Legislature(2019 - 2020)ADAMS ROOM 519

05/02/2019 01:30 PM FINANCE

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Audio Topic
01:45:37 PM Start
01:46:08 PM HB96
03:38:23 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:45 pm --
+= HB 49 CRIMES; SENTENCING;MENT. ILLNESS;EVIDENCE TELECONFERENCED
<Bill Hearing Canceled>
+= HB 145 PROPERTY CRIME; MOTOR VEHICLE THEFT TOOLS TELECONFERENCED
<Bill Hearing Canceled>
<Pending Referral>
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 96 PIONEERS' HOME AND VETERANS' HOME RATES TELECONFERENCED
Heard & Held
Fiscal Note Discussion
                   HOUSE FINANCE COMMITTEE                                                                                      
                         May 2, 2019                                                                                            
                          1:45 p.m.                                                                                             
                                                                                                                                
1:45:37 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Wilson called the House Finance Committee meeting                                                                      
to order at 1:45 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tammie Wilson, Co-Chair                                                                                          
Representative Jennifer Johnston, Vice-Chair                                                                                    
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Zach Fields, Sponsor; Tristan Walsh, Staff,                                                                      
Representative   Zach   Fields;    David   Teal,   Director,                                                                    
Legislative Finance Division.                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Clinton Lasley, Director, Division of Alaska Pioneer Homes,                                                                     
Department of Health and Social Services.                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 96     PIONEERS' HOME AND VETERANS' HOME RATES                                                                               
                                                                                                                                
          HB 96 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 96                                                                                                             
                                                                                                                                
          "An Act relating to Alaska Pioneers' Home and                                                                         
        Alaska Veterans' Home rates and services."                                                                              
                                                                                                                                
1:46:08 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson reported  that the  committee would  review                                                                    
the fiscal notes.                                                                                                               
                                                                                                                                
CLINTON LASLEY, DIRECTOR, DIVISION  OF ALASKA PIONEER HOMES,                                                                    
DEPARTMENT    OF   HEALTH    AND   SOCIAL    SERVICES   (via                                                                    
teleconference), reviewed  the new  fiscal impact  note from                                                                    
the Division  of Alaska Pioneer Homes,  Department of Health                                                                    
and  Social Services.  He  relayed that  the  total cost  of                                                                    
operating the homes was $62  million. The administration was                                                                    
currently proposing  to return the operation  of the Pioneer                                                                    
Homes into a need based  system versus the present manner of                                                                    
appropriating  $33 million  in state  funding regardless  of                                                                    
the  residents  ability  to pay.  The fiscal  note reflected                                                                    
the governor's proposal.  He pointed to the  $1.5 million in                                                                    
federal  receipts  from  the Veteran's  Administration  that                                                                    
were  for the  Veteran's Home  in Palmer.  In addition,  the                                                                    
$26,052.2 million  (with the  reduction of  $5,552.2 million                                                                    
in the current  fiscal note) from program  receipts were the                                                                    
funds collected  from the elder  residents or  their private                                                                    
insurance.  The   interagency  receipts  amounting   to  $32                                                                    
million, reduced by   $7,751.7 in HB 96  were typically from                                                                    
the Medicaid  waiver program. He  elaborated that  under the                                                                    
governor's  proposal a  separate  component  would be  added                                                                    
under the Medicaid Waiver, called  the Pioneer Homes Payment                                                                    
Assistance component.  The Pioneer Homes  Payment Assistance                                                                    
funding  would supplement  the interagency  receipts on  the                                                                    
current fiscal  note for individuals without  the ability to                                                                    
pay. Finally,  the $3,083.7 million in  Statutory Designated                                                                    
Funds  were receipts  that were  received  for pharmacy.  He                                                                    
delineated that  when the administration decided  to propose                                                                    
rates  equivalent to  the cost  of providing  services, they                                                                    
examined  a  report  done  by  Agnew  Beck  Consulting.  The                                                                    
division  considered the  current  expected spend  in FY  20                                                                    
based on the expected 95  percent occupancy which equated to                                                                    
a total  population of 471  elders. He concluded  that based                                                                    
on  the level  of  care, population,  and  using their  rate                                                                    
methodology, HB 96  would leave the homes  $13 million short                                                                    
from what  the homes  would be able  to earn.  He referenced                                                                    
public  testimony  earlier  in  the  week  from  a  resident                                                                    
stating that the  proposed rate increase would  cost him $78                                                                    
thousand. He indicated that the  $78 thousand was the amount                                                                    
the state  was currently  subsidizing which amounted  to $13                                                                    
thousand each month at the  highest level of care. Under the                                                                    
bill  the maximum  the state  could charge  for the  highest                                                                    
level of  care left a   $3,000  gap. The funding  gaps would                                                                    
add  up  to  $13  million  in GF  (General  Funds)  and  was                                                                    
necessary to fund the Pioneer Homes.                                                                                            
                                                                                                                                
Co-Chair  Wilson  asked  whether  there  was  a  spreadsheet                                                                    
available  to provide  detail. Mr.  Lasley answered  that he                                                                    
had  provided  a  spreadsheet  to  the  Legislative  Finance                                                                    
Division (LFD). He offered to provide it.                                                                                       
                                                                                                                                
1:52:06 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson referenced  the  fiscal  note and  surmised                                                                    
that  the  governor  included   $25  million  for  residents                                                                    
needing payment assistance and no  other general funds (GF).                                                                    
Mr. Lasley  answered in the  affirmative. He recapped   that                                                                    
the governor's proposal  removed $33 million GF  and added a                                                                    
new  need-based payment  assistance component  appropriating                                                                    
$25 million.                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston asked  how long  the Pioneer  Home been                                                                    
working on restructuring its  finances. Mr. Lasley responded                                                                    
that the  division had started  looking at  restructuring in                                                                    
the  current  year.  Since 2015,  the  legislature  and  the                                                                    
governor had  asked the division  to look for other  ways of                                                                    
earning  revenue. The  division gradually  transitioned from                                                                    
GF to other funding  sources, primarily Medicaid and program                                                                    
receipts.  He pointed  to the  challenges  of providing  the                                                                    
same service with less GF and  offer the same subsidy to all                                                                    
residents   regardless   of  income.   Vice-Chair   Johnston                                                                    
recalled spending  time with the previous  division director                                                                    
of  the  Pioneer Homes  who  had  seemed  to be  working  on                                                                    
something similar.  She asked whether  the current  plan had                                                                    
been  worked on  for some  time. Mr.  Lasley replied  in the                                                                    
affirmative.  He  detailed that  the  agency  had asked  the                                                                    
Alaska Mental Health Trust Authority  (AMHTA) to help fund a                                                                    
study to  determine how  to best utilize  and fund  the home                                                                    
for  the  needs  of  the   community  and  increasing  aging                                                                    
population.  He  noted  that  the  study  was  published  in                                                                    
November  2018. The  division worked  on the  issue for  one                                                                    
year and was implementing some of the findings.                                                                                 
                                                                                                                                
