Legislature(2013 - 2014)HOUSE FINANCE 519
04/07/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB314 | |
| HB376 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 119 | TELECONFERENCED | |
| + | HB 314 | TELECONFERENCED | |
| + | SB 178 | TELECONFERENCED | |
| + | HB 376 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 376
"An Act extending the termination date of the Alaska
Health Care Commission; and providing for an effective
date."
9:18:26 AM
REPRESENTATIVE PETE HIGGINS, SPONSOR, introduced the
legislation. He discussed that health care costs in the
state were high and noted the importance of the Alaska
Healthcare Commission. The commission was established to
address affordability and access to healthcare and to
identify strategies for improving the health of all
Alaskans. He stressed the importance of the commission in
gathering information, which enabled the legislature to
make more informed decisions on the issue and recommended
the commission's extension.
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, stated that the sunset review of the
commission was performed on May, 2013. The purpose of the
audit was to determine whether the commission was serving
the public's interest and whether the sunset date should be
extended. Background information on the commission was
included on page 5 of the report because the audit was the
first sunset review of the commission. The commission was
established by administrative order in 2008 and re-
established in statue in 2010. The legislature intended
that the commission accomplish reform by developing a
statewide health plan. The original commission believed
that it was not its responsibility to develop a statewide
plan and instead focused on making specific policy
recommendations. In 2010, the commission decided to
continue the prior commissions work and collected
information for various cost studies, developed high level
policy recommendations, and established general priorities,
which evolved into a strategic framework. The strategic
framework was included in the audit report as "Appendix A."
The audit concluded that the commission operated in the
public interest but improvements in the development of a
state health plan was necessary to justify its continued
existence. She reiterated that the legislature proposed
that the commission develop a comprehensive health care
plan in conjunction with the Department of Health and
Social Services (DHSS).
Ms. Curtis continued that although various policy
recommendations were developed the commission failed to
develop a statewide health plan and collaborate with DHSS.
The audit recommended a three-year extension allowing
adequate time to develop a comprehensive plan. The audit
concluded that the commission was active, conducted several
studies, and developed the foundation of a plan. The
framework lacked components necessary for implementation:
specific actions were not identified, no timeframe for
completion, no entities responsible for action was
identified, no definitions of successful outcomes were
included, or plans for measuring progress. The audit
further concluded that without a health plan the commission
may not affectively change healthcare in the state. The
audit recommended that the commission coordinate with the
commissioner of DHSS to identify agencies roles and
responsibilities in developing a plan and initiate
development of the plan. She identified additional
administrative recommendations to improve the noticing of
public meetings and to ensure that annual reports included
all statutorily required elements.
Co-Chair Stoltze questioned the criticism that the
commission was not coordinating with DHSS "when a top DHSS
official was heading the commission."
Ms. Curtis stated that the department only partially
concurred with the audit's findings. The department
considered that the commission's progress was much closer
to a comprehensive plan. She agreed that the commission was
active and the foundation was complete but reiterated that
what was developed did not meet the requirements of a plan
and more coordination with the department was necessary to
achieve the outcome.
Representative Wilson wondered why the audit recommended a
three-year extension instead of a one year extension due to
failure to develop the plan.
Ms. Curtis stated that the recommendation was a
collaborative effort with the commission and the
department, who concluded that three years was necessary to
bring a plan forward. She explained that the issues were
complex and that although much work was accomplished more
was needed in order to establish a plan.
Co-Chair Austerman asked whether the original legislation
included any timeframes for developing a plan.
Ms. Curtis answered that no time limit was designated.
Co-Chair Austerman asked whether the legislation only
addressed the creation of a plan.
Ms. Curtis replied that the language in the original
legislation required that the commission should coordinate
with DHSS and "may" develop the plan. The legislative
intent stipulated that DHSS and the commission work
together to create a plan, but the language was "not strong
in a definitive sense to require" development of a plan.
However, the purpose of the commission's creation was to
create a healthcare plan.
9:28:26 AM
DR. WARD HURLBURT, MD, CHIEF MEDICAL OFFICER, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES, noted that he was the chair of
the commission. He stated that the commission felt that the
audit process was very constructive. He maintained that the
health care commission did not interpret the legislation as
mandating establishment of a plan. He opined that
healthcare plans "become documents that sit on a shelf."
