Legislature(2015 - 2016)CAPITOL 106
03/26/2015 03:00 PM House HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| HB148 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 148 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
March 26, 2015
3:04 p.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Liz Vazquez, Vice Chair
Representative Neal Foster
Representative Louise Stutes
Representative David Talerico
Representative Geran Tarr
Representative Adam Wool
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 148
"An Act relating to medical assistance reform measures; relating
to eligibility for medical assistance coverage; relating to
medical assistance cost containment measures by the Department
of Health and Social Services; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 148
SHORT TITLE: MEDICAL ASSISTANCE COVERAGE; REFORM
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/18/15 (H) READ THE FIRST TIME - REFERRALS
03/18/15 (H) HSS, FIN
03/24/15 (H) HSS AT 3:00 PM CAPITOL 106
03/24/15 (H) Heard & Held
03/24/15 (H) MINUTE(HSS)
03/26/15 (H) HSS AT 3:00 PM CAPITOL 106
WITNESS REGISTER
JON SHERWOOD, Deputy Commissioner
Medicaid and Health Care Policy
Office of the Commissioner
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 148, testified on
behalf of the administration.
REMOND HENDERSON, Deputy Commissioner
Office of the Commissioner
Department of Corrections (DOC)
Juneau, Alaska
POSITION STATEMENT: Answered questions related to HB 148.
LAURA BROOKS, Division Operations Manager
Office of the Commissioner
Department of Corrections (DOC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions related to HB 148.
ALBERT WALL, Director
Central Office
Division of Behavioral Health
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Answered questions related to HB 148.
VALERIE DAVIDSON, Commissioner Designee
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 148, testified on
behalf of the administration.
ILONA FARR, MD
Alaska Family Medical Care, LLC
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition of HB 148.
BECKY HULTBERG, President, CEO
Alaska State Hospital & Nursing Home Association (ASHNHA)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 148.
JOHN GAGUINE
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 148.
ALYSON CURREY
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 148.
MELISSA ENGEL
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 148.
KARENZA BOTT
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 148.
VERNE BOERNER, President, CEO
Alaska Native Health Board (ANHB)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 148.
MICHAEL DZURISIN
Location unknown
POSITION STATEMENT: Testified in support of HB 148.
ROBIN SMITH
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 148.
ANDREW SMALLWOOD
Cordova, Alaska
POSITION STATEMENT: Testified in support of HB 148.
JEFF JESSEE, Chief Executive Officer
Alaska Mental Health Trust Authority
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 148.
ACTION NARRATIVE
3:04:22 PM
CHAIR PAUL SEATON called the House Health and Social Services
Standing Committee meeting to order at 3:04 p.m.
Representatives Tarr, Stutes, Talerico, Foster, Wool, and Seaton
were present at the call to order. Representative Vazquez
arrived as the meeting was in progress.
HB 148-MEDICAL ASSISTANCE COVERAGE; REFORM
3:04:47 PM
CHAIR SEATON announced that the only order of business would be
HOUSE BILL NO. 148, "An Act relating to medical assistance
reform measures; relating to eligibility for medical assistance
coverage; relating to medical assistance cost containment
measures by the Department of Health and Social Services; and
providing for an effective date."
3:07:46 PM
JON SHERWOOD, Deputy Commissioner, Medicaid and Health Care
Policy, Office of the Commissioner, Department of Health and
Social Services (DHSS), said he will be reviewing the fiscal
notes [Included in members' packets]. Overall for Fiscal Year
(FY) 2016, there would be an appropriation of over $146 million
with an actual reduction in undesignated general funds (UGF) of
over $2 million. In 2021 total expenditure would rise to $215
million and a reduction in undesignated general funds of almost
$98 million.
3:08:50 PM
MR. SHERWOOD explained fiscal note 1 [dated 3/18/15] is a small
increase for the Department of Administration (DOA), Office of
Administrative Hearings. Fiscal note 2 [dated 3/18/15] is for
the Department of Corrections (DOC), [Physical Health Care],
reflecting a reduction in expenditures as a result of the
expansion. Inmates who receive in-patient care could become
eligible for Medicaid coverage when receiving in-patient
treatment while physically out of the correctional facility
overnight. This would allow the Department of Corrections to
bill those expenditures to Medicaid.