Vice-Chair Johnston  pointed out  that some of  the concerns                                                                    
was related  to "the  mix of the  population in  the homes."                                                                    
She  understood that  "some mission  creep" had  occurred in                                                                    
running  the  homes due  to  an  older population  currently                                                                    
residing in  the homes  compared to  the past's  more active                                                                    
population.  She shared  a concern  that if  the rates  were                                                                    
raised too high,  it could penalize some of  the more active                                                                    
residents living with  a spouse who required  a higher level                                                                    
of  service  and were  paying  via  insurance. She  pondered                                                                    
whether raising  rates resulted in  the state  losing money;                                                                    
thus,  the  ability  to subsidize  the  residents.  She  was                                                                    
trying to  get a sense  whether there were  enough residents                                                                    
paying their own  way at a lower level of  care that offsets                                                                    
the  higher   costs  for  high   level  care.   She  thought                                                                    
statistics  should  reflect  the  change and  costs  of  the                                                                    
home's population.                                                                                                              
                                                                                                                                
1:58:02 PM                                                                                                                    
                                                                                                                                
Mr. Lasley responded  that currently over 50  percent of the                                                                    
elders  were in  a higher  level of  care requiring  24 hour                                                                    
assistance due  to dementia and  other issues  and currently                                                                    
10 percent at  the lowest level. He  restated that currently                                                                    
seniors  were not  required  to prove  how  much they  could                                                                    
afford  to  pay  prior  to  moving in.  Once  a  person  was                                                                    
admitted to  the home, the  amount a resident could  pay was                                                                    
determined and  the remainder was subsidized.  He emphasized                                                                    
that the proposal was requiring  residents "that can pay, to                                                                    
pay  what they  can."  The state  was currently  subsidizing                                                                    
about half  of the  home's service  costs. Total  costs were                                                                    
over  $60  million, and  the  state  subsidized roughly  $33                                                                    
million. Vice-Chair  Johnston asked  what percentage  of the                                                                    
population paid on their own  and what percentage was paying                                                                    
strictly through Medicaid and  Medicare. Mr. Lasley answered                                                                    
that  currently approximately  50 percent  received a  state                                                                    
subsidy.                                                                                                                        
                                                                                                                                
Vice-Chair Ortiz  asked whether the governor's  proposal had                                                                    
potential  to  drive  out a  population  of  current  payers                                                                    
covering  at  least  some  of  their  costs  leading  to  an                                                                    
increased population without the  ability to pay. Mr. Lasley                                                                    
replied that  anything was  possible. He  noted that  if the                                                                    
rates went into effect, they would  be closer to the cost in                                                                    
the private  sector. He  relayed that  every time  the rates                                                                    
were  increased some  residents left  the Pioneer  Homes and                                                                    
chose to reside in a private facility.                                                                                          
                                                                                                                                
2:02:42 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson asked  for the  difference  between when  a                                                                    
person  needed   assisted  living  versus  a   nursing  home                                                                    
setting. Mr.  Lasley replied that  the Pioneer  Home allowed                                                                    
and elder to age in place  until the end of life. Typically,                                                                    
many  assisted living  facilities asked  residents to  leave                                                                    
when they required  higher levels of care and  the next step                                                                    
would  be a  nursing  home. He  indicated  that the  Pioneer                                                                    
Homes  unique  model was a  cost saver to the  state because                                                                    
the nursing  home care was  reimbursed at a higher  rate. He                                                                    
noted that it was rare that  high care seniors were asked to                                                                    
leave the home due to care issues.                                                                                              
                                                                                                                                
Co-Chair Wilson  wondered whether  federal law  dictated the                                                                    
type of home  an elder resided in. Mr.  Lasley answered that                                                                    
the level of  care was based on medical need.  The homes had                                                                    
nurses  on  staff  but  did   not  provide  skilled  nursing                                                                    
services,  which  would  require  a resident  to  leave  the                                                                    
Pioneer  Homes. Co-Chair  Wilson  recalled  viewing a  chart                                                                    
showing the  number of  care levels and  the amount  of beds                                                                    
associated with  the levels.  She asked  if the  homes still                                                                    
measured beds  in the  same way.  Mr. Lasley  responded that                                                                    
the homes were  staffed based on the level of  care that was                                                                    
anticipated  in the  community except  for the  Juneau home,                                                                    
which  solely  accepted people  via  their  position on  the                                                                    
waitlist. The  division structured their homes  based on the                                                                    
needs  of  the individuals  on  the  waitlist and  were  not                                                                    
holding beds according to care  level. He offered that prior                                                                    
to  his  tenure  many  beds  were  left  vacant  while  many                                                                    
individuals  remained on  the waitlist.  He determined  that                                                                    
the system was unacceptable, and  he instituted a goal of 95                                                                    
percent  occupancy; the  industry standard.  Co-Chair Wilson                                                                    
asked for clarification that  the state currently subsidized                                                                    
the  Pioneer  Homes  and  residency was  not  based  on  the                                                                    
ability to  pay. Mr.  Lasley elaborated  that once  a person                                                                    
was transitioned  to an active  list, which meant  they were                                                                    
ready  to  move  in  within  30  days,  was  the  point  the                                                                    
individual's finances and ability  to pay was determined. He                                                                    
cited AS 37.55 that clearly  outlined in statute that elders                                                                    
living  in Alaska  where not  accepted or  evicted based  on                                                                    
their ability to pay.                                                                                                           
                                                                                                                                
2:08:32 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson clarified  that she  was not  attempting to                                                                    
evict  any seniors  from the  Pioneer Homes.  She referenced                                                                    
Mr. Lasley's  testimony stating  the state  subsidized every                                                                    
resident at  the same level  regardless of their  ability to                                                                    
pay and asked  for clarity. Mr. Lasley  responded that under                                                                    
the current system the state  was subsidizing every resident                                                                    
at the same  level because the rates  were artificially low.                                                                    
He exemplified that  a current level 3  resident was charged                                                                    
$6,795. per month  but the true cost was  $13,333. The state                                                                    
subsidized  the  difference  in   cost,  regardless  of  the                                                                    
ability  to  pay.  Co-Chair Wilson  surmised  that  even  if                                                                    
someone could  pay the  $13,300, the level  had been  set so                                                                    
low  the costs  were  automatically  subsidized. Mr.  Lasley                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Vice-Chair Johnston  asked if a  sliding fee scale  had been                                                                    
considered.  Mr.  Lasley   answered  that  essentially,  the                                                                    
payment  assistance  program that  had  been  in effect  was                                                                    
based a sliding  fee scale. He used the top  level 3 rate of                                                                    
$13,333  as an  example; if  the  resident was  able to  pay                                                                    
$5,000  per month  the state  subsidized the  remainder. The                                                                    
sliding fee scale was based  on the resident's resources and                                                                    
monthly  income. Vice-Chair  Johnston asked  if the  current                                                                    
sliding fee schedule considered  insurance or other forms of                                                                    
payment.  Mr. Lasley  answered that  currently, the  payment                                                                    
assistance program was only subsidizing  against the rate of                                                                    
$6,795. He voiced  that the problem was that  the rates were                                                                    
set  artificially low  and it  was not  a regulatory  issue.                                                                    
Vice-Chair Johnston  surmised that  under the  proposal that                                                                    
established 5 levels  of care, the division  would still use                                                                    
the  same approach.  The  fiscal note  would  show what  the                                                                    
actual  costs were  because residents  would be  charged the                                                                    
full amount of their ability to  pay.  She asked whether she                                                                    
was correct.                                                                                                                    
                                                                                                                                
