-existing conditions, general rate increases, etc. The State has received a $1 million dollar grant to address "access" issues. There is a caveat to the grant that it must apply to all uninsured persons.

Dr. Karen Minyard, Executive Director for the Georgia Health Policy Center, also made a presentation on where Georgia is today and where it needs to be in the future. She brought with her a map of the State depicting the health status of the population. Much of Georgia has fair or poor health status and no area in the State has "excellent" health status. She cited a number of factors influencing the health status of Georgians – not just the health system itself: market considerations; people; genetics; providers; as well as lifestyle and environmental issues. In the market, there are other challenges such as the payment systems. She also pointed out factors such as an aging population, more sick patients, and persons who are more discontent with the actual healthcare system. Dr. Minyard pointed out that providers are pushed in various directions and encounter difficulties with technology and leadership.

Dr. Minyard stressed that healthcare is local. Thus, systems can change the health status of the population through the power of the community and its ability to impact the population. She also explained that healthcare is basically a three-tiered system: community, state, and national. Solutions across these tiers will maximize health status. Of course, the environment plays a role. Other influences also come into play such as case management, care management, transportation, etc. Bold leaders are needed to make these changes along with good communication and support. However, none of these will be possible if the system does not receive and pay for care.

Dr. Minyard raised the question whether the system was actually broken. She also told the Study Committee that it could not necessarily blow up the system in its current form. Thus, when polling groups earlier this year, she found that perhaps supporting the existing system was necessary along with making payments appropriately would be most helpful. If changes do occur, some providers will have to work with more challenges than others.

Randy Giddens, a representative from the McNeary Healthcare Services, provided information on medical malpractice insurance. The Georgia Hospital Association is one of McNeary’s clients. McNeary has looked at the dollars expended by hospitals for insurance premiums and the challenges associated with these rising expenditures. Mr. Giddens indicated that a crisis was now occurring with rising medical malpractice rates. Getting facilities coverage is a real issue. The problem has only been heightened since September 11.

Mr. Giddens cited some figures concerning medical malpractice costs. In 1994, the average medical malpractice award in a civil case was a little more than $1 million. Now, trends show that awards are approximately $3.5 million, and this trend continues upward. Large catastrophic claims are being paid around the country. Some of this is due to a backlash against managed care and the health plan industry as a whole. In 1995 to 2000, the median average of verdicts was between $500,000 and $1 million. Thus, insurance rates have spiked. Between 2001 and 2002, 41% of the hospitals have had 50% premium hikes. One hospital paid $182,000 and then received a premium rate of $1.3 million (for a one year premium on a one year policy). Doctors are also being impacted by these premium increases as are nursing homes. Not only are premiums increasing but so are the deductibles - thus, there is no real measurement of outcomes because claims can take from two to seven years before costs are known. These new insurance renewal rates can literally be an "open/close" issue for a hospital and this economic strain can cause a crisis for a community. The market also is impacted with these premium rates and claims which then causes problems with carriers. Several insurance carriers have ceased writing policies and now only between three and five carriers exist. For instance, St. Paul recently ceased writing policies. Carriers are now selective about who they are willing to write business for due to claims and other risks. In the short-term, Mr. Giddens suggested that work be done with insurance industry on creative solutions to this problem. A long-term solution is tort reform.

Dr. Mahlon DeLong presented information on complimentary and alternative medicine. Dr. DeLong is a National Institute of Health CAM Grant Recipient at Emory University. He explained that $20 billion was spent in 1997 on complimentary and alternative healthcare rather than on traditional treatments. Many of these complimentary and alternative healthcare treatments are supplementing traditional care. Alternative forms of medicine have been done for thousands of years but never fully studied. Such forms include intervention such as hypnosis, use of botanicals, manipulative therapies, energy therapies, etc. He urged the Study Committee to consider such in moving forward with its Study.

Dr. Jeff Lesesne, with Wesley Woods Geriatrics, discussed prevention and aging issues. There are now more older adults seeking care. Prevention has made big strides in the last 100 years. More identification of diseases, modification of life styles, identification of risk factors, etc. has been done. Many persons did not expect to live as long and now are faced with more healthcare issues (such as long-term care treatment, etc.). Dr. Lesesne explained the Source Program at Wesley Woods. This program is receiving funding from the State, through the Department of Community Health, in an effort to provide nursing home care in a community setting for those persons eligible for Medicaid. Dr. Lesesne stressed the need to deal with long-term care issues involving chronic diseases. Sen. Price asked to see reports with outcome data on the Source Program.