3:09:25 PM
CHAIR SEATON observed the reduction would be $4.1 million in FY
2016, but $7 million in FY 2017 and thereafter. He asked why
the difference.
MR. SHERWOOD deferred to the Department of Corrections, but said
his understanding is that DOC doesn't anticipate being able to
achieve the maximum savings in the first year. Part of it may
be that DOC is paying for care that was already provided in the
previous year. Also, DOC may not be able to get everyone
enrolled in the early part of the year.
CHAIR SEATON inquired whether there is any correlation with
recidivism or being able to provide behavioral health services
as inmates exit the corrections system and are still on
probation.
MR. SHERWOOD offered his belief that, although there is a
potential for savings, he doesn't believe this fiscal note
reflects savings associated with that. He deferred to DOC.
3:11:10 PM
REPRESENTATIVE WOOL asked for clarification that the $7 million
in savings would be for overnight hospital stays for prisoners
in state custody, not a day trip for medical treatment.
MR. SHERWOOD confirmed the aforementioned is correct. An inmate
must actually be staying out of the facility overnight so the
inmate would no longer be considered to be residing in the
facility on that day.
REPRESENTATIVE TARR added the prison population is aging and
therefore the health care needs are more significant as far as
extended stay care.
3:12:54 PM
REMOND HENDERSON, Deputy Commissioner, Office of the
Commissioner, Department of Corrections (DOC), addressed
Representative Seaton's first question about fiscal note 2,
explaining the difference between the $4 million reduction in FY
2016 and $7 million in reduction for each of the out years is
because DOC will not be fully ramped up in the first year and
only expects to achieve a 50 percent savings that first year.
The DOC analyzed actual medical bills for individuals
institutionalized in a hospital for 24 hours or more in fiscal
years 2012, 2013, 2014, and 2015. The estimates arrived at
fiscal note 2 are 80 - 90 percent of what was seen in that
analysis. For example, in FY 2014, $8.5 million was spent for
individuals who were in care for 24 hours or more; 90 percent of
that is $7 million. For FY 2015 through January, the
expenditure is already $5.5 million for people who would be
potentially eligible under Medicaid, which equates to almost $9
million. Therefore, DOC believes $7 million is a reasonable
amount.
3:15:09 PM
LAURA BROOKS, Division Operations Manager, Office of the
Commissioner, Department of Corrections (DOC), addressed
Representative Seaton's second question about behavioral health
follow up as people transition from prison into probation. She
said the department has staff who work to link those offenders
to community resources upon release from DOC facilities. If DOC
can ensure that these individuals in custody are set up and
ready to go for Medicaid upon release, there will not be a lapse
in services as is often experienced now. However, in terms of a
fiscal note, she said she doesn't believe that is going to
result in any direct savings to the department because those are
services that are already provided in the community. There is
research that addresses that those who have their criminogenic
needs met, which includes things like stable medical and
behavioral health care, have a reduced likelihood of returning
to corrections and reduced recidivism in the long run.
Responding further, she confirmed the fiscal note does not
include those who [have been released and] are now out in the
community.
3:16:39 PM
MR. SHERWOOD addressed fiscal note 3 [dated 3/18/15] for the
Department of Health and Social Services, Behavioral Health
Administration, explaining it will be the cost of adding one
position for the 1915(i) option [under Medicaid] which would be
able to cover individuals. Some individuals that are currently
served through [Division of Senior and Disability Services] in
grant programs and some are served through [Division of
Behavioral Health]. Different benefit packages are allowed to
be designed for different populations under that option, and it
is anticipated that one person would be required for the
development and then the ongoing operation and maintenance of
that component. The expenditure starts at $120,400 [for FY
2016], which includes some one-time expenses for adding the
position, and then goes down to $112,800 in the subsequent
fiscal years.
CHAIR SEATON asked where that employee would be located.
ALBERT WALL, Director, Central Office, Division of Behavioral
Health, Department of Health and Social Services (DHSS), replied
that position is anticipated to be in Anchorage.
CHAIR SEATON presumed "that one position will be doing whether
somebody's coming out of Juneau or Fairbanks or anything else."