2:13:23 PM                                                                                                                    
                                                                                                                                
Mr. Lasley  replied that  under HB 96  the state  would fall                                                                    
$13  million short  because the  maximum allowable  rate was                                                                    
$10,000. However, the actual cost was $13,333.                                                                                  
                                                                                                                                
Co-Chair  Wilson wondered  why the  division would  not base                                                                    
the  rate   on  $13,333.   Mr.  Lasley  answered   that  the                                                                    
governor's  proposal under  the  current regulatory  package                                                                    
was to do  as stated and charge $13,333.  The division would                                                                    
charge the rate  based on the true cost of  services and the                                                                    
remainder would  be subsidized by  the state  in recognition                                                                    
of  the   statute  that  provided  the   payment  assistance                                                                    
program. The problem  was that the rates had been  so low it                                                                    
did not  reflect the true  cost of services. The  change was                                                                    
proposed  in  regulation and  was  currently  in the  public                                                                    
comment period. Co-Chair Wilson  wondered whether the elders                                                                    
understood the  payment system versus a  sliding scale based                                                                    
on the ability to pay. Mr.  Lasley answered that it had been                                                                    
very difficult  to communicate  the proposal.  He reiterated                                                                    
that the  division was not  doing anything  different except                                                                    
charging  the true  costs of  services. The  residents would                                                                    
still only  receive a  monthly bill  for the  portion deemed                                                                    
they could afford  to pay under the formula  set in statute.                                                                    
The system that  protected every elder that  allowed them to                                                                    
live and  stay in  the home regardless  of their  ability to                                                                    
pay remained  in place. Co-Chair  Wilson understood  why the                                                                    
residents were upset. She wondered  whether a general letter                                                                    
was  sent  to  residents  or a  letter  to  each  individual                                                                    
resident explaining  the rate increase and  detailing how it                                                                    
affected  their monthly  bill including  their subsidy.  Mr.                                                                    
Lasley replied  that he had  sent a blanket letter  to every                                                                    
resident  in October  that was  not  specific to  everyone's                                                                    
financial  situation.  He  maintained  that  he  lacked  the                                                                    
financial  information  of  residents  that  were  privately                                                                    
paying the  full advertised rate  and would need  to request                                                                    
financial information from each elder.                                                                                          
                                                                                                                                
2:18:24 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson did  not understand  how  the division  had                                                                    
communicated  a huge  rate increase  and did  not anticipate                                                                    
the anxious  reaction by residents.  She countered  that the                                                                    
division  had collected  the  necessary financial  paperwork                                                                    
and the  ability to  pay was known.  She suggested  that the                                                                    
division  wanted to  avoid the  work  of sending  individual                                                                    
letters.   She  thought   that   the   division  upset   the                                                                    
individuals in the home for no reason.                                                                                          
                                                                                                                                
Representative Josephson  ascertained that the  division was                                                                    
attempting  to maximize  the  payments  of residents'  other                                                                    
resources like  Medicaid benefits  or private  insurance and                                                                    
then subsidize  the remaining amount. Mr.  Lasley replied in                                                                    
the  affirmative and  added that  the goal  was to  create a                                                                    
true need  based system. He  furthered that  for individuals                                                                    
paying the  full rate, until  recently they had  never asked                                                                    
them  what  resources  they  had.  Representative  Josephson                                                                    
asked  about  the impact  on  the  self-paying resident,  He                                                                    
deduced that  the increase would reduce  their resources and                                                                    
leave  their  estate  diminished. Mr.  Lasley  affirmed  the                                                                    
statement. He  indicated that payment assistance  required a                                                                    
resident to use  their resources prior to  receiving a state                                                                    
subsidy, which was the same  with Medicaid. He conveyed that                                                                    
under current statute and  regulations, residents paying the                                                                    
advertised rate were exempted  from financial reporting. The                                                                    
proposal planned to maximize the  resident's revenue and the                                                                    
payment assistance would be a true need-based system.                                                                           
                                                                                                                                
2:22:33 PM                                                                                                                    
                                                                                                                                
Representative Josephson  asked how the division  would know                                                                    
what  it  could  capture  in the  maximization  effort.  Mr.                                                                    
Lasley replied  that presently, the division  was uncertain.                                                                    
He  shared  that  in  2017  the  division  began  requesting                                                                    
"simple" resource  information and  again in  November 2018.                                                                    
The division did  not know the amount  of additional revenue                                                                    
that would  be generated under  program receipts due  to the                                                                    
limited  data. Representative  Josephson concurred  with one                                                                    
of  the concerns  that had  been expressed  about increasing                                                                    
rates. He did not know how  much income could be replaced if                                                                    
people  decided  to look  at  the  private marketplace.  Mr.                                                                    
Lasley  agreed that  there  was no  way  of knowing  whether                                                                    
elders would  move to the  private marketplace or  remain in                                                                    
the  Pioneer Homes.  He referenced  the number  $5.7 million                                                                    
that  was   the  estimated  amount  of   additional  program                                                                    
receipts that would be generated  based on the limited data.                                                                    
Representative Josephson  asked that if the  figure was $5.7                                                                    
million, why  not raise the  rate to that level.  Mr. Lasley                                                                    
answered  that the  goal was  to  reflect the  true cost  of                                                                    
service in  the rates. He  noted that the division  had been                                                                    
asked to find ways to earn  more money in the past couple of                                                                    
legislative  sessions. The  effort  was to  be truthful  and                                                                    
honest about  the cost and  to return to a  true needs-based                                                                    
system.  The payment  assistance program  should operate  on                                                                    
need and not based on an arbitrary number.                                                                                      
                                                                                                                                
2:26:37 PM                                                                                                                    
                                                                                                                                
Representative Merrick  asked how to address  the problem of                                                                    
fraud. She exemplified the  individual who transferred their                                                                    
assets to a family member.  She wondered if the division had                                                                    
considered the  issue. Mr. Lasley answered  that the program                                                                    
required  a  three-year  lookback under  state  statute  and                                                                    
Medicaid  required  a   five-year  lookback.  Representative                                                                    
Merrick asked if it was a  lookback at income or assets. Mr.                                                                    
Lasley answered that it was  a review of both. The financial                                                                    
disclosure  required bank  statements, property,  other non-                                                                    
liquid assets, title searches, etc.                                                                                             
Co-Chair Wilson thought  the state may need  to increase the                                                                    
number of years in the review.                                                                                                  
                                                                                                                                
Co-Chair Wilson asked to hear from the sponsor.                                                                                 
                                                                                                                                
2:28:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ZACH FIELDS,  SPONSOR, reported  the purpose                                                                    
of the bill was to  honor the state's historic commitment to                                                                    
the Pioneer  Homes and  provide a  solid financial  base. He                                                                    
commented  that the  discussion centered  on a  disagreement                                                                    
regarding finding  the best economic policy  for the Pioneer                                                                    
Homes  versus a  competitive  environment.  His concern  was                                                                    
that "setting a  price point that was  impossibly high would                                                                    
scare  off paying  customers, adversely  impact the  pool of                                                                    
residents, and ultimately cost the  state money" He detailed                                                                    
that  he  had studied  economics  and  an artificially  high                                                                    
price point in  terms of the market and not  based on actual                                                                    
cost of  care could decrease the  home's revenue collection.                                                                    
He suggested hearing from LFD. His  goal was for the home to                                                                    
be as financially sound as possible for the next 100 years.                                                                     
                                                                                                                                