Gary Redding, Commissioner with the Department of Community Health, was also present at this hearing and told the Study Committee that it had a ‘daunting task’ and his Department was at the forefront of what will take place as the largest payor of healthcare in the State. The Department will provide a presentation to the Committee on the Source Program to address Sen. Price’s questions.

Clyde Reese, General Counsel for the Department of Community Health, presented information on the status of the State’s Certificate of Need program. The program is now administered by the Department of Community Health since passage of the new legislation in 1999. The CON law is considered to be a set of philosophical issues governed by statute in Title 31 of the Official Code of Georgia Annotated. Reese explained that the policy preamble discusses mandatory review for new institutional health services and discusses the goals of providing adequate services in an economic manner which are available to all citizens. The goal is to avoid unnecessary duplication of services. There are questions which arise over the CON process and therefore, there are competing viewpoints. According to Mr. Reese, the health planning statute has been in place in Georgia since 1983.

The environment plays a critical role in CON discussions. Reese cited two questions for consideration: 1) is the health planning law effective?; and 2) can Georgia continue the CON program in the current climate? Reese further raised if the market would be better served if a free market were in place with unfettered competition. Or is CON still effective and efficient to assure access to services with a continued ability to pay for services rendered. Reese believes that it is difficult to answer such questions as there are difficult choices on competing CON applications.

From 1979 to 1999, the CON program in Georgia was administered by the State Health Planning Agency. On July 1, 1999, the CON program moved to the purview of the Department of Community Health under the Division of Health Planning. The Division of Health Planning was given the responsibility of data analysis, review of CON applications, and CON appeals. Hospitals are required to submit annual responses to questionnaires on services rendered at facilities which include numbers on utilization as well as patients served. Recently, there has been a move to bifurcate the data and the planning functions. Thus, the Division of Health Planning will still gather data, analyze the data, and promulgate the CON rules necessary to administer the program. The Office of General Counsel for the Department of Community Health will be given the review functions, appeals and any resulting litigation from such CON filings.

Mr. Reese further explained that CON law covers these new institutional health services (which includes additional new hospital beds, additional new nursing home beds, expansions, personal care home beds, assisted living beds (in homes with 25 or more beds), etc. The CON review process also depends on the amount of expenditure involved. There are three thresholds established: 1) an equipment threshold of $694,000 ; 2) standard baseline threshold of $500,000; and 3) capital construction threshold of $1.2 million (for items which do not involve the provision of healthcare services such as kitchen renovations, parking decks, etc.). There is an expedited review process for non-patient care-related CONs where clinical services are not involved. In these expedited reviews, not as much information is required from the applicant.

Georgia’s law also does not provide that CON reach into a physician’s practice. Thus, if a physician (or group of physicians) wishes to open an ambulatory surgery center ("ASC"), such is possible, without CON review, as long as the ASC is devoted to a single specialty and is below a $1.3 million expenditure threshold in creating such.

Mr. Reese also explained that there is a 90 day review cycle which can actually extend to 120 days. He explained the parties with standing in a CON action: the applicant; any joined applicant (for the same service or similar service area); the city or county impacted by the CON; and any competing healthcare facility which would be aggrieved (harmed competitively or economically if the CON was granted to applicant). He also explained that, after the Department’s initial decision, an applicant has the right to an appeal before an administrative hearing officer. Once that decision is rendered by the administrative judge following a ‘bench trial’ then that may be appealed to the Health Planning Review Board – which can affirm, reverse, or remand a matter back to the Department. Reese believes that this is a streamlined process. If all parties agree, an administrative appeal can be accomplished in three to four months after a decision. Once the Review Board renders a decision, a party can then petition to the Superior Court for judicial review. Such reviews are done more in high profile projects with a number of competing facilities. Once the case is on judicial review, the Department has no control over the matter. Judicial review can extend up to two years. In 2001, there were 128 CON applications filed with the Department. There were 170 CON projects approved (some of these would have been filed in prior years) with an 84% approval rate. There are currently 26 projects under review.