MR. WALL responded correct.
REPRESENTATIVE TARR observed the position would be called Health
Program Manager II, and requested a description of the position.
MR. WALL answered the Health Program Manager II handles a
variety of issues, including policy and regulatory writing, and
program oversight for various programs that are health related.
This person provides program approval and oversight that is not
specifically for a clinical position, which is done by a mental
health clinician.
REPRESENTATIVE TARR surmised this person would be experienced in
health care and would be a higher level position.
MR. WALL replied this position will require a very high level of
expertise in Medicaid services and the regulations that govern
those services.
CHAIR SEATON understood there would be two services: one under
[Division of Senior and Disability Services] and one under
[Division of Behavioral Health].
MR. SHERWOOD responded the two division services that are
currently provided by general funds could be put under 1915(i).
One is the Division of Behavioral Health and the other is the
Division of Senior and Disability Services. Different
populations can be served under this option; for example,
individuals with dementia, traumatic brain injury, developmental
disabilities who don't meet the institutional criteria for
service under one of the department's existing waivers, as well
as individuals with severe mental illness or other behavioral
issues might qualify.
3:21:16 PM
MR. SHERWOOD turned to fiscal note 4 [dated 3/18/15] for the
Department of Health and Social Services, Behavioral Health
Treatment and Recovery grants. He said those are the general
funds services, some of which could be shifted to Medicaid under
1915(i), and some of which are from the expansion itself as
individuals not currently eligible for Medicaid, but with
behavioral health needs, are able to get Medicaid through the
expansion. A reduction to the grants is anticipated as a result
of people now paying for their services funded through Medicaid
instead of through the grants. That begins as a reduction of
nearly $1.6 million [in FY 2016] and increases to a reduction of
$19.5 million in FY 2021. That is a combination of both the
expansion that would occur in FY 2016 and FY 2017, and then in
FY 2018 the reductions are related to the addition of 1915(i).
REPRESENTATIVE TARR surmised that the smaller amount in FY 2016
is because it is the year in which people will begin the
transition to Medicaid billing.
MR. SHERWOOD answered yes, and explained the department does not
have a way to effectively compel everyone to come forward and
identify themselves as potentially Medicaid eligible and apply
on the first day. It may take some time to get individuals into
the system.
3:23:40 PM
MR. SHERWOOD discussed fiscal note 5 [dated 3/18/15] for the
Department of Health and Social Services, Behavioral Health
Medicaid Services, stating this is the actual increase to the
Medicaid expenditures around behavioral health. Like the
grants, it stems from two sources: the expansion which starts
in FY 2016 and then the additions of 1915(i) services which
would begin in FY 2018. It is almost $4.8 million in FY 2016,
increasing to $26.6 million in FY 2021.
REPRESENTATIVE STUTES asked whether this includes 1915(i)
services.
MR. SHERWOOD replied yes, it is 1915(i) services for the
behavioral health side.
REPRESENTATIVE TARR surmised the first year there is no general
fund match because the state is at 100 percent federal
reimbursement which steps down in the ensuing years.
MR. SHERWOOD responded the expansion is initially 100 percent
federal, stepping down over this period to 90 percent. With the
retention of the 100 percent tribal match, Alaska's match rate
will always be effectively higher. The 1915(i) services will go
predominantly to people who may already be Medicaid eligible but
who do not meet an institutional level of care to get the
[state's] waiver services. The anticipation is that those
services will be provided pretty much at the base match rate of
50 percent. He believed that in this fiscal note the average is
about 56 percent because Behavioral Health serves individuals on
Denali Kid Care and through tribal health systems. But the
1915(i) services are not at the same enhanced match rate as the
expansion services.
3:26:42 PM
MR. SHERWOOD moved to fiscal note 6 [dated 3/18/15] for
Department of Health and Social Services, Adult Preventative
Dental Medicaid Services. He said this fiscal note reflects the
portion of the increase in spending related to Medicaid
expansion for this particular allocation in the Medicaid
services budget. [The department] allocated all preventative
dental and medical services separately and this expansion is
targeted on the adult population, so a portion of the
expenditures would fall under this Medicaid services component.
REPRESENTATIVE STUTES recalled a presentation in which Mr.