Co-Chair Wilson  asked exactly  what the  bill accomplished.                                                                    
Representative  Fields  replied  that the  bill  capped  the                                                                    
rates that  the department  could set.  He preferred  not to                                                                    
cap the  rates in statute  but given the  governor's current                                                                    
proposal,   he  worried   about   the  long-term   financial                                                                    
viability  of  the  Pioneer Homes.  In  addition,  the  bill                                                                    
allowed the Department of Health  and Social Services (DHSS)                                                                    
to  raise  rates  based  on  the  Social  Security  rate  of                                                                    
inflation to  better keep pace  with the increasing  cost of                                                                    
care. Co-Chair Wilson pointed to  Section 5(f) [page 3, line                                                                    
20] and  ask whether the  section was based on  the proposed                                                                    
five   tiers.   Representative   Fields  answered   in   the                                                                    
affirmative.  He  emphasized  that the  bill  supported  the                                                                    
recommendation  to go  from  three to  five  levels of  care                                                                    
based on  the Agnew Beck Report  and SB 74- Medicaid Reform;                                                                  
Telemedicine;   Drug  Database   [Chapter   25   SLA  16   -                                                                    
06/21/2016]  recommendations.  He   pointed  to  Section  5,                                                                    
subsection (f)(5) and  relayed that he did  not propose rate                                                                    
caps for  a category in  Tier 5 care for  complex behavioral                                                                    
health issues,  which was a separate  rate of reimbursement.                                                                    
He maintained  that it  was unnecessary to  cap the  Level 5                                                                    
rates  in terms  of keeping  the Pioneer  Homes competitive.                                                                    
Co-Chair Wilson surmised  that he did not  number the levels                                                                    
of care in  the bill but addressed the  levels by specifying                                                                    
the  rates and  care for  each level.  Representative Fields                                                                    
affirmed that  the levels of  care language  corresponded to                                                                    
the department's tiers.                                                                                                         
                                                                                                                                
2:31:51 PM                                                                                                                    
                                                                                                                                
Co-Chair Wilson  referred to  subsection (f)  (5) on  page 4                                                                    
and reasoned  that the subsection  corresponded to  level 5,                                                                    
the highest  level of care  and was not "setting  the level"                                                                    
in   statue.   Representative   Fields  responded   in   the                                                                    
affirmative. Co-Chair  Wilson pointed to subsection  (f) (6)                                                                    
and (7) and asked what the subsections corresponded to.                                                                         
                                                                                                                                
TRISTAN  WALSH,  STAFF,  REPRESENTATIVE ZACH  FIELDS,  cited                                                                    
page  4,  line  8  and  line  13,  and  explained  that  the                                                                    
provisions  reflected  payments  for respite  care  services                                                                    
that were  set in  regulation and not  in statute.  The bill                                                                    
would set the schedule in statute.                                                                                              
                                                                                                                                
Co-Chair Wilson  asked if  respite care  was available  in a                                                                    
person's home  versus the Pioneer  Homes. Mr.  Walsh replied                                                                    
that respite  care was  available in  the Pioneer  Homes. He                                                                    
deferred to  Mr. Lasley  to expound on  the extent  to which                                                                    
respite  care was  used. Co-Chair  Wilson  cited Section  5,                                                                    
Subsection (6) on page 4, lines  8 through 12 and Section 5,                                                                    
Subsection (7) on page 4,  lines 13 through 16. She inquired                                                                    
whether the respite rates were  paid in addition to the rate                                                                    
a resident  paid. Mr.  Lasley answered  in the  negative and                                                                    
expounded  that respite  care allowed  the  home to  provide                                                                    
temporary services for up to  14 days for an individual that                                                                    
needed to come  into a home, or for  a temporary replacement                                                                    
for a primary care provider that  took care of an elder in a                                                                    
Pioneer  Home. The  regulation allowed  them  to secure  the                                                                    
service  at  a  "good  daily rate."  Co-Chair  Wilson  asked                                                                    
whether  the following  provisions  were  reflective of  the                                                                    
actual cost. She cited the provisions as follows:                                                                               
                                                                                                                                
     (6) $70  a day  for services  provided in  a home  to a                                                                    
     recipient  who  requires   the  provision  of  housing,                                                                    
     meals,      emergency       assistance,      medication                                                                    
     administration,  health-related  services,  recreation,                                                                    
     and  extensive  assistance  with  activities  of  daily                                                                    
     living for  up to eight  hours a day between  6:00 a.m.                                                                    
     and  6:00 p.m.,  including meals  scheduled during  the                                                                    
     period the recipient is receiving the services;                                                                            
                                                                                                                                
     (7) $100  a day for room  and board provided in  a home                                                                    
     to a  recipient who requires the  provision of housing,                                                                    
     meals,      emergency       assistance,      medication                                                                    
     administration,  health-related  services,  recreation,                                                                    
     and  extensive  assistance  with  activities  of  daily                                                                    
     living  for 24  hours a  day for  up to  14 consecutive                                                                    
     days                                                                                                                       
                                                                                                                                
Mr. Lasley answered that the  subsections reflected the fees                                                                    
that were  currently in  statute but  were increased  in the                                                                    
new  regulation  package.  Co-Chair Wilson  asked  what  the                                                                    
rates were increased to.                                                                                                        
                                                                                                                                
2:35:00 PM                                                                                                                    
                                                                                                                                
Mr. Lasley answered  that the $70 rate would  change to $161                                                                    
and the respite service would change to $322.                                                                                   
                                                                                                                                
Representative  Merrick  asked if  the  home  had a  certain                                                                    
number  of  beds  allocated  to  respite  care.  Mr.  Lasley                                                                    
answered  in the  negative. He  elaborated that  the vacancy                                                                    
rate dictated the space available  to take in residents. The                                                                    
respite  service  was  rarely  utilized  but  he  wanted  to                                                                    
maintain the ability when necessary.                                                                                            
                                                                                                                                
Representative  Josephson recalled  hearing  that the  rates                                                                    
Representative  Fields  recommended  were  higher  than  the                                                                    
typical  adjustments for  inflation. He  asked for  clarity.                                                                    
Representative Fields  affirmed that  the rates in  the bill                                                                    
were a bit higher. He  indicated that based on testimony and                                                                    
the prior  committee process the  rates had  been increased.                                                                    
He would be supportive of  ratcheting the increase back down                                                                    
a  bit after  discussions with  LFD about  the economics  of                                                                    
revenue capture and  keeping the homes on  a sound financial                                                                    
footing.                                                                                                                        
                                                                                                                                
Co-Chair   Wilson  speculated   that  the   legislature  was                                                                    
disadvantaged   by  not   having   access   to  the   actual                                                                    
financials.                                                                                                                     
                                                                                                                                
