Legislature(2015 - 2016)HOUSE FINANCE 519
04/09/2015 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB148 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 148 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 9, 2015
8:37 a.m.
8:37:12 AM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 8:37 a.m.
MEMBERS PRESENT
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mark Neuman, Co-Chair
Representative Cathy Munoz
Representative Scott Kawasaki
ALSO PRESENT
Matt Eisenhower, Director, Community Health Development,
PeaceHealth Ketchikan Medical Center, Ketchikan; Rick
Davis, CEO, Central Peninsula Hospital, Kenai; Bruce
Richards, External Affairs/Marketing, Central Peninsula
Hospital; Representative Dan Ortiz.
SUMMARY
HB 148 MEDICAL ASSISTANCE COVERAGE; REFORM
HB 148 was HEARD and HELD in committee for
further consideration.
Co-Chair Thompson addressed the agenda for the meeting.
HOUSE BILL NO. 148
"An Act relating to medical assistance reform
measures; relating to eligibility for medical
assistance coverage; relating to medical assistance
cost containment measures by the Department of Health
and Social Services; and providing for an effective
date."
8:38:05 AM
MATT EISENHOWER, DIRECTOR, COMMUNITY HEALTH DEVELOPMENT,
PEACEHEALTH KETCHIKAN MEDICAL CENTER, KETCHIKAN, shared his
intent to provide a "boots on the ground" perspective on
population health and work the center had done through an
innovation program funded by a Centers for Medicare and
Medicaid Services (CMS) grant. He provided a PowerPoint
presentation titled "Envisioning Better Care, Better
Health, a Better You!" (copy on file). He relayed that
Ketchikan had a population base of approximately 16,000. He
addressed the CMS Demonstration Project on slide 3. He
relayed that in 2010 the Affordable Care Act (ACA) had
given over $10 billion to CMS over a ten-year period to
look at demonstration population health improvement models;
some of the models were related to payment reform and care
delivery changes. PeaceHealth had been a recipient of one
of the initial grants, which was awarded for a three-year
period at a total of $3.1 million. The project at
PeaceHealth had functionally started in January 2013 and
had touched about 3,300 lives in the community
(approximately 20 percent of the community residents).
Mr. Eisenhower addressed that CMS was trying to accomplish
part of the "Triple Aim," which was a per capita reduction
of cost for patients receiving care and some confidence in
population health (slide 4). PeaceHealth had looked at
payment reform related to how numbers were tracked, which
was largely a new concept in healthcare. Additionally, the
project had focused on how to shift some care. He relayed
that for the past 50 years the healthcare delivery system
had been experts on how to fix people, but were by in large
not very good about keeping people healthy. He opined that
it should more appropriately be called "sick care" due to
the way clinicians were trained and the way providers were
paid for fee-for-services. He explained that providers only
got paid when they worked with patients, typically when
they were fixing a problem; they did not typically get paid
when helping patients to stay healthy. He spoke to various
ways to reduce the cost of care: 1) reduce readmission
rates; 2) reduce unnecessary utilization of certain
procedures that may not be necessary if patients are given
the preventative treatment they needed; 3) increase care
for chronic disease surrounding hypertension, high blood
pressure, and diabetes (cost of care for these issues
dramatically decreases when treated properly at an early
age); 4) increase community understanding and encouraging
ownership in patients' healthcare; and 5) increase access
to care.
8:42:19 AM
Mr. Eisenhower highlighted outcomes on slide 5. Examples of
outcomes illustrated on the slide included controlling
diabetes (especially for patients with out of control
diabetes, which lead to complications), emergency room (ER)
clinic referrals when a patient should be seen in a primary
care physician setting, hypertension improvement, and how
to provide better follow up after a patient leaves the
hospital. He addressed readmission rates on slide 6. He
stated that typically if a patient needed to return to a
hospital within 30 days for the same diagnosis something
was wrong (either they were not properly treated or their
post-acute care was not accurately handled). He addressed
that based on other hospitals of a similar size, the
facility's readmission rate should be approximately 8.87
percent. Prior to the work PeaceHealth had done, its
historical rate had been 9 to 9.5 percent over the past
five years. He pointed out that raw data for an 18-month
period showed a decrease in readmission over the period. He
noted that the facility's current adult readmission rate
was 5.93 percent compared to the expected 8.87 percent
readmission rate. He continued that as some of the
interventions had been refined over a six-month period,
readmission rates had dropped from 7.42 percent down to
4.86 percent, which represented a 45 percent reduction
(slide 9). There were about 1,200 hospital admissions in
Ketchikan annually, which equated to approximately 50
patients who did not need to return to the hospital
unnecessarily. He estimated that the savings was
approximately $500,000.
8:45:14 AM
Mr. Eisenhower discussed that CMS wanted hospitals and
caregivers to improve per beneficiary per encounter cost
reduction (slide 10). He detailed that the cost for
Medicare (patients over the age of 65) and Medicaid
(federal/state entitlement for people with needs) had gone
from $536/encounter in FY 12 to $457/encounter in FY 13 (a
reduction of 15 percent). All payers (private insurance
companies) had also seen the same savings. He addressed the
lower portion of slide 10. Hospital data for 2012 and 2013
was shown on the right and clinic data was shown on the
left. He pointed out that the clinic data represented
regular doctors providing preventative care; the payment
dollars for all payers was approximately $200. He remarked
that the payment dollars for Medicare and Medicaid had not
changed significantly; the numbers may actually rise if
providers were doing their jobs properly. He pointed to the
"all payers" under the hospital columns and noted that the
deep costs resided in this area. He pointed to a dramatic
reduction for hospitals per beneficiary per encounter from
$1,373 in 2012 to $1,028 in 2013. From a prevention
standpoint costs were expected to remain about the same or
rise, with a cost or payment reduction on the inpatient and
hospital side.