Georgia’s law provides for a rule making process which is found in the administrative code section. In concluding his remarks, Mr. Reese explained three necessary factors: that there be accessibility to services; financial accessibility; and the ability of the Department to require a certain amount of services be performed for the indigent. He explained that there is a definition of indigent care and a three (3%) percent requirement for an applicant for a new service-related CON. In 2000, the law changed in order to allow the Department to assess penalties to parties not meeting their indigent care commitments outlined in their CON applications. The shortfalls on indigent care are then penalties paid to the Indigent Care Trust Fund (rather than the State’s General Treasury). The dollars in the Indigent Care Trust Fund ($1.7 million collected since the penalties have been assessed) then are provided to those disproportionate share providers providing care to the State’s indigent population. He also stated that the free-standing ambulatory surgery centers were economic engines for hospitals and that physicians were competing for those dollars. Thus, economic thresholds were necessary for these ASCs. The physicians make the arguments that they can provide these ASC-related services more conveniently and at a lower cost to the patient. However, Mr. Reese stated that quality, safety, and access should be factors reviewed in making decisions relating to ASCs.

There are 37 states which have CON statutes; 13 states do not have such statutes or have repealed former statutes. However, states do have some healthcare regulations to address issues by other means than CON.

The next meeting of this Senate Study Committee will be on July 22, 2002 at 2:00 p.m. A place for this meeting will be announced. One subject on the agenda will be trauma care. The Study Committee will also look at scope of practice issues, getting prescription drugs to senior citizens, and assisted living as it looks towards a long-term strategy for healthcare (looking towards the years 2010 or 2020).

Additionally, the Department of Community Health held a meeting in Atlanta concerning Budget proposals for FY 2003 Supplemental and FY 2004. This is one of a series of forums scheduled around Georgia to hear from the public on the healthcare needs to be addressed in the Department’s Budgets.

Here are a few highlights of funding requests made:

• better pharmacy reimbursement rates for home health providers providing infusion therapies;
• some repeated requests made included funding for children with autism;
• more dollars for a tuberculosis program (Georgia has 2,000 active cases, higher than the national average);
• funding for persons with disabilities to live in their communities by expanding the Independent Care Waiver slots;
• funding a Medicaid buy-in program for persons with disabilities;
• funding for support for cancer patients (this would include not just meeting their transportation needs but also other activities of daily living);
• dollars to provide for prescription drugs to be more affordable for senior citizens who are not Medicaid-eligible;
• funding for dentures and hearing aids for Medicaid-eligible persons;
• expansion of Medicaid coverage for children up to 150% of the Federal Poverty Level;
• coverage for the second year of transitional Medicaid coverage for those women leaving TANF (Temporary Assistance for Needy Families);
• 12 months of continuous coverage for children under both Medicaid and PeachCare programs;
• working parents’ coverage at 100% of the Federal Poverty Level;
• moving PeachCare program back to an ‘accrual basis’ of accounting;
• requiring that Express Scripts be more patient friendly and not implement a first-fail approach to drugs;
• continue efforts on EPSDT screening and treatment;
• dollars for funding State Health Benefit Plan-covered persons with incomes of 150% of the Federal Poverty Level in order to cover children in those families;
• funding for healthcare workforce shortage initiatives, looking especially at the rural areas of the state;
• funding for State Health Benefit Plan to implement a disease state management program;
• implementing rate freezes so that premium increases were minimal for State Health Benefit Plan members but to also address "out-of-pocket" expenditures required by members;
• funding drug program so that no prior approval on pharmaceuticals would be required;
• fostering initiatives to engage in public-private partnerships for long-term care programs (federal legislation is pending but would require Georgia to pass enabling legislation);
• coverage for morbid obesity (the Department is already conducting an internal study on this issue);
• reimbursement rate increases to hospitals for inpatient services at 100% of costs based upon the most recent cost report and with current inflation factors;
• reimbursement rate increases to hospitals for outpatient services at 100% of costs (currently paid at 90%);
• funding for prevention programs;
• dental program funding;
• dollars for adults needing G-tube feeding;
• more access to therapy programs, including education;
• dollars for the medically fragile; and
• dollars restored to fund the Governor’s Blue Ribbon Task Force’s Recommendations.