The focus of the commission for the previous five years was
to provide clear and specific recommendations regarding
health care. The audit findings were taken seriously by the
commission. The commission was working closely with the
commissioner to develop a beneficial plan. He believed that
the commission's work was valuable to the legislature.
Dr. Hurlburt related that the average increase in teacher's
salaries in the Anchorage School District over the last 15
years increased 1 percent per year and the cost of medical
care coverage for school district employee coverage
increased 15 percent above inflation over the same time
period. He pointed out that the reason the state was facing
financial challenges was largely due to increases in
medical care costs similar to the increases experienced by
the school district. The federal government spent
approximately 18 percent of the Gross Domestic Product
(GDP) of the United States (US) on healthcare and the state
spent 21 percent to 22 percent of its GDP on healthcare.
Other industrialized countries spent between 9 percent to
l2 percent of their GDP in comparable ratios. The US would
have saved approximately $15 trillion if the US expended as
much on healthcare as Switzerland or Norway.
Dr. Hurlburt continued that the only state spending more
than Alaska was Massachusetts which had an older
population. He added that 97 percent of Massachusetts
residents were insured due to its "Romney Care" program and
the state had more physicians than any other state. Alaska
was mid-range among the states in terms of number of
physicians. He relayed that studies revealed the main
reason Massachusetts had the most expensive healthcare
costs was the rapid increase in pricing.
Dr. Hurlburt cited the Milliman study concluded that
Alaska's high cost statistics were also due to pricing. He
explained that the members of the Health Care Commission
were comprised of representatives from physicians,
hospitals, nursing homes, behavioral health, health
insurers, tribal health, federal health care, community
clinics, the public, the legislature, and the
administration. He voiced that the members had done a
commendable job sharing their knowledge and working on
behalf of all Alaskans. He communicated that British
Columbia had a population of 4.8 million and spent
approximately $25 billion less than the US would have spent
on the same number of people. The information illustrated
that the US was forced to make choices on how to allocate
all funding needs to accommodate the high costs of
healthcare. The commission was searching for an American
market-based solution. The commission gathered information
and analysis and provided a set of recommendations each
year in January in an annual report to the legislature and
governor. He reported that the commission collaborated with
other groups and human resource directors for larger
employers to reach out to the business community. The
commission identified regulations and statutes that
"mitigated against a free marketplace in negations between
providers and payers." He offered that the state purchased
about $2.6 billion in healthcare per year. There had
historically been relatively little coordination between
agencies, but recently collaboration had increased. The
state had a "lot of potential leverage" as a purchaser of
healthcare as opposed to a regulator of healthcare.
Dr. Hurlburt voiced that the state needed a "robust"
healthcare system in light of the valuable service provided
by committed healthcare professionals. He concluded that
healthcare in Alaska was priced excessively and
unsustainably high and correcting the problem would cause
"tensions." Unique ethical and moral dimensions existed in
the healthcare industry even though healthcare was a
business. The commission believed that because of the
ethical and moral dimensions the leadership needed for
change would come from within the industry. The
commission's efforts assisted in facilitating industry
leadership.
Co-Chair Stoltze asked whether the commission's workload
was proactive in defining efficiencies or "reactive to
external policies from other political jurisdictions" and
how the workload was apportioned in attaining the
committee's goals.
Dr. Hurlburt responded that the commission as established
by Governor Palin was smaller, and was expanded by the
legislature. Much effort and time was expended in gathering
information and analysis and educating the commission's
members and the public. He saw education as an ongoing
responsibility of the commission. The commission would
continue its efforts to reach out to identify different
entities for collaboration. He saw the commission's role to
serve as a "convener" of interested entities in healthcare
issues. He conveyed that in prior years when the commission
established specific findings and recommendations the
commission was careful not to assign responsibilities
because of the belief that was not the role of the
commission. He stated that the commission worked closely
with the DHSS commissioner. He emphasized that the
commission "responded and embraced" the audit findings. He
saw more work for the commission moving forward resolving
the audits recommendations.
9:40:25 AM
Co-Chair Stoltze asked how the commission was actively
dealing with the evolving federal healthcare policies or
mandates. He wondered what challenges federal policies
created for the commission and whether its response was
reactive or proactive.
Dr. Hurlburt replied that the commission engaged with the
military healthcare and tribal healthcare systems and with
its commissioners from those sectors of healthcare. He
informed the committee that each of the commissioners was
constantly updated on the Affordable Care Act but that the
commission had not taken a proactive role regarding the
issues surrounding the law. The commission did not feel it
was the best forum to formulate recommendations partly due
to "political sensitivities."