Mr. Eisenhower provided an example related to transitional
care on slide 11. He explained that when a patient left the
hospital the discharge report was provided to care
coordinators (social worker, licensed practical nurse, and
registered nurses) who discussed next course of treatment
and medication reconciliation with patients. He elaborated
that medication reconciliation was used for certain
diseases such as heart failure; understanding and taking
medication was a key component of reducing readmission
rates. He emphasized that there were many non-medical
hurdles to healthcare that resulted in medical failures.
8:48:32 AM
Co-Chair Thompson noted that Representative Gara had joined
the meeting.
Vice-Chair Saddler asked for a definition of medication
reconciliation. Mr. Eisenhower replied that medication
reconciliation was helping the patient with medications
they were taking, what they should be taking, and how much
they take. For example, it boiled down to telling a patient
to take one blue pill in the morning and two pink pills at
night.
Vice-Chair Saddler asked for clarification on what was
being reconciled. Mr. Eisenhower replied that
reconciliation referred to whether a patient was doing what
the doctor prescribed. He emphasized that frequently a
patient either did not understand the discharge planning or
failed to pick up their prescription because they could not
afford it, they did not have transportation to pick it up,
or other. He reiterated that patients ended up back in the
hospital due to many hurdles that were not necessarily from
a scientific or medical standpoint.
Mr. Eisenhower continued to discuss a snapshot of the
process on slide 12. The hospital employed social workers
and primary care physicians for transitional care; it also
worked with financial educators and community
organizations. The hospital followed up with patients two
days after they were discharged to provide post-acute care.
He addressed the transition of care call template on slide
13. He explained that the template was easily replicated
for other organizations if needed. Slide 14 showed examples
of things a nurse did prior to making a phone call. The
nurse reviewed a patient's experience in the hospital and
looked for red flags that may result in readmission. For
example, if a person went in for knee surgery the nurse
would not find it important to check their ear; the
preparation was specifically related to the patient's
recent procedure. The preparation also included a
medication review, follow up appointments, home health,
other community support, and supplies. He looked at slide
15 and addressed the importance of motivational
interviewing and active listening with patients. Care
coordinators aimed to ensure that the patient did not
return to the hospital and provided their recommendation.
8:51:52 AM
Representative Wilson asked if Mr. Eisenhower was referring
to the ER when he discussed the hospital. Mr. Eisenhower
replied in the negative. He explained that he was referring
to discharged patients leaving the hospital after they had
been admitted. He detailed that frequently a patient's
visit began in the ER and ended up in the hospital.
However, similar procedures were used for ER patients as
well. He continued that once a person was admitted their
level of acuity or difficulty was typically higher than the
emergency room. The goal was to keep patients from using
the ER repeatedly if the environment was not appropriate.
Representative Wilson recalled visiting Unalaska a few
years earlier. She discussed that the Unalaska clinic was
also the emergency room. She explained that the clinic's
model focused on steps it could take to prevent patients
from unnecessarily using the emergency room. She surmised
that the model used by PeaceHealth focused on following up
with discharged patients to reduce readmission rates.
Mr. Eisenhower replied in the affirmative. He clarified
that on a federal Medicare level the items were starting to
be paid for with fee-for-service. The Medicaid world did
not currently have the tools from a payment standpoint. He
continued addressing psychosocial hurdles that resulted in
expensive medical care (slide 15). For example, a patient
may not fully understand their insurance or their coverage,
may be concerned with pricing transparency, and other. He
discussed that often times homelessness could contribute to
a lack of healing. Other issues included adequate
caretaking at home, transportation challenges (access to
food and basic needs), disabilities, general medical
literacy challenges, and other (slide 16). He believed that
addressing the issues was part of the medical community's
responsibility. He stated that the only way it would happen
and would be incentivized was through payment reform and by
holding hospitals and clinics responsible for their
patients. He continued that medical facilities should be
given the financial tools of payment in order to hire
people who could help (i.e. social workers and care
coordinators).
Co-Chair Thompson noted that Representative Guttenberg had
joined the meeting.
Mr. Eisenhower addressed the final slide "Questions and
Discussion" (slide 17):
· Tough math: $700,000 in operational costs results in
about a $1.5 million in lost revenue. Where is the
incentive to change?
· Key ingredient currently missing in most facilities is
capital and confidence.
· Care coordination requires local knowledge by
caregivers.
Mr. Eisenhower elaborated that there was a net $2.2 million
loss the hospital was realizing. He stated that the
hospital did it in part because it had a grant to cover
operational costs and philosophically it was the right
thing to do; however, the model was not sustainable. He
believed capital for the upfront startup costs of similar
programs was missing. Additionally, confidence that it
would work in communities was lacking. PeaceHealth had been
fortunate to receive capital from a grant. He added that
the care coordination required local knowledge by
caregivers. He noted that based on the facility's
experience, it was not practical to use a call center in
Chicago to help with the items the organization found to be
successful.
8:58:11 AM
Representative Gara wondered if Medicaid expansion had any
bearing on the Ketchikan community. He referenced previous
testimony from the Alaska Regional Hospital that with
expansion it could reduce ER costs by constructing a clinic
to provide needed services for a much lower price.
Mr. Eisenhower replied that the scenario described by
Representative Gara was called a "fast track" in the
medical system; where a person came into the emergency
room, but was fast tracked through a different level of
services. He stated Medicaid expansion would help
PeaceHealth provide self-payers with a tendency to use the
ER with more optimal clinic or fast track options. He added
that from a researcher standpoint, the cost really resided
in preventable expensive readmissions to hospitals. For
instance, the hospital costs to the ER may be a few
thousand dollars, whereas a readmission of a heart failure
patient could be $30,000 or $40,000. He discussed that in
smaller communities like Ketchikan, the hospitals averaged
about 24 patients in the ER every 24 hours. He elaborated
that even if the number was reduced, the hospital's
staffing and cost for the ER did not change. He detailed
that PeaceHealth could not really adjust its staffing to
realize savings due to the facility's volumes. He stated
that from a patient perspective it was about quality of
care - getting a person in the right place, which was often
not the ER.