Vice-Chair  Ortiz  asked   if  most  of  the   homes  had  a                                                                    
substantial waiting list. Mr.  Lasley replied that there was                                                                    
a   waitlist  for   every  home.   He  furthered   that  200                                                                    
individuals  were on  the waitlist  systemwide. The  vacancy                                                                    
rate of 95  percent occupancy ensured that  there was always                                                                    
a set  number of rooms available.  Vice-Chair Ortiz inquired                                                                    
about the  selection process. He  asked if the  waiting list                                                                    
was  on  a  first  come,  first  served  basis.  Mr.  Lasley                                                                    
responded  that   anyone  age   65  or  older   could  place                                                                    
themselves on the inactive wait  list, which set their place                                                                    
in line. He elucidated that  once an individual was ready to                                                                    
move into  a home, they  were placed on an  active waitlist.                                                                    
The selection  was based on  the original  application date.                                                                    
The home  considered the  level of  services needed  to find                                                                    
the placement.                                                                                                                  
                                                                                                                                
2:40:07 PM                                                                                                                    
                                                                                                                                
Vice-Chair Johnston  ascertained that  a person  residing in                                                                    
the state  for at least  one year  had the ability  to place                                                                    
themselves on  the inactive waiting  list at the age  of 65.                                                                    
The  inactive waiting  list was  weighted  against how  many                                                                    
years the  person was on  the inactive list.  The individual                                                                    
placed themselves on an active  waitlist when thy desired to                                                                    
move into  a home.  She asked whether  she was  correct. Mr.                                                                    
Lasley  replied  in  the  affirmative.  Vice-Chair  Johnston                                                                    
expressed  concern about  mission creep.  She detailed  that                                                                    
the Pioneer  Homes had been  established for people  who had                                                                    
built Alaska and in honor  of the state's pioneers. However,                                                                    
it was found  unconstitutional to require a  longer than one                                                                    
year residency requirement. She  asked for confirmation. Mr.                                                                    
Lasley  answered in  the affirmative.  However, many  of the                                                                    
residents entering  the homes  had been in  the state  for a                                                                    
substantial amount  of time due  to the waitlist  system. He                                                                    
articulated that the average age  of a resident was 87 years                                                                    
old.  Elders were  entering  the Pioneer  Homes  at a  later                                                                    
point in life  when they truly need high  levels of service.                                                                    
Vice-Chair  Johnston thought  that the  mission of  the home                                                                    
had  changed drastically.  Mr. Lasley  confirmed that  Vice-                                                                    
Chair Johnston  was correct and  added that over  50 percent                                                                    
of the residents were at the highest level of care.                                                                             
                                                                                                                                
2:43:35 PM                                                                                                                    
                                                                                                                                
Representative  LeBon provided  a  hypothetical scenario  of                                                                    
someone age 66  placing themselves on the  list. He wondered                                                                    
when the person  met the one year requirement  could he jump                                                                    
to  a second  list and  accrue time  on that  list and  make                                                                    
themselves  available to  move in  as soon  as possible.  He                                                                    
asked  whether  a person  on  the  active  list that  was  a                                                                    
resident for 65  years could be treated  "more special" than                                                                    
the  one  year  resident  on the  active  list.  Mr.  Lasley                                                                    
affirmed that a  person could put their name  on an inactive                                                                    
list  and change  to  the  active list  after  one month  as                                                                    
required under  statute. He explained that  since the active                                                                    
waitlist  was  predicated on  the  application  date on  the                                                                    
inactive waitlist,  the earlier  a person  placed themselves                                                                    
on  the   inactive  waitlist,  the  better   the  chance  of                                                                    
placement. Therefore, the new  person on the active waitlist                                                                    
would  have their  placement drop  as more  people that  had                                                                    
applied years earlier placed themselves  on the active list.                                                                    
He noted  that individuals  placed themselves on  the active                                                                    
list each month. Representative  LeBon felt assured that the                                                                    
system prohibited the new resident  from being placed before                                                                    
the long-term resident.                                                                                                         
                                                                                                                                
Co-Chair  Wilson  asked Mr.  Teal  to  speak to  the  fiscal                                                                    
notes.                                                                                                                          
                                                                                                                                
2:46:22 PM                                                                                                                    
                                                                                                                                
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
indicated that he could not  provide a "simple walk through"                                                                    
of the  fiscal notes  based on  the previous  discussion. He                                                                    
noted that  the behavioral  and other implications  made the                                                                    
fiscal  impacts more  than "merely  a numbers  exercise." He                                                                    
emphasized that  the bill  changed the  source of  funds but                                                                    
not the  amount required to  operate the Pioneer  Homes. The                                                                    
state  would  still operate  the  Pioneer  Homes System.  He                                                                    
pointed  out that  a  complicating factor  was  a change  in                                                                    
structure by  adding the  Payment Assistance  component. The                                                                    
component made it appear that  the funds were reduced by $33                                                                    
million.  The add  back of  $20 million  along with  program                                                                    
receipts, etc. created confusion. He  thought it was best to                                                                    
envision  the fiscal  note as  a  single appropriation  that                                                                    
reduced GF  by roughly $12.3  million. The problem  with the                                                                    
governor's  appropriation was  that  the administration  did                                                                    
not expect  to cover the  receipts. The fiscal note  made it                                                                    
appear that  the $12.3 million  in UGF would be  replaced by                                                                    
program receipts  and Medicaid.  However, the  Pioneer Homes                                                                    
did not expect  to receive more than about  $5.7 million. He                                                                    
informed the committee that LFD  estimated that amount at $5                                                                    
million  rather than  $5.7  million.  The governor's  budget                                                                    
left  the Pioneer  Homes short  by  about $6  million to  $7                                                                    
million.  In  other  words,  the   governor  left  the  home                                                                    
underfunded relative to  FY 19 and he  advised the committee                                                                    
to expect a supplemental  request. The governor's budget was                                                                    
replacing GF  with uncollectible receipts. It  appeared that                                                                    
the  Pioneer Homes  would  run  out of  funding  in May.  He                                                                    
highlighted that  the current  legislation did  collect less                                                                    
funds.  He cautioned  that it  was best  not to  compare the                                                                    
governor's budget to the fiscal  note. He deduced that HB 96                                                                    
reduced costs  by approximately $2  million, which  was much                                                                    
less  than the  governor's  reduction of  $12.3 million.  He                                                                    
reminded  the  committee  that the  fiscal  note  was  being                                                                    
compared to a governor's scenario  that had not yet occurred                                                                    
and was  not fully funded.  He felt that the  situation made                                                                    
the fiscal note comparison  difficult. He continued that the                                                                    
primary concern when  analyzing the fiscal note  was how the                                                                    
change  affected behavior.  He was  concerned that  the rate                                                                    
increase  would  drive the  level  1  residents out  of  the                                                                    
homes.  He  figured  that  if the  level  1  residents  were                                                                    
replaced  by  higher  level residents  the  governor's  plan                                                                    
could  cost  more  than  HB  96 and  the  exact  amount  was                                                                    
difficult to  quantify but emphasized that  the scenario was                                                                    
a significant  concern. He pointed  to the handout  that was                                                                    
prepared by the director of the Pioneer Homes.                                                                                  
                                                                                                                                