Co-Chair Stoltze characterized the commission's actions
towards the Affordable Care Act as a "cautious defensive
posture."
Dr. Hurlburt replied in the affirmative.
Representative Guttenberg discussed the difference between
recommendations and policy. He believed that both
recommendations and policy were "shelved." He judged that
proactively examining health care policy concentrating on
increasing efficient health care delivery and higher
quality care could not be accomplished without some
confrontation and criticism. He expected that the
commission would take proactive stances and make definitive
statements regarding road blocks to competition or creating
efficiencies. He wanted the commission to identify what was
impeding the delivery of quality affordable healthcare so
lawmakers could act.
Dr. Hurlburt observed that he saw movement on the
commission's recommendations. Changes would create tensions
due to deeply held beliefs and the large amounts of money
at stake. He mentioned the commission's recommendation for
greater transparency which could be accomplished through an
all payer claims database. The database required payers to
report what they were paying for healthcare services. He
delineated that a bill was recently introduced in
Washington State to establish the data base. Premera and
Regents insurance companies were the main opponents and
killed the bill. The bill that was signed only required the
state to report its healthcare costs. Conflicts of interest
were problematic. He noted possible conflicts of interest
between commission members and the industry they work for.
He mentioned that Commissioner Jeff Davis was the Chief
Executive Officer (CEO) of Premera in Alaska and a valuable
commissioner working for the best interest of all Alaskans.
He thought that a similar bill would place Commissioner
Davis in a conflict of interest. The commission identified
high profit margins for urban hospitals. The urban
hospitals were run by outstanding individuals but would
choose to continue to maintain the profitability. He
indicated that some regulatory and legal restrictions
existed i.e., workman's compensation required that payments
were made at the 90th percentile of market pricing. The
requirement enabled a medical specialty with relatively few
providers to control the pricing. He referenced legislation
by Rep. Olsen's that required that the state employ a cost-
based methodology rather than provider pricing. He remarked
that the issues created controversy. He stated that the
issues noted were examples of concrete recommendations that
came from the commission.
Representative Guttenberg related hearing complaints about
inadequate Medicaid reimbursement rates. He wondered how
accurate the claim was.
Dr. Hurlburt responded that Medicaid and Medicare utilized
a cost based methodology for payments. Outside of Alaska,
the Medicaid payments were much lower. Washington State was
40 percent lower than Alaska. He mentioned discussions with
a hospital administrator who expressed that Medicare was
the larger problem. In Alaska, Medicaid payments were
higher than Medicare payments. He stated that Medicaid and
Medicare payments were significantly lower than insurance
reimbursement in any state.
9:51:05 AM
Representative Guttenberg asked whether a study regarding
the actual costs of delivering a service was compared to
the actual Medicaid and Medicare reimbursement rates.
Dr. Hurlburt answered that the cost based methodology was
exactly what Medicaid and Medicare took into account. The
data employed was derived from the American Medical
Association and came directly from the provider's side of
the equation.
Representative Gara stated that annually Alaska had the
highest healthcare cost increases in the country. He asked
whether the statement was accurate and why it occurred.
Dr. Hurlburt stated that the costs were driven by a human
tendency to charge what can be charged in any business. The
competition in the state was limited and had a history of
high cost. Premera reported more pressure from employers to
send people to other states because of the high costs. He
restated that Alaska should maintain a quality and robust
health care sector and provide services within the state.
Co-Chair Stoltze noted that SB 13 was the companion bill
and would be heard by the committee soon.
HB 376 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 314 - Correspondence between BP and DOR.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| HB 314 - HB 271 Sponsor Statement 23rd legislature.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| HB 314 - Letter of Support AOGA 3.11.14.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| HB 314 - NSLP Map.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| HB 314 - Relevant Excerpts from the Legislative History.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| HB 314 - Sectional Analysis 4.4.14.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| HB 314 - Sponsor Statement ver. O 4.4.14.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 314 |
| 2013AnnualReportFINAL.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 376 |
| AHCC audit rpt-2013.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 376 |
| HB 376 Sponsors Statement.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 376 |
| Resolution.pdf |
HFIN 4/7/2014 8:30:00 AM |
HB 376 |