Representative Gara wondered if uncompensated costs sent to
private insurance payers would be reduced if ER care was
reduced through Medicaid expansion. He asked if expansion
would have a side benefit for Alaskans with private
insurance who had their premiums hit due to uncompensated
care.
Mr. Eisenhower deferred the question to another party. He
remarked that there was a widely understood perspective
that the whole trend of healthcare was changing to
population health; there was an understanding that
hospitals would have a different role in the future. From a
hospital standpoint, there were many things that could be
prevented. He continued that the cost based on volume would
reduce through a combination of good population health
management (keeping people out of the hospital) as well as
ensuring patients in the hospital could pay their bills
through Medicaid expansion. He recognized that PeaceHealth
would have to redeploy many of its resources and move away
from the acute setting towards the preventative world. He
believed the perspective was widely understood. However,
there was currently not much incentive to make the change
based on a payment perspective; he could not get paid for
much of the preventative work that was currently being
done. He explained that the prevention was actually
decreasing the revenue in the hospital setting.
9:03:37 AM
Co-Chair Thompson liked the idea of improving wellness and
working to prevent people from coming back to the hospital
repeatedly; however, he believed for larger hospitals the
scope of the increased work would be very difficult.
Mr. Eisenhower answered that his presentation represented a
small sliver of population health. He communicated that CMS
and Medicare provided chronic care management, which
allowed the hospital the enrollment of patients on a
monthly basis in a registry. As long as the patients went
through the preventative components dictated by CMS, the
hospital was paid for the work. Currently traditional care
and chronic care management were the two options available
to the hospital. He agreed with Co-Chair Thompson. He
continued that often in the Lower 48 the work was
segmented; there were staff who only worked with discharge
patients, while others worked only with chronic management.
He discussed that it was doable; for every $1 the hospital
spent it was saving $2. The hospital knew improvement was
possible, that it was the wave of the future, and the right
thing to do.
Vice-Chair Saddler asked if PeaceHealth was a for-profit
hospital. Additionally, he wondered if the facility was the
only hospital in Ketchikan and if it was part of a national
association. He asked for detail on the facilities. Mr.
Eisenhower responded that PeaceHealth was part of a system
of eight hospitals in the Northwest. He furthered that
PeaceHealth was the only hospital in Ketchikan; it had one
clinic in Craig. PeaceHealth was a critical access hospital
with 25 beds; the facility offered a wide array of
specialty services including obstetrics and orthopedic and
general surgery. He remarked that a lot of Alaska had a
closed system, including PeaceHealth. He elaborated that
within its system, most of the physicians were employed by
PeaceHealth; therefore, the facility had a very close
relationship with the inpatient world, which was not the
case everywhere. He was not opposed to clinics remaining
independent, but he believed there needed to be a closer
collaboration; in the past much of the patient care had
been siloed.
Vice-Chair Saddler asked how many hospitals were in
Ketchikan. Mr. Eisenhower replied that there was only one.
He detailed that there was not significant incentive for
the hospital to compete for patients due to the lack of
competition. People had questioned why the hospital was
paying money to lose money; the hospital was doing it to be
a leader, because it believed it was the right thing to do,
and because ultimately it would benefit.
Vice-Chair Saddler asked about the hospital's current
funding stream. He asked for the number of Medicare,
Medicaid, and other payers.
9:08:40 AM
Mr. Eisenhower replied that public payers accounted for 50
percent (Medicare at 21 percent/Medicaid at 18 percent), 8
percent were dual payers, 37 percent private payers, and 12
percent were uninsured or self-pay.
Vice-Chair Saddler pointed to slide 16 related to hurdles
to follow up care. He believed addressing patients' housing
needs, family support, transportation, and food was a broad
mandate of care. Mr. Eisenhower replied in the affirmative.
He did not believe it was the hospital's responsibility to
handle the items, but he did believe the hospital needed to
take some ownership to help patients navigate the items to
some degree. He furthered that the hospital did not have to
provide housing, but in many cases it needed to help
patients figure out housing through other organizations.
Vice-Chair Saddler asked if the hospital needed to help
patients figure out housing out of a sense of social
obligation or because it was good for the business.
Mr. Eisenhower answered that it was good for public health.
He believed the days were gone where a payer was agreeable
to continue paying every time a patient showed up to the
hospital; the payers wanted true capitation and population
health. He elaborated that hospital organizations took
responsibility for a life and would negotiate what that
life cost would be. For PeaceHealth the scenario was 10 to
15 years down the road; however, there were affordable care
organizations in the Lower 48 that had a capitative
agreement.
Vice-Chair Saddler asked for a definition of capitative.
Mr. Eisenhower explained that a capitative agreement meant
that a hospital would receive one allocated payment amount
per year for a patient. For example, PeaceHealth would
receive $6,000 per year to take care of a patient. The
structure incentivized PeaceHealth to make sure prevention
was done because any cost above $6,000 would cost the
hospital, whereas if the hospital did a good job and the
patient only cost $4,000, the hospital would net the
remaining $2,000. He remarked that there had been waves of
the scenario through the 1980s through managed care and
other. Ultimately, the consumer would drive the change
through the expectation to receive good care. He opined
that outside of capitation, it was difficult to see how the
situation would change.
Vice-Chair Saddler believed Mr. Eisenhower was saying that
people would be willing to give up more control of their
lives to the influence of the healthcare system in order to
receive healthcare at a lower cost. He thought it was an
interesting trend to have a healthcare system take over
more responsibility for food, disabilities, housing, family
support, and social work.
