Legislature(2003 - 2004)

03/31/2003 03:25 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 153                                                                                                            
                                                                                                                                
     An Act  repealing the statute  that sets  priorities for                                                                   
     the Department  of Health  and Social Services  to apply                                                                   
     to  administration  of the  medical  assistance  program                                                                   
     when  there  are  insufficient funds  allocated  in  the                                                                   
     state   budget  for   that   program;  authorizing   the                                                                   
     department to  make cost containment decisions  that may                                                                   
     include  decisions  about  eligibility  of  persons  and                                                                   
     availability  of services  under the medical  assistance                                                                   
     program; and providing for an effective date.                                                                              
                                                                                                                                
JOEL GILBERTSON, COMMISSIONER,  DEPARTMENT OF HEALTH & SOCIAL                                                                   
SERVICES,   stated  that   under   current   law,  if   funds                                                                   
appropriated to  the Medicaid program are insufficient  for a                                                                   
given fiscal  year, the Department  is directed  to eliminate                                                                   
optional Medicaid  services based on a priority  list that is                                                                   
out-of-date.     The  existing  list  is  not   an  effective                                                                   
management tool  and if used,  would result in the  denial of                                                                   
necessary and cost-effective services  to Alaskans in need of                                                                   
health care.                                                                                                                    
                                                                                                                                
He  continued  that  the proposed  bill  would  replace  that                                                                   
obsolescent  language with  authority for  the Department  to                                                                   
undertake cost containment based on three key principles.                                                                       
                                                                                                                                
  · First, the Department must pursue all other reasonable                                                                      
     cost   containment  measures   before  eliminating   any                                                                   
     eligibility groups or services;                                                                                            
   · Second, the Department should aggressively pursue                                                                          
     strategies to  maximize federal financial  participation                                                                   
     in the Medicaid program;                                                                                                   
   · Third, cost containment decisions should be made in a                                                                      
     manner  that best  reflects the  needs and interests  of                                                                   
     eligible Medicaid recipients.                                                                                              
                                                                                                                                
Commissioner Gilbertson  noted that it is imperative  to slow                                                                   
the growth  of State funding for  Medicaid while at  the same                                                                   
time  maintaining health  care coverage  for needy  Alaskans,                                                                   
which is an issue that can no  longer be avoided.  Passage of                                                                   
the legislation will give the  Department additional tools to                                                                   
meet these challenges.                                                                                                          
                                                                                                                                
Representative  Stoltze  asked if  the Department  would  see                                                                   
benefit in  being able  to prorate the  amount of  payment to                                                                   
eligible persons.                                                                                                               
                                                                                                                                
BOB LABBE, DEPUTY  DIRECTOR, DEPARTMENT OF HEALTH  AND SOCIAL                                                                   
SERVICES,  stated  that  the payments  made  in  the  Medical                                                                   
Assistance Program  are to health care providers  rather than                                                                   
to  individual beneficiaries.    It is  difficult to  prorate                                                                   
once they have provided the service.                                                                                            
                                                                                                                                
Representative  Croft pointed out  that the Department  could                                                                   
determine to  eliminate item  #11, mammography screening,  if                                                                   
the bill was passed.                                                                                                            
                                                                                                                                
Commissioner Gilbertson  acknowledged that under  the current                                                                   
options  list,  item #11  could  go.   The  Department  would                                                                   
maintain the discretion to help achieve cost containment.                                                                       
                                                                                                                                
Representative Croft commented  that the Department could get                                                                   
rid  on any  item on  the list  and  that they  would not  be                                                                   
required   to  move   in  the   order  already   established.                                                                   
Commissioner Gilbertson acknowledged that was correct.                                                                          
                                                                                                                                