Sherwood indicated this was one of the items that was cut out in
the 1990s to save money. She inquired whether this expansion
would put it back in.
MR. SHERWOOD answered [the department] cut adult dental service
in the 1990s but then restored it later in the 1990s. The
service that was cut was what [the department] referred to as
emergency dental or coverage of acute pain and infection. This
is an enhanced dental service for adults that was added by the
legislature, he believed, in the early 2000s. It goes beyond
emergency care, which is something that would put a person in
the hospital if left untreated, and provides basic dental
services such as filling of cavities, restoration, and dentures.
It has been available for about 10 years.
REPRESENTATIVE STUTES, stating it appears that this is also
preventative, presumed it is cleaning and those sorts of things.
She asked how many states provide dental coverage.
MR. SHERWOOD replied he does not know how many states provide
for adults and added it is an optional service. He offered to
provide this information to the committee.
3:30:04 PM
MR. SHERWOOD reviewed fiscal note 7 [dated 3/18/15] for
Department of Health and Social Services, Health Care Medicaid
Services. He explained Health Care Medicaid Services covers the
bulk of primary and acute care provided by [the department]
through the Medicaid program. Two things are included in this
fiscal note. One is the net increase in Medicaid spending as a
result of adding the expansion group. The other is the impacts
of the Section 1115 waiver for tribal services, which is a
provision included in HB 148. The expansion starts immediately
in FY 2016. Some savings are anticipated from the Section 1115
waiver in FY 2017, with savings ramping up through FY 2021. The
net impact of the Section 1115 waiver is not an increase in
Medicaid spending, but a shifting of Medicaid spending from non-
tribal to tribal facilities and therefore the department is
projecting a change in the federal match rate. This service
would drop from 50 percent general funds to 0 percent general
funds, which is why the line for federal receipts increases more
than the line for total operating expenditures. Even though
there would be a required general fund match for the expansion
piece, the total general fund match is actually a reduction
because of reducing the amount needed for those services
provided to tribal members that would be served in the waiver.
3:32:40 PM
MR. SHERWOOD addressed fiscal note 8 [dated 3/18/15] for the
Department of Health and Social Services, Senior and
Disabilities Medicaid Services. It would begin with a small
amount of the total projected expenditure for expansion
allocated to Senior and Disabilities Medicaid Services, he said,
and then in FY 2018 it would be a more substantial increase as
the 1915(i) option is brought in. Also in HB 148 is the 1915(k)
option in which some services from [the department's] current
home and community based waivers are converted to the (k) option
and get an extra 6 percent of federal match. So, fiscal note 8
includes three things: the expansion; the 1915(i) increase,
which is offset by reductions to grant programs that will be
discussed in subsequent fiscal notes; and the 1915(k) option,
which shifts money from general funds to federal funds. The
total expenditure in the first year of FY 2016 is $2.9 million
and by FY 2021 the total expenditure is up to $21.3 million.
3:34:25 PM
MR. SHERWOOD stated fiscal note 9 [dated 3/18/15] for the
Department of Health and Social Services, Catastrophic and
Chronic Illness Assistance, is the reductions for the Chronic
and Acute Medical Assistance (CAMA) Program. Almost all of the
individuals who are eligible for CAMA right now, he said, would
be eligible for the Medicaid expansion and it is anticipated
that in the first year about two-thirds of the cost would be
moved out of the CAMA Program and into the Medicaid expansion,
eventually reducing CAMA by $1.4 million.
CHAIR SEATON inquired about the number of participants.
MR. SHERWOOD responded it would be under 500.
3:35:41 PM
MR. SHERWOOD said fiscal note 10 [dated 3/18/15] for the
Department of Health and Social Services, Medical Assistance
Administration, constitutes the administrative side of health
care services. It includes staffing for the expansion and the
Section 1115 waiver. One position would be added in FY 2018 for
the waiver because this waiver typically comes with an extensive
amount of federal oversight and data reporting that someone will
have to track and provide to the federal government. The other
four positions would be around the Medicaid expansion.
MR. SHERWOOD explained fiscal note 11 [dated 3/18/15] for the
Department of Health and Social Services, Rate Review, is very
small at $4,500 [in FY 2016]. One provision of HB 148 has to do
with evaluating and developing a proposal for a provider tax and
this has some funding for meetings in Juneau and Fairbanks.