9:12:57 AM
Representative Edgmon referred to Mr. Eisenhower's
statement that healthcare should be more appropriately
called sick care due to the high number of patients who
returned prematurely. He pointed to Mr. Eisenhower's
thorough discussion about all of the things PeaceHealth did
to reduce readmission rates to 8.7 percent. He surmised
that the takeaway was more about payment reform and the
fact that if healthcare providers received the proper
resources they could provide better care, increase
efficiency, and reduce readmissions.
Mr. Eisenhower agreed. He detailed that most providers
understood what needed to be done to keep people out of
hospital. He relayed that there was currently not the
incentive to do so. He believed payment reform was the
incentive.
Representative Edgmon asked for verification that payment
reform was more important than expanding Medicaid. Mr.
Eisenhower believed the two went hand in hand. He
elaborated that Medicaid expansion would provide more
revenue to the hospital because of the reduction in
uncompensated care. However, what he was referencing would
not be accomplished primarily with Medicaid expansion
without some payment and Medicaid reform.
Representative Wilson referred to the 12 percent who were
uninsured or self-payers. She asked if the hospital
received any federal funds that offset the 12 percent if
they could not pay. Mr. Eisenhower did not believe so. He
added that there were self-payers who paid their bills.
9:16:05 AM
Representative Wilson stated that many people had gone
through the exchange in the past year. She commented that
individuals had been given the choice to buy health
insurance or take the federal tax penalty. She wondered if
the 12 percent figure had declined when the exchange had
been implemented.
Mr. Eisenhower prefaced that he was not a chief financial
officer. He answered in the first quarter of FY 14 the
percentage of self-payers had been 17 percent at
PeaceHealth; the number was currently 12 percent.
Representative Wilson asked how much of the 12 percent had
no funds to offset their costs. Mr. Eisenhower would follow
up with the information.
Vice-Chair Saddler asked about the specific Medicaid reform
requirements needed to accomplish the triple aims care
coordination process. Mr. Eisenhower replied that the
hospital's experience had demonstrated that capital was
needed to start up a program, get the training in place,
and to ensure tracking is done properly. He shared that
capital was necessary for the first step in Alaska, which
would lead to confidence in policy makers to do even more
payment reform. True payment reform would mean ensuring the
hospital was compensated for its work from a fee-for-
service standpoint (which was not currently occurring).
Vice-Chair Saddler asked about elements of payment reform
needed. Mr. Eisenhower answered that payment could be
provided to the hospital by a private insurance company,
Medicaid, or Medicare. He detailed that for over 50 years
it had been a fee-for-service. He stated that payment
reform could come in many forms. He used true capitation as
an example of an extreme payment reform that he did not
foresee the state seeing in the next few years. Clearly in
payment reform models, the fee-for-service would be
shifting or adding fees for services the hospital was
providing that it was not currently paid for. For example,
the hospital was not currently paid for transitional care;
there was no fee structure that enabled the hospital to
bill for the service.
Vice-Chair Saddler asked for verification that payment
reform would be separate from Medicaid expansion. Mr.
Eisenhower replied that it was possible.
9:21:04 AM
Vice-Chair Saddler referred to the hospital's $3.1 million
grant for three years. He asked how much capital would be
needed for the facility. Mr. Eisenhower replied that
PeaceHealth would need approximately $700,000 per year to
implement all of the population health benefits. He
explained that PeaceHealth had received more than the
$700,000 because a piece of the project was to track the
data and conduct the research; most facilities would not
need that extra layer.
Vice-Chair Saddler asked if it would be fair to divide the
$700,000 by the hospital's 1,200 patients to determine the
cost per patient. Mr. Eisenhower replied in the negative.
He detailed that it was only one piece of what the hospital
was doing. He could provide the information. The
transitional care management piece represented in the
presentation was only one facet of the broader work being
done.
Vice-Chair Saddler appreciated seeing what care
coordination and cost containment could be. He also
understood that the items were exclusive of Medicaid
expansion. Mr. Eisenhower agreed.
Co-Chair Thompson referred to discussion that Alaska was
the only state that had no medical provider tax. He asked
for comment. Mr. Eisenhower replied that the topic was out
of his expertise.
9:23:16 AM
Co-Chair Thompson noted that the following presenters were
working on a coordinated care project in Kenai.
RICK DAVIS, CEO, CENTRAL PENINSULA HOSPITAL (CPH), KENAI,
read from a prepared statement:
Central Peninsula Hospital is a 49-bed acute care
hospital in Soldotna. It is owned by the Kenai
Peninsula Borough and leased to a nonprofit board CPGH
Inc. I'm testifying today in support of Medicaid
reform and Medicaid expansion. In addition I'm going
to cover a demonstration project that we've been
working on that could help put Medicaid on a
predictable and sustainable glide path. Reform is
necessary for Alaska and expansion is necessary for
those Alaskans who can't afford coverage. When I talk
about reform I'm really talking about both delivery
and payment reform combined. Because CPGH is a
standalone community hospital, we must figure out a
glide path on our own. There isn't a big health system
behind us or a corporate swat team to call in to help
us navigate the rapidly changing healthcare
environment.
Some of you on the committee may have hospitals in
your districts that operate under the same
circumstances and pressure. As a result, we are left
to our own devices to survive the ongoing
transformation while continuing to provide those high
quality services that make sense for our populations
we serve. The process and timeline for us to change
and how we deliver and pay for care has now been
accelerated due to the current fiscal climate we find
in Alaska today. For our part CPH began developing a
pilot demonstration over a year ago for the Medicaid
population on the peninsula. The demonstration is a
managed care plan model that is risk baring, locally
governed provider network that we call a community
care organization or CCO for short. It would provide
all Medicaid beneficiaries with physical health
services and potentially behavioral health and dental
services in one benefit package. The CCO would be paid
under a single global budget for these services that
can only grow at a fixed rate per year. That stability
should be attractive from a state budget architect's
standpoint as it eliminates the peaks and valleys that
occur from year to year with the budget.