2:52:26 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:56:28 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Mr.  Teal  pointed to  a  handout  from  LFD with  no  title                                                                    
related to  the Pioneer  Homes  bed  rate and  costs(copy on                                                                    
file). The  chart showed  the current bed  rate and  the bed                                                                    
rate  under  HB 96.  He  explained  that the  furthest  left                                                                    
column indicated  the number of  residents at each  level of                                                                    
care that illustrated over half  were at level 4 care versus                                                                    
20 years ago  when most occupants were at level  1 care. The                                                                    
furthest column  to the right characterized  the significant                                                                    
impact  of  the shift  through  continual  increases in  the                                                                    
state subsidy,  which totaled  $13 million  under HB  96. He                                                                    
reiterated  that the  governor  did  not request  additional                                                                    
funding  and  would  result  in  insufficient  funding.  The                                                                    
monthly  Level  1  bed  rate  under HB  96  was  $3,100.  He                                                                    
remarked  that if  making money  was  the goal  the Level  1                                                                    
rates should  be lowered.  Increasing the  rate for  Level 1                                                                    
care meant  going to  the Pioneer Homes  would be  much more                                                                    
expensive than  remaining in a person's  home. He referenced                                                                    
the fourth column on the  left that reported the current bed                                                                    
rate  costs  for  Level  1   care  that  was  $3,623.20.  He                                                                    
hypothesized a scenario  where the cost of Level  1 care was                                                                    
decreased to  $2,000 per  month which  resulted in  a $1,600                                                                    
subsidy,  creating more  demand  for Level  1 residents  and                                                                    
less beds for Level 4  residents. The outcome would still be                                                                    
more cost  effective considering the $15,000  subsidy of the                                                                    
Level  4  resident.  He  maintained  that  the  fiscal  note                                                                    
preparer  was   asked  to  project  behavior   and  economic                                                                    
alternatives.  He asserted  that  it was  impossible to  use                                                                    
current  data,  which  did  not  include  information  about                                                                    
occupant's finances,  impacts of rate increases,  and future                                                                    
occupants  care requirements  and  craft  a reliable  fiscal                                                                    
note. The best projection that  LFD could calculate was that                                                                    
HB  96 appeared  to  reduce costs  from FY  19  by about  $2                                                                    
million.  The governor's  proposal would  reduce it  by more                                                                    
than that,  but due  to rate increases  it could  cost more.                                                                    
The exact  outcome was unpredictable. He  indicated that the                                                                    
$13 million  increase in  the fiscal note  was based  on the                                                                    
current costs  to operate the  homes relative  to governor's                                                                    
budget  where  he  eliminated the  GF  and  underfunded  the                                                                    
program.  The HB  96 fiscal  note funded  the program  for a                                                                    
full year.  He stressed that  the fiscal note  was difficult                                                                    
to  prepare.  He  understood why  the  fiscal  note  created                                                                    
confusion. He believed the HB  96 fiscal note was reasonable                                                                    
and reiterated  that the increase  in GF reflected  the cost                                                                    
to fully fund the homes for one year.                                                                                           
                                                                                                                                
3:02:44 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston agreed  with  Mr. Teal  that the  costs                                                                    
were unpredictable. She reported  that the DHSS subcommittee                                                                    
had  also struggled  with the  topic and  chose to  fund the                                                                    
subsidy at  a higher  rate than  the governor.  She declared                                                                    
that  one  aspect that  was  overlooked  was the  policy  to                                                                    
capture as  much available  funds as  possible, particularly                                                                    
at the  high levels  of care  (Levels 4  and 5).  She voiced                                                                    
that the state was not  capturing all the available Medicaid                                                                    
funds at  the high levels  of care. The difficulty  was that                                                                    
residents could  have gone into  the facility with  funds of                                                                    
their  own, but  when  fees would  be subsidized  eventually                                                                    
became a negotiation with Medicaid,  which meant a divesture                                                                    
of  their  assets. She  discerned  that  the discussion  was                                                                    
about the  amount of  state subsidy,  the population  of the                                                                    
Pioneer  Homes, and  whether the  issue could  be viewed  as                                                                    
subsidizing  residents'  estates.   Mr.  Teal  believed  the                                                                    
points were all  good. He thought the answer  was known, but                                                                    
it  could   not  be  quantified.   He  commented   that  the                                                                    
governor's proposal  would cost  more for  certain residents                                                                    
like those that self-pay, in  theory, because the rates were                                                                    
increased.  However, the  increase could  push a  self-payer                                                                    
into  requiring   partial  subsidies.  He   emphasized  that                                                                    
without access  to the financial records  of the individuals                                                                    
and  always dealing  with  the unknowns  of  the amount  and                                                                    
level  of  care  of  future  residents,  fiscal  notes  were                                                                    
impossible to prepare.  He did not know how  big the problem                                                                    
was but  did not think  that many could be  self-paying when                                                                    
the  cost was  $15,000 per  month.  He offered  that as  the                                                                    
rates  increase,   the  costs  drive  self-payers   out  and                                                                    
potentially   replace   them  with   completely   subsidized                                                                    
residents.  Unless one  could specify  who would  occupy the                                                                    
homes, he could not prepare an accurate fiscal note.                                                                            
                                                                                                                                
3:07:27 PM                                                                                                                    
                                                                                                                                
Representative  Sullivan-Leonard referenced  the spreadsheet                                                                    
and was not  sure they were receiving  accurate numbers. She                                                                    
indicated that  the budget the  committee worked on  was not                                                                    
the   FY  20   budget  the   governor  transmitted   to  the                                                                    
legislature  in  February   [2019].  She  requested  another                                                                    
comparison that  included the  FY 19  budget and  the budget                                                                    
action  items  the  DHSS  subcommittee  reviewed.  Mr.  Teal                                                                    
stated   that   her   request  made   perfect   sense,   but                                                                    
unfortunately fiscal  notes were compared to  the governor's                                                                    
original  budget.  Representative  Sullivan-Leonard  thought                                                                    
the comparison  should include the  FY 19 budget.  She noted                                                                    
that  the committee  received updated  fiscal notes  "all of                                                                    
the time."  Mr. Teal  clarified that  the fiscal  notes were                                                                    
updated  because the  costs changed,  not the  comparison to                                                                    
the  governor's request  base budget.  He continued  that in                                                                    
the  case  of  the   Pioneer  Homes   budget,  the  governor                                                                    
included an  amendment for  an additional  $5 million  GF in                                                                    
recognition that  the shortage  in GF could  not be  made up                                                                    
based  on receipts  collected from  residents. He  disclosed                                                                    
that the  governor's original budget  was $18  million short                                                                    
funded rather than $12.3 million.  The comparison was to the                                                                    
governor's  amended  budget.  He referenced  testimony  that                                                                    
$5.7  million  in  additional   Medicaid  funding  could  be                                                                    
captured, however that  still left a shortage  of $6 million                                                                    
to $7 million.                                                                                                                  
                                                                                                                                