[The department] anticipates doing the work and absorbing most
of the cost with existing staff and budget, but the funding is
for stakeholder meetings in two locations. The staff for this
office is based in Anchorage so no funding was included for a
meeting in Anchorage or the Anchorage area.
3:37:52 PM
VALERIE DAVIDSON, Commissioner Designee, Department of Health
and Social Services, pointed out that implementing a provider
tax is complicated. Since Alaska hasn't had a provider tax, but
other states have, the department is using FY 2015 funds to work
on a request for proposals (RFP) to secure an independent
contractor who can analyze what other states have done and look
at the Alaska information to help the department to develop
recommendations for provider tax that might work in Alaska.
CHAIR SEATON noted there is an amendment in this regard.
REPRESENTATIVE TARR asked whether the contractor would work in
conjunction with staff and do the stakeholder meetings.
COMMISSIONER DAVIDSON answered correct. Given the timelines in
the bill in order to be ready to deliver the report, the
department needs to get started now and is using FY 2015 funds
to accomplish that. Therefore, the independent contractor
dollar amount is not included in the FY 2016 fiscal note.
REPRESENTATIVE TARR observed there is a 50 percent federal match
to this. Offering her understanding that part of Medicaid
expansion included administrative support, she inquired whether
that is only available for FY 2017 or would administrative
support dollars still be available after that if needed.
MR. SHERWOOD replied the department can receive funding for
ongoing administrative activities of Medicaid. In terms of 50
percent federal match, that is the standard percent for Medicaid
administrative expenses that is available to the department this
year and throughout the foreseeable future.
3:40:28 PM
CHAIR SEATON referenced the distribution of a multi-page
document on provider taxes, the complications, and the federal
requirements. He said the document backs up why outside help
might be necessary.
REPRESENTATIVE STUTES observed that fiscal note 10 provides for
five additional staff members, but said she didn't see any other
provision for staff members on the other fiscal notes. She
recalled that in a prior presentation the committee was told it
would take approximately 26 new staff members to facilitate this
expansion. She asked how the other 21 new staff members will be
paid for.
MR. SHERWOOD responded this will be addressed in the fiscal
notes he has yet to review.
3:41:59 PM
MR. SHERWOOD turned to fiscal note 12 [dated 3/18/15] for the
Department of Health and Social Services, Community
Developmental Disabilities Grants, saying this is within the
Division of Senior and Disabilities Services. These are
anticipated reductions in grants for services that would be
provided through the 1915(i) option. It is a pure general fund
reduction, he said, since those are state grant programs.
MR. SHERWOOD said fiscal note 13 [dated 3/18/150] for the
department of Health and Social Services, Senior Community Based
Grants, is similar and is a reduction for 1915(i) in a different
grant component in the budget of the Division of Senior and
Disabilities Services.
3:42:53 PM
MR. SHERWOOD explained that fiscal note 14 [dated 3/18/15] for
the Department of Health and Social Services, General Relief/
Temporary Assisted Living, is another program in the Division of
Senior and Disabilities Services. It is an entitlement program,
not a grant program, for vulnerable adults who need assisted
living care because they have needs that cannot be met in a
regular community setting. If they are not eligible for
Medicaid coverage of that care, [the department] provides that
care through this program. With the implementation of 1915(i),
the department believes it would be able to reduce, not
eliminate, the amount of individuals it would have to cover
through the General Relief/Temporary Assisted Living Program.
CHAIR SEATON surmised fiscal note 14 is not the full amount of
the program, but just the amount anticipated to change after the
passage of HB 148.
MR. SHERWOOD concurred, offering his belief that the full amount
of the program is just under $8 million.
MR. SHERWOOD reviewed fiscal note 15 [3/18/15] for the
Department of Health and Social Services, Senior and
Disabilities Services Administration, saying it is largely
around 1915(i), but to some extent is also around 1915(k).
System changes would be required to the division's information
system, called the automated service plan, as well as one
additional staff person in the first year for the development of
1915(i) and 1915(k). As 1915(i) and 1915(k) come up, additional
staff people would be needed, with a total projection in the out
years of three staff people. There is a difference in the
amount of staffing between the Division of Senior and
Disabilities Services and the Division of Behavioral Health.