The CCO would be held accountable by the state to meet
performance metrics and quality values that align with
industry standards, new systems of governments, and
payment incentives that reward improved health
outcomes. Healthcare in Alaska is fragmented and it
lacks coordination and efficiency, which reduces
quality and increases unnecessary care. Currently
Alaska does not utilize managed care organizations or
managed health plans, but I understand there is
language in nearly every bill the legislature is
considering that provides for elements of the Medicaid
population to be enrolled in a managed health plan.
I support making this necessary step. We must begin
structural payment reform in Alaska now because it's
clear to me that this will be the next stop in the
road to reform. We're talking about global payment as
a payment reform mechanism here.
I view our CCO as the step beyond payment reform. My
belief is simply based on the funding structure and
risk baring nature of the program. More importantly
providers will no longer be paid for treating illness,
but instead for a highly coordinated system that
prevents illness and the high costs associated with
it.
9:27:55 AM
Mr. Davis continued reading a prepared statement:
As a hospital administrator I see things almost every
day which do not make much sense with regard to
patient care. The reason for this is because of the
way providers are reimbursed or to take it a step
further, the way incentives in our business are
misaligned. An example, a terminally ill person who
has managed to stay at home until their condition or
pain has deteriorated to a point that their family
could no longer provide the level of care necessary to
manage their loved one's pain. What happens next for
that patient? Probably many of you are thinking the
next logical step would be hospice care. That would
seem to make the most sense, but in our community you
won't find a robust hospice program. We have a
volunteer hospice program that does their best loaning
out equipment providing some home health visits with
the limited donations that they currently receive. But
most patients still come to the hospital for those
final days of their life. As a hospital, we're not
incentivized to provide home hospice care simply
because we're not paid for it. But I would like the
flexibility to do that. So what happens instead? The
patient's admitted to the hospital where they're most
likely to spend their last days receiving care, but in
the wrong high-cost environment.
Under the CCO model a global budget would allow the
organization flexibility to develop a more robust
hospice program that would provide this pain
management, palliative care, and respite services for
the family in a less expensive home environment.
Vice-Chair Saddler asked for a definition of the term
global payment. Mr. Davis replied that it could be called
capitation, per diem, or other; it was a mechanism of
payment. For example, on the Kenai Peninsula Borough there
had been a given number of Medicaid beneficiaries who paid
a given amount for service. The concept would be to present
a global budget for the population for the following year,
capped at a certain level; it would then be the
organization's responsibility to manage the care of the
given population under the defined global budget. He
believed it had to be done through a coordinated effort
between the physicians, hospitals, post-acute care,
insurance, and other.
Vice-Chair Saddler surmised that it [global payment] looked
at history to determine how much it cost to provide care
for a population and then limiting the organization to the
historical average to eliminate outliers.
9:31:44 AM
Mr. Davis continued to read a statement:
I would like for us to have the flexibility to be able
to put these care models in place, but if we do divert
our current resources to non-paying services it
jeopardizes our other services that we do provide for
our residents. It sounds ridiculous because it is. We
need to restructure our payment system so that we can
do what is best for the patient at a sustainable cost.
The demonstration project we're building would allow
us to do that. You may be wondering what the
coordinated care organization looks like. It's a model
based on a clinically integrated care and population
health management model. It includes the hospital
employed and independent primary care physicians,
behavioral health providers, specialists, and an
insurer. And they all work together instead of against
each other, which is kind of the way our current
system is built. This structure requires a great deal
of frontend work to bring the stakeholders together,
agree on a payment structure within the organization,
and we would need to form a network, a shared savings
distribution program, and develop quality targets and
metrics for accountability.
We're currently in the process of analyzing our
current Medicaid population to better understand our
needs. Under traditional managed care health plans the
system separates physical health, behavioral, and
other types of care. That makes things more difficult
for the patients and providers and more expensive for
the state. A CCO would have the flexibility to support
new models of care that are patient centered and team
focused, and reduce health disparities.
I'm not guaranteeing we can provide all of these
benefits together just yet. We're doing that
assessment now. We believe a CCO would be better able
to coordinate services and also focus on prevention,
chronic illness management, and person-centered care.
We would have the flexibility within our budget to
provide services along with medical benefits with the
goal of making and meeting the triple aims of better
health, better care, and lower costs for the
population we serve. There's not a better time in
Alaska to consider implementing these models in
combination with authorizing Medicaid to expand.
Transforming newly eligible members into the managed
care delivery system and our global budget model would
help ensure sustainability in the state funding of the
expansion when that time comes.
Alaska should strongly consider moving into the care
coordination organization model to stabilize Medicaid
funding, prevent future reductions in Medicaid
coverage and benefits for Alaska's most vulnerable
constituents, and begin working towards providing the
preventative care needed for a healthier Alaska.
Mr. Davis relayed that there was an upfront cost to
developing a program like the one under discussion. The
organization had some employed physicians, but the majority
were independent. He communicated that integrating all of
the providers into a system was a substantial project with
associated costs. He explained if the project was
successful, reimbursement at the hospital would decrease.
For example, recently there had been nine psychiatric
patients. He emphasized that CPH was not a psychiatric
hospital and was not the best place for the care to occur.
Additionally, there had been a waiting room full of sick
and injured patients. He communicated that there was no
safety net system in the community to help the people
before they reached a point of suicidal tendency or other
that brought them to the emergency room. He elaborated that
the state paid the hospital for the very expensive care;
some of the patients ended up being admitted to the
hospital and others were helicoptered to the Alaska
Psychiatric Institute. He furthered that a global budget
would allow the hospital to begin putting hospice, home
health, and other services in place. Expanding Medicaid
would allow the hospital to fund the program. He stated
that without a grant, there had to be a revenue stream from
somewhere to help develop the innovations.
9:37:16 AM
Vice-Chair Saddler asked if CPH was the only hospital on
the Kenai Peninsula. Mr. Davis replied in the affirmative.