3:10:30 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson clarified  that the  governor's budget  had                                                                    
zero under GF  for the Pioneer Homes. She asked  that if $15                                                                    
million  was added  through the  budget  process, would  the                                                                    
Pioneer Homes still need the  $13 million. Mr. Teal answered                                                                    
that the $13 million would  be additional money added to the                                                                    
Conference   Committee  budget   leaving  the   negative  $2                                                                    
million, that  would really be  an $11 million net  add. The                                                                    
net add  would bring the  Pioneer Homes appropriation  up to                                                                    
the full cost  of running the home.  Co-Chair Wilson thought                                                                    
that  the fiscal  note would  qualify that  the $13  million                                                                    
appropriation  was predicated  on  the  assumption that  the                                                                    
conference  committee  number  stayed   at  zero.  Mr.  Teal                                                                    
answered  that  the  house budget  added  $10  million;  the                                                                    
governor's  amendment  added  $5  and  the  house  added  $5                                                                    
million more,  if the conference  committee chose  the House                                                                    
number then the fiscal note  would be reduced by $5 million,                                                                    
which  occurred  in  Conference Committee.  Co-Chair  Wilson                                                                    
recapped  the conference  committee process  and noted  that                                                                    
the final numbers would reflect  that the Pioneer Homes were                                                                    
fully funded. Mr.  Teal affirmed. He added that  under HB 96                                                                    
the costs  were roughly $2 million  less than in FY  19. Co-                                                                    
Chair Wilson reiterated  that the HB 96 fiscal  note and the                                                                    
funding was  "a best guess"  of what was necessary  to cover                                                                    
the   costs.  Mr.   Teal  mostly   agreed,  but   cited  the                                                                    
spreadsheet  demonstrated where  the subsidies  occurred and                                                                    
that  $10  million  out  of  the  $13  million  subsidy  was                                                                    
attributed to Level  4 care. The data offered  a snapshot of                                                                    
information  even though  it  was not  calculated  on a  per                                                                    
person  basis; he  was unsure  the numbers  could really  be                                                                    
understood in that manner.                                                                                                      
                                                                                                                                
3:15:10 PM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson  noted that  the  12  Level 5  individuals'                                                                    
subsidies  were  not  reflected   on  the  chart.  Mr.  Teal                                                                    
answered in the affirmative. He  voiced that the fiscal note                                                                    
was  "the messiest  fiscal note  you will  see -  through no                                                                    
fault of  the bill or  the sponsor"  He reiterated  that the                                                                    
fiscal note contained a comparison  to an underfunded budget                                                                    
and  was  trying  to predict  behavior  that  was  virtually                                                                    
impossible to predict.                                                                                                          
                                                                                                                                
Representative  Carpenter was  not  sure  he understood  the                                                                    
purpose of the Pioneer Homes.  He stated that if the purpose                                                                    
was to care  for all the elderly the "purpose"  would cost a                                                                    
given amount then  the question was nothing  more than where                                                                    
to obtain  the money.  He questioned  whether the  intent of                                                                    
the  original  service of  the  Pioneer  Homes was  ever  to                                                                    
provide  more  than  Level  1  care.  Representative  Fields                                                                    
responded  that the  homes  were  originally established  in                                                                    
1913  as a  home  for  indigent men.  He  surmised that  the                                                                    
changing  population   in  the   homes  was   reflective  of                                                                    
demographic changes  in the population at  large rather than                                                                    
from policy decisions.  He offered that 50  years ago people                                                                    
did  not live  long enough  to  reach the  age dementia  and                                                                    
other diseases affected the elderly.  The homes were meeting                                                                    
the  original mission  that was  to take  care of  people in                                                                    
their  final home.  However,  the  demographics had  changed                                                                    
significantly, resulting in higher cost care.                                                                                   
                                                                                                                                
Representative Carpenter deduced that  the issue boiled down                                                                    
to a  question of purpose  and policy. He asked  whether the                                                                    
state was  going to subsidize  any amount "to be  all things                                                                    
for all people." He questioned  what the policy was that the                                                                    
state  wanted  to  subsidize  and pay  for  if  the  subsidy                                                                    
covered all levels of care.  He reiterated that the question                                                                    
was the intent  of the Pioneer Homes and whether  it was all                                                                    
things to all people.                                                                                                           
                                                                                                                                
Co-Chair Wilson agreed that the issue was a policy call.                                                                        
                                                                                                                                
Representative Fields  replied that  he did not  believe the                                                                    
purpose of the  homes, past or present was to  be all things                                                                    
to  all  people.  However,  there   was  a  historic  policy                                                                    
decision  that believed  in the  benefit of  a diversity  of                                                                    
residents which  brought a  quality of  life benefit  to the                                                                    
residents.  The   benefit  extended  to  the   state,  which                                                                    
happened to correspond to a  financial benefit. He concluded                                                                    
that  meeting the  historic mission,  offering a  respectful                                                                    
and  supportive  final home  to  elders,  and maintaining  a                                                                    
diversity of  residents which included  level 1 and  level 2                                                                    
was consistent with its historic mission.                                                                                       
                                                                                                                                
3:19:54 PM                                                                                                                    
                                                                                                                                
Representative  Carpenter was  sensitive to  the matter  but                                                                    
noted that someone had to pay  for it. He contended that the                                                                    
discussion in  the committee was  focused on who  was paying                                                                    
at  what  level  and  was  germane  to  the  facilities  and                                                                    
"structure that exist  to take care of  people." He wondered                                                                    
if the  structure considered  all levels of  care or  was it                                                                    
limited to  service the  state could  afford to  provide. He                                                                    
surmised that  unfortunately, a level  of care that  was not                                                                    
affordable for the state would have to be found elsewhere.                                                                      
                                                                                                                                
Co-Chair  Wilson  agreed   that  Representative  Carpenter's                                                                    
statement  was "absolutely  correct."  The  bill before  the                                                                    
committee  included a  policy call  regarding  the level  of                                                                    
subsidy  and whether  it was  included in  HB 96  or in  the                                                                    
operating budget. She remarked that  unless a bill to change                                                                    
the  structure of  the Pioneer  Homes was  introduced -  the                                                                    
current bill was under discussion.                                                                                              
                                                                                                                                
3:22:04 PM                                                                                                                    
Representative Fields  put the  bill into  the context  of a                                                                    
broader discussion  on a  sustainable budget  and healthcare                                                                    
savings that  began with SB  74. He recognized  that savings                                                                    
were  associated with  operating the  homes. He  referred to                                                                    
Mr.  Lasley's  testimony that  the  Pioneer  Homes were  not                                                                    
equivalent to nursing home care  and that they qualified for                                                                    
a 50 percent match for  Medicaid funding. He voiced that the                                                                    
costs were real,  but people did not just  disappear if they                                                                    
were not  residing in  the Pioneer Homes.  Some were  in the                                                                    
Alaska  Psychiatric  Institute  (API)  at  a  cost  of  $500                                                                    
thousand per year.  He stated that the 451  residents of the                                                                    
homes "existed in a much broader eco system."                                                                                   
                                                                                                                                
Co-Chair Wilson affirmed that HB 96 was a policy call.                                                                          
                                                                                                                                