Representative Croft asked if  there was any intent language,                                                                   
which  would  require the  Department  to  come back  to  the                                                                   
Legislature before eliminating any one provision.                                                                               
Commissioner   Gilbertson  replied  that   there  is   not  a                                                                   
provision in the  bill that would require that,  however, the                                                                   
Department  would be  working  with the  coordination of  the                                                                   
Legislature,  to find  ways to  insure that  the funding  was                                                                   
available for services  that are needed.  There  is direction                                                                   
from  the  Legislature to  the  agency  to provide  for  cost                                                                   
containment of  the Department to manage the  Medicaid budget                                                                   
within  the amount that  the Legislature  appropriates.   The                                                                   
Department  needs the  flexibility, which  the bill  provides                                                                   
to, accomplish that mission.                                                                                                    
                                                                                                                                
Representative   Hawker  commented   on   the  latitude   the                                                                   
Department needs  in order to  provide for cost  containment.                                                                   
He inquired  if situations might  occur when the  Legislature                                                                   
is not in session.                                                                                                              
                                                                                                                                
Mr.  Labbe responded  that in  the past,  the Department  has                                                                   
projected the expenditures for  the Medicaid program while in                                                                   
session.    If  the Department  realizes  that  they  have  a                                                                   
significant reduction,  they would  bring the choices  to the                                                                   
Legislature  at that  time.   However, with  only the  option                                                                   
list  available,  there  have  been  unintended  consequences                                                                   
resulting from the high federal  matching rate to achieve any                                                                   
savings.     Mr.  Labbe  anticipated   that  if   there  were                                                                   
significant budget  actions taken, the Department  would then                                                                   
indicate a plan on how to meet that, such as:                                                                                   
                                                                                                                                
   ·    Eligibility levels                                                                                                      
   ·    Eliminating services and/or                                                                                             
   ·    Providing enhancements                                                                                                  
                                                                                                                                
Mr. Labbe added  that there would be a package  deal in order                                                                   
to achieve the  program outlined.  The intent  is to preserve                                                                   
the benefit and the eligibility  levels.  He pointed out that                                                                   
taking  the  proposed  actions  requires  regulation  change,                                                                   
which  does not move  very quickly.   Based  on the  proposed                                                                   
budget, the  Department will not  be able to make  it through                                                                   
this next year without taking some additional measures.                                                                         
                                                                                                                                
Commissioner  Gilbertson  pointed out  that  the fiscal  note                                                                   
indicates zero  expenditures.   The Department believes  that                                                                   
if the  Governor's budget  passes as  submitted, that  budget                                                                   
contains all the cost containment intended.                                                                                     
                                                                                                                                
Representative  Hawker understood  that the  bill would  give                                                                   
the Department latitude and/or  flexibility to choose amongst                                                                   
alternate means to meet the budget shortfall.                                                                                   
                                                                                                                                
Commissioner  Gilbertson  agreed   that  was  correct.    The                                                                   
current  structure limits  the  Department's flexibility  and                                                                   
disproportionately places the  burden on a number of services                                                                   
that  may  not  be efficient,  such  as  the  elimination  of                                                                   
prescription drug coverage.  The  Department would have to go                                                                   
after some needed  services before affecting  the eligibility                                                                   
standards.    The  additional  flexibility  would  allow  the                                                                   
Department  to  manage  the  program to  the  same  level  of                                                                   
responsiveness to  maintain costs.  It would  also reduce the                                                                   
impact on the consumers.                                                                                                        
                                                                                                                                
Co-Chair  Williams  noted  that  HB 153  would  be  HELD  for                                                                   
further consideration.                                                                                                          
                                                                                                                                
HOUSE BILL NO. 153                                                                                                            
                                                                                                                                
     An Act  repealing the statute  that sets  priorities for                                                                   
     the Department  of Health  and Social Services  to apply                                                                   
     to  administration  of the  medical  assistance  program                                                                   
     when  there  are  insufficient funds  allocated  in  the                                                                   
     state   budget  for   that   program;  authorizing   the                                                                   
     department to  make cost containment decisions  that may                                                                   
     include  decisions  about  eligibility  of  persons  and                                                                   
     availability of services under the medical assistance                                                                      
     program; and providing for an effective date.                                                                              
                                                                                                                                
Representative  Hawker   MOVED  to  report  HB   153  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HB 153 was reported out of Committee with a "do pass"                                                                           
recommendation and with a zero fiscal note #1 by the                                                                            
Department of Health and Social Services.                                                                                       

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