He elaborated that South Peninsula Hospital was
approximately 80 miles south in Homer. Central Peninsula
Hospital was a 49-bed facility; it received approximately
50 percent of its payment from Medicare/Medicaid, 35
percent commercial, 6 percent self-pay, and 7 or 8 percent
federal pay (Indian Health Services and the state
Department of Corrections).
Vice-Chair Saddler asked if there was a trend towards
consolidation. He heard Mr. Davis saying that if the
providers and follow up could all be coordinated there
would be more control over the system and costs would be
reduced. He wondered if it was the long-term trend in
healthcare. Mr. Davis was looking at integration rather
than consolidation moving forward. For instance, the
contracts the hospital was working on for participation in
the CCO involved transparency of data and sharing of
electronic health information between all of the CCO
members. Part of the problem with the current system was
the absence of primary care-centered case management; a
patient could visit the ER and go see a specialist, but was
lost outside of the system. The clinically integrated
coordinated care model was based on patient-centered
primary care medical homes; the primary care medical home
model was where the coordination began. He furthered that
there was access to outcomes data from specialists, the
organization knew where the good care was found and was
able to keep them within the system to keep sight of their
healthcare.
Vice-Chair Saddler could see the clear benefits. He asked
about physicians and healthcare providers who were not part
of the CCO. Mr. Davis answered that the goal was to better
coordinate the care. He expounded that if a physician chose
to not participate in the network, it did not exclude them
from being part of a patient's care.
Vice-Chair Saddler remarked that "resistance is not
futile." Mr. Davis agreed. He explained that a patient
would be referred to a physician who would provide the best
care (whether they were inside or outside the network). He
continued that ideally there would be better access to
outcomes data for someone in the network because they had
already agreed to share the data and meet certain outcomes
criteria. The goal would be to have everyone involved with
more data transparency.
Vice-Chair Saddler understood that CPH supported Medicaid
expansion. He wondered if the CCO was dependent on Medicaid
expansion.
9:41:26 AM
Mr. Davis replied that the CCO was dependent on Medicaid
expansion.
Vice-Chair Saddler asked for verification that the CCO
could not currently be accomplished. Mr. Davis replied in
the negative. He detailed that the hospital could not
afford the upfront cost of developing the program without
Medicaid expansion. He explained that if the project was
successful its ER volumes would drop. He shared that
recently the hospital had 7 patients at one time who had
been over the age of 87. He relayed that the patients would
probably have been better served at home through hospice or
a palliative care program, but because the community did
not have the service, the patients had come to the hospital
for their final days. He remarked that the hospital was not
the best place to go for a lot of the individuals; however,
there was currently no alternative. He communicated that
there was a cost associated with developing the program.
The hospital's goal was to help fund some of the post-acute
care and pre-acute care programs for the psychiatric
patients. He noted that PeaceHealth had received a $3.1
million grant to get its feet on the ground, but CPH did
not have any grants available to help.
Vice-Chair Saddler did not see how the reforms the hospital
wanted to accomplish were dependent on Medicaid expansion.
He believed they were money dependent.
Mr. Davis replied that it was the uncompensated care that
would become eligible for Medicaid expansion that would
backfill the holes in the hospital's revenue stream. He
furthered that as the Medicaid ER population dropped due to
improved coordination of care, the hospital would be able
to replace the patients with newly covered Medicaid
expansion patients.
Vice-Chair Saddler commented that Medicaid expansion was
one way to provide the hospital with the money it needed.
9:44:10 AM
Representative Guttenberg thought CPH may be the largest
unaffiliated hospital in the state. He mentioned the
Fairbanks and Ketchikan hospitals that were a part of a
larger system. He remarked that CPH had problems that
others did not have. He wondered how easy it would be to
change the culture inside the hospital. He wondered if
change of culture inside the hospital was governed by the
way the hospital managed care and assigned doctors, nurses,
and physician's assistants. He wondered if it was difficult
to align people with the different missions and whether
there was an additional cost.
Mr. Davis answered that it was difficult to change the
culture within an organization. He did not believe the
model's focus was about changing the culture within an
organization because doctors were trained to perform
procedures to heal people and nurses were there to care for
people. The model pertained more to the management of
population health in the community that was not currently
taking place. The incentives were for everyone to do what
they were trained to do (i.e. procedures, visits, or
other). He explained that a global budget for population
health management incentivized the cultural shift to a
clinically integrated network coordinated care-type model
where people became incentivized to provide preventative
care, psychiatric safety net care, or to coordinate with
the appropriate caregiver (as opposed to a person trying to
do it all themselves because of payment incentive). He
added that value-based purchasing was a large component of
the overall picture.
Representative Guttenberg asked for detail on value-based
purchasing. Mr. Davis replied that value-based purchasing
meant being paid for outcomes as opposed to procedures.
Currently hospitals were incentivized do more MRIs,
procedures, and volume. He furthered that the model would
incentivize the hospital to provide valuable care instead
of just more care.
Representative Guttenberg shared that his most recent
experience with hospice had been dramatically different
than the previous experience. He addressed what had
changed. He explained that the hospice culture had changed
in the Fairbanks medical community. He elaborated that one
doctor had taken the operation of the whole program under
his wing. He observed that hospitals were not getting fees
to deliver an adequate program such as hospice. He asked
for further detail.
Mr. Davis answered there was no payment incentive for the
scenario described by Representative Guttenberg. He
referred back to the elderly patients who had been in the
hospital recently; some of the patients would have been
served better and more cost-effectively at home. The global
payment model would provide incentive for the hospital to
put a more robust hospice program in place to help keep
similar patients at home. He furthered that the global
payment would enable the hospital to prepare a hospice
program more cost-effectively. He summarized that under a
global payment model the hospital would be incentivized to
develop a hospice program, whereas under a fee-for-service
model it was incentivized to admit them and to bill
Medicare.