Representative  Josephson asked  for  verification that  the                                                                    
administration's  initial  assumption   wanted  the  Pioneer                                                                    
Homes to "have a net  zero cost to the state." Subsequently,                                                                    
the administration conceded that the  homes would need a $25                                                                    
million  subsidy.  Mr.   Teal  thought  that  Representative                                                                    
Josephson's perspective  was from a single  appropriation to                                                                    
the  Pioneer Homes  that did  not factor  in the  governor's                                                                    
payment assistance  allocation. He surmised that  it did not                                                                    
appear  that  the  governor's intent  was  to  eliminate  GF                                                                    
support  for  the  Pioneer  Homes.   He  recalled  that  the                                                                    
governor's  subsidy  increased  to $20  million  versus  the                                                                    
house's $25  million. Representative Josephson  deduced that                                                                    
the  administration  agreed  that  it  had  to  continue  to                                                                    
subsidize funding for  the homes. Mr. Teal  responded in the                                                                    
affirmative. Representative  Josephson stated that  the bill                                                                    
was a  long way from  becoming law but suggested  that there                                                                    
was  merit  in  passing   the  bill  pending  completion  of                                                                    
obtaining  the  financial  information   that  was  not  yet                                                                    
available  regarding capturable  revenue.  He asked  whether                                                                    
his  suggestion made  sense. Mr.  Teal stated  that it  made                                                                    
sense to  examine the information,  but it  was unobtainable                                                                    
due to the unknowns regarding the future population.                                                                            
                                                                                                                                
Co-Chair   Wilson   stated  concerns   regarding   obtaining                                                                    
accurate information  related to resident who  self-pay. She                                                                    
was   unsure  the   state  was   collecting  the   necessary                                                                    
information.  She  wondered  if the  state  was  subsidizing                                                                    
individuals  who could  pay more.  She inquired  whether the                                                                    
$25 million  should be Designated General  Fund (DGF) verses                                                                    
GF.                                                                                                                             
                                                                                                                                
3:27:47 PM                                                                                                                    
Mr. Teal responded that a  separate fund was not created. He                                                                    
verified  that  the fund  source  was  UGF. He  thought  the                                                                    
component breakdown  was created  for clarity.  He indicated                                                                    
that the  $33 million was  UGF and the structure  change did                                                                    
not make it any more  visible, it merely confused the issue.                                                                    
It appeared  that the  funding would need  to come  from two                                                                    
different   allocations   and    created   "a   bureaucratic                                                                    
inefficiency"  and  the  department would  need  to  request                                                                    
funding transfers  from one allocation to  another. Co-Chair                                                                    
Wilson   noted   that  the   bill   did   not  correct   the                                                                    
inefficiency.  Mr. Teal  affirmed  and added  that the  bill                                                                    
maintained the governor's structure.                                                                                            
                                                                                                                                
Representative Carpenter appreciated the  work that had gone                                                                    
into the  bill. However, he wondered  if HB 96 put  the cart                                                                    
before  the horse.  He asked  whether there  was a  level of                                                                    
care the Pioneer Homes could  provide without a subsidy. Mr.                                                                    
Lasley  did not  believe so.  He detailed  that the  Pioneer                                                                    
Homes  system   was  designed  to   be  a  safety   net  for                                                                    
individuals that  could not afford  services in  the private                                                                    
sector. The  homes had become  a safety net  for individuals                                                                    
with  the  understanding  that the  state  would  provide  a                                                                    
subsidy.  Representative Carpenter  stated  that the  answer                                                                    
did not  "jive" with  what had been  stated as  the original                                                                    
intent -  to provide level  one care. He reiterated  that it                                                                    
was not  possible to  provide all things  to all  people. He                                                                    
stated that if  the policy continued, the  only question was                                                                    
about where the  money would come from; either  the state or                                                                    
individuals.                                                                                                                    
                                                                                                                                
Co-Chair Wilson asked where the  individuals would go if the                                                                    
Pioneer Homes  did not  exist. Mr.  Lasley answered  that if                                                                    
the  Pioneer  Homes did  not  exist  there were  not  enough                                                                    
facilities  in the  state to  provide care  for individuals.                                                                    
The   individuals   would   leave   Alaska.   He   addressed                                                                    
Representative Carpenter's  statement and concurred  that in                                                                    
1913 there  was only one level  of service that jumped  to 3                                                                    
service levels in 1954 and  increased to 5 service levels in                                                                    
1996  and  was again  decreased  to  3  levels in  2004.  He                                                                    
observed  that  the  homes were  providing  and  subsidizing                                                                    
multi-levels of care for 70 years.                                                                                              
                                                                                                                                
3:32:38 PM                                                                                                                    
                                                                                                                                
Co-Chair Wilson asked if the  state had always played a part                                                                    
in subsidizing  the Pioneer Homes. Mr.  Lasley answered that                                                                    
residents were only  paying a small portion of  the costs in                                                                    
1913 when the homes had been established for indigent men.                                                                      
                                                                                                                                
Co-Chair  Wilson found  it interesting  the  homes had  been                                                                    
established for men only.                                                                                                       
                                                                                                                                
Vice-Chair Ortiz deemed that just  because the original home                                                                    
only offered  one level of  care did not necessarily  make a                                                                    
statement  about what  the purpose  of the  homes had  been.                                                                    
The population and  needs had changed. The  changes were not                                                                    
based  on  policy,  but  changes   were  based  on  changing                                                                    
population and needs.  He read the mission  statement of the                                                                    
Pioneer  Homes as  follows: "Assist  older Alaskans  to have                                                                    
the highest quality of life  by providing assisted living in                                                                    
a  safe home  setting which  promotes independence  positive                                                                    
relationships meaningful  activities physical  and emotional                                                                    
and spiritual  growth." He did  not view any changes  in the                                                                    
mission; just adaption to the needs of Alaskans.                                                                                
                                                                                                                                
Representative  Carpenter   interjected  that   if  assisted                                                                    
living was  the mission and individuals  exceeded that level                                                                    
of  care, it  was no  longer assisted  living but  a nursing                                                                    
home.                                                                                                                           
                                                                                                                                
Vice-Chair  Ortiz   thought  Representative   Carpenter  was                                                                    
assuming   a  specific   definition   of  assisted   living.                                                                    
Representative  Carpenter   agreed  and  offered   that  the                                                                    
industry had  standards for  assisted living  homes, nursing                                                                    
homes, etc.  Therefore, the mission was  assisted living and                                                                    
the Pioneer Homes was providing higher levels of service.                                                                       
                                                                                                                                
3:36:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Wilson  noted that HB  96 would be heard  again the                                                                    
following  afternoon.   Discussion  ensued   regarding  what                                                                    
policy decisions were being made by the bill.                                                                                   
                                                                                                                                
Representative Knopp  thought that  Representative Carpenter                                                                    
brought  up  a  good  point  about the  level  of  care.  He                                                                    
reasoned that  if the structure  was changed to  provide low                                                                    
levels  of care  the  individuals would  need  to find  care                                                                    
somewhere else and the revenue  would be lost. He pointed to                                                                    
the  over  471 bed  capacity  and  vacancies that  would  be                                                                    
created by only  offering lower levels of  care, which would                                                                    
ultimately increase costs.                                                                                                      
                                                                                                                                
Co-Chair Wilson underscored that pioneers in Alaska were                                                                        
very important and to understand that the members were                                                                          
struggling with policy calls.                                                                                                   
                                                                                                                                
HB 96 was HEARD and HELD in committee for further                                                                               
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:38:23 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:38 p.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB 96 NEW FN DHSS PH 5.2.19.pdf HFIN 5/2/2019 1:30:00 PM
HB 96
HB 96 Supporting Doc Testimony.pdf HFIN 5/2/2019 1:30:00 PM
HB 96
HB 96 Supporting Doc DHSS PH costs.pdf HFIN 5/2/2019 1:30:00 PM
HB 96