9:49:53 AM
Representative Guttenberg asked for verification that
Medicaid expansion would be necessary for the hospital to
make the changes described. Mr. Davis replied that the
hospital could make the changes currently if it chose to
invest significant funds into a program that would bring it
no reimbursement. However, CPH was community owned and he
did not believe the community would support the idea.
Co-Chair Thompson noted that Representative Dan Ortiz was
present in the committee room.
Vice-Chair Saddler asked how much it would cost to make the
changes Mr. Davis had described. Mr. Davis answered that he
did not currently have a dollar estimate. He explained that
the real cost for the hospital would be in reduced services
it was providing for the current Medicaid population (i.e.
services provided when individuals inappropriately used the
high-cost emergency room). He reasoned that the development
of the network, legal costs, manpower, and consulting costs
would be expensive. He relayed that the hospital was
working with the Rural Policy Research Institute, under the
University of Ohio [correction: University of Iowa]; the
institute had received federal grant funds for rural
innovative healthcare model studies. He elaborated that the
institute was working with CPH along with four other
hospitals nationwide to help the entities come to terms
with how to establish making the changes discussed. He
reiterated that CPH was a standalone entity; it did not
have the manpower to make the changes on its own. He
relayed that there would be quite an expense going into the
undertaking.
Vice-Chair Saddler appreciated the complexity of the
challenge, but did not know if some of the costs described
by Mr. Davis to achieve cost reductions had been included
in the public discussion about what Medicaid expansion
would bring. He asked if the Rural Policy Research
Institute was housed under the University of Ohio. Mr.
Davis corrected his earlier statement and relayed that the
institute was housed under the University of Iowa.
Co-Chair Thompson referred to an earlier statement by
Representative Guttenberg about the Fairbank's hospital. He
stated that the Fairbanks hospital was privately owned; it
was operated by Bannister Health. He wondered if the CPH
management was leased to a large corporation. Mr. Davis
replied in the negative. He explained that CPH was managed
by an 11-member, local community board.
9:53:43 AM
Representative Edgmon stated that one of the bigger
criticisms of Medicaid expansion was the inability to find
Medicaid providers. He wondered if the issue would be a
challenge for CPH.
Mr. Davis answered that the savings pool associated with
the global payment model had built-in incentives to
compensate the primary care physicians at a level that was
slightly higher than at present. The increase would come
from shared savings achieved by a reduced volume of
Medicaid patients coming into the hospital and from better
coordination of specialty care services. He elaborated that
there was a risk pool associated with the payment structure
that was reallocated back to members with a higher
percentage going to primary care providers to incentivize
the primary care medical home model development. The
primary care providers then became the care coordinators
for the population and helped to steer patients to the
right care and the right place at the right time. The
organization had employed and non-employed primary care
physicians who were very interested in the project and had
been participating in the early stages of development. He
believed there would be adequate coverage in the region.
Representative Edgmon reasoned that the current
conversation was a business discussion. He elaborated CPH
was in the business of helping people and making sure they
get the necessary medical services. He stated that those in
support of Medicaid expansion often discussed the economic
multiplier effect it would have. He asked how the economic
multiplier effect would impact the Kenai Peninsula.
BRUCE RICHARDS, EXTERNAL AFFAIRS/MARKETING, CENTRAL
PENINSULA HOSPITAL, answered that there would be a
significant impact. There was impact when economic
expansion occurred; new physicians came to the hospital and
provided a service that had not been offered before. He
cited a new spine surgeon as an example. He continued that
there were significant jobs that followed a new service
line into the community (e.g. new nurses, assistants, and
other). He elaborated that sometimes individuals had to
come in from out-of-state to help a new surgeon with an
opening. He did not know the exact numbers, but the
economic multiplier was significant. He noted it was
important to keep in mind that the economic multiplier was
not always the main objective; the goal was to get people
covered with the right care in the right place for a
reasonable cost. He remarked on the complexity of making
the improvements. He highlighted that the movement away
from a fee-for-service system to a system based on value
and quality where people were held to measurements and
outcomes. He concluded that there would be positive
economic impacts as a result of the changes.
Representative Edgmon referred to prior testimony from the
commissioner of Department of Health and Social Services
that the state was looking at $1 billion in benefits over a
six-year period, including $146 million in FY 16 alone and
an additional 4,000 jobs scattered around the state. He
noted that the statistics were all on a macro level; he did
not have detail on what it would mean to various regions of
the state. He stated that the discussion was about
economics; better economics provided better services, saved
money, and made people healthier. He thought it was worthy
for the hospital to have stronger numbers to substantiate
that better benefits would come to the region from Medicaid
expansion.
10:00:12 AM
Representative Wilson wondered if Medicaid was being done
in the right direction. She remarked that under the pay-as-
you-go system a patient had to come in [to a hospital or
other] before someone [the hospital or other] got paid. She
discussed that there was no incentive to provide wellness
care because it did not bring in any money. She wondered if
it was possible to change the way the Medicaid system
worked to include preventative services and reduce costs.
She surmised that grants were pushing hospitals in the
direction of making the changes; however, if the grants
were successful there would be no money to replace them in
the future.
Mr. Davis replied that CPH had not received any grants.
From CPH's perspective, the Medicaid expansion population
would help provide the needed funding. He relayed that the
global payment model would incentivize CPH to provide the
preventative care programs. He had looked at the Eastern
Oregon coordinated care organization; one of the facets of
its program was a coordinated care model. The program
targeted the high utilizers of the ER and offered them the
ability to participate in a coordinated care model (similar
to the project at PeaceHealth in Ketchikan) that taught the
individuals to learn better habits or steered them towards
mental health services. He stated that the model would
incentivize CPH to provide many kinds of wellness and
preventative programs because of a global budget payment,
whereas, at present the hospital was paid when individuals
inappropriately came to the ER.
10:02:57 AM
Representative Wilson remarked that Medicaid expansion
would offer a different payment method. She thought Mr.
Davis was saying that expansion would incentivize hospitals
to offer [preventative or wellness] programs that were not
possible under the current Medicaid system.
Mr. Richards replied that the demonstration project was
included in the legislation in order to utilize and try the
new payment system. He asked for clarification on the
question.
Representative Wilson restated her question, which did not
assume the passage of the legislation. She wondered if the
model used in Ketchikan could be used under the current
Medicaid system. Mr. Richards responded that there was not
currently the payment system in place for hospitals to get
paid for the work.
10:04:26 AM
Representative Wilson wondered if one year would be
sufficient to know whether the model was successful. She
was interested to learn how to take care of the current
Medicaid recipients before expanding to a larger
population. Mr. Davis replied that any global payment model
would help the medical system achieve better care for
patients. Expansion of the program would be partially
determined by the associated revenue or revenue that was
lost. He explained that there would be some benefit to a
global payment model for the current Medicaid population;
however, uncompensated care costs would continue and the
population benefitting would be smaller. He did not know
how long it would take to implement the model, but he hoped
it would not take long. He added that the hospital was
working hard on the project.
Representative Wilson did not have a good understanding
about whether some of the issues were related to how the
system was worked and how much flexibility there was to
change the current system in order to increase cost savings
to hospitals and lower costs for payers. She believed there
was opportunity the state could utilize that did not relate
to Medicaid expansion.
Co-Chair Thompson noted that the committee would end at
10:20 a.m. He relayed that the committee would meet at 9:00
a.m. the following day to continue the conversation.
Vice-Chair Saddler referred to testimony given by Mr.
Eisenhower and Mr. Davis about the complexity of setting up
coordination and other. He asked if the bill would enable
the hospital to take advantage of coordination at the start
of the upcoming fiscal year in July. Mr. Davis answered
that CPH was currently in the beginning stages of setting
up the program. He did not know where the precise start and
finish lines would be.
Vice-Chair Saddler remarked that Mr. Davis had testified
that the project could not be done without Medicaid
expansion. He asked for verification that CPH was working
on the project anyway. Mr. Davis answered that the hospital
was working on a coordinated care organization. He
explained that the model would be much more robust and
better if an estimated 4,100 people below 100 percent of
the federal poverty level with no coverage in the region
could be incorporated. He elaborated that CPH wanted to
achieve population health management; it could not do a
good job without including the 4,100 individuals in the
Medicaid population.
Vice-Chair Saddler stated that Mr. Davis had testified that
the hospital could not do the project without Medicaid
expansion; however, he observed that CPH was moving forward
without it. He asked for clarification.
Mr. Davis replied that CPH was working on healthcare reform
in some form or other. The system he had described earlier
would not be possible without Medicaid expansion to help
fund it. He furthered that the hospital would try to do
something regardless of the passage of a bill. He explained
that what the changes would look like and the effectiveness
of the hospital's efforts would depend on whether Medicaid
expansion and reform or Medicaid reform were enacted.
Vice-Chair Saddler asked for clarification that the
organization was going forward with the CCO currently
without a commitment for Medicaid expansion. Mr. Davis
answered that the hospital was exploring the idea, but it
could end at any time.
Vice-Chair Saddler asked if the establishment of the CCO
was conditional. Mr. Richards answered that CPH had started
designing the program in anticipation of Medicaid
expansion, which had been passed under the Affordable Care
Act.
Vice-Chair Saddler asked if the program would be continued
if the bill did not pass. Mr. Richards did not know;
however, the demonstration project in the bill was based on
Medicaid expansion.
Vice-Chair Saddler asked how long it would take to continue
setting the project up. Mr. Richards answered that it would
probably be sometime in the fall, but he did not want to
guess at a precise timeline.
Vice-Chair Saddler asked if the timeline was 6 months, 2
years, or 5 years. Mr. Richards replied that the hospital
would want to begin sooner. He thought it could potentially
be in the next 12 months.
10:12:09 AM
Representative Gara spoke to the testimony that with
Medicaid expansion the hospital could provide increased
preventative care, decrease costs, divert people from the
ER, and increase the economic multiplier in the region. He
wondered if the same savings and other benefits could be
achieved without Medicaid expansion.
Mr. Davis replied that the hospital would have to spend
significant money in order to lose money to improve the
care of its community. Without Medicaid expansion CPH would
be asked to spend money to lose money on the Medicaid only
population. He did not know where it ended up and surmised
that it was only possible to spend money to lose money for
so long. He believed the Medicaid expansion population
would help backfill the beds in the hospital. Currently, if
the hospital was successful it would save the state money
on the current Medicaid population, but the money came out
of the pockets of the community.
Vice-Chair Saddler about disproportionate share hospital
payments at CPH. He wondered how much the hospital received
in a year. Mr. Richards replied that CPH did not receive
disproportionate share hospital funding. He believed the
total coming into the state was about $22 million. He
approximated that the state's General Fund match was about
half; the other half was returned to the federal
government.
Vice-Chair Saddler asked about the amount of uncompensated
care the hospital provided through its emergency program.
Mr. Davis answered that in 2014 CPH had $20 million in bad
debt and charity care.
Co-Chair Thompson thanked the testifiers for their
presentations. He addressed the agenda for subsequent
meetings.
ADJOURNMENT
10:16:29 AM
The meeting was adjourned at 10:16 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HAC Resolution-in-Support-of-Medicaid-Expansion.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |
| HB 148 Eisenhower Presentation HFIN 4 9 15.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |
| Log 3028 Response.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |
| Mandatory Optional Services Summary 2011-2014.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |
| PCG Document 1.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |
| PCG Document 2.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |
| HB 148 DHSS PCG Document 2.pdf |
HFIN 4/9/2015 8:30:00 AM |
HB 148 |