This is because the 1915(i) option requires an assessment of the
individuals receiving the senior grants, something not currently
done. This increase in assessment would not occur in the
behavioral health population.
MR. SHERWOOD explained fiscal note 16 [dated 3/18/15] for the
Department of Health and Social Services, Public Assistance
Field Services, is the increase in work for the administration
and eligibility determination of people who are going to be
covered through the expansion. The anticipation is that 23 new
positions would be added beginning in FY 2016. The startup cost
for the first year assumes $2.7 million and in the out years it
is $2.3 million. The funding is 50 percent state and 50 percent
federally.
3:47:00 PM
REPRESENTATIVE STUTES understood this would not include the five
people from fiscal note 10, thus it would be a total of 28
people.
MR. SHERWOOD answered there are a couple of other positions in
other fiscal notes. In FY 2016, the cumulative total is 29
positions, growing to 31 in 2017, 32 in FY 2018 and 2019, and 33
in 2020 and 2021.
3:48:08 PM
REPRESENTATIVE STUTES posited that currently it costs the state
a certain amount of dollars per individual covered by Medicaid.
She asked whether the department has any figures on what it will
cost the state to cover that same individual starting in FY 2016
up through FY 2021 with Medicaid expansion in effect.
CHAIR SEATON inquired whether Representative Stutes is talking
about the average recipient or the current recipient.
REPRESENTATIVE STUTES said she is talking about what the state
is paying today for one individual. However many people there
are, there is going to be an average cost per individual. After
the expansion, even with more people, there is still going to be
an average cost with the projected increase of people. She said
she realizes this is a ballpark figure, but she would like to
see what the average cost would be from FY 2016 through FY 2021
for that same individual with Medicaid expansion in effect.
MR. SHERWOOD replied the department will calculate what that
difference will be, but he can say that since this is one of the
less expensive populations to serve, the department expects that
the average cost per average recipient adding Medicaid expansion
will go down, not up.
3:50:35 PM
CHAIR SEATON understood the expansion population includes single
adults between the ages of 19 and 64. He further understood
that is why the expansion population would generally be assumed
to be in a healthier condition than people with old age problems
and children covered under other programs.
MR. SHERWOOD confirmed Chair Seaton is correct, saying the most
expensive population to serve is the elderly and individuals
with disabilities. The population over 65 is ineligible for the
Medicaid expansion and people with the most substantial
disabilities and low incomes would already be covered by
Medicaid through one of the categories that covers adults with
disabilities. The department believes this population is much
more comparable to its population of adults who are on Medicaid
because they are parents of children and historically that has
been a less expensive population for the department to service.
3:52:18 PM
REPRESENTATIVE STUTES understood the second group of people
would be an average of all people covered by Medicaid, not just
the new expansion.
COMMISSIONER DAVIDSON reported that when Evergreen Economics did
the analysis of the expansion population, it was found that 54
percent of the eligible expansion are men and 20 percent of that
group is between 19 and 34 years of age. Men and younger men
are typically the lowest cost beneficiary to cover. Therefore
the department expects the average cost to actually decrease.
3:53:26 PM
REPRESENTATIVE WOOL understood the reimbursement rate of this
added population is much higher, which he surmised would lower
the average cost per Medicaid recipient, expansion and non-
expansion population.
MR. SHERWOOD responded it would lower the average general fund
cost. The total costs of providing coverage would be equal, but
because the federal match rate is much better, the average
general funds per person would be much lower, so that would
lower the average general funds even more than it would lower
the overall average.
REPRESENTATIVE WOOL noted everyone is asking what the average
cost is per recipient, but people in this building want to know
what the average cost is for the state per recipient. So,
although a person might consume $7,000 in services, what is the
state responsible for? The expansion population getting a 90
percent reimbursement at worst is going to further lower the
expense. He posited that maybe Representative Stutes is trying
to get at the number for what the state is on the hook for.
CHAIR SEATON said he thinks what is wanted is both sets of
numbers. He requested the department to provide a table with
the average cost that is provided in Medicaid and what is the
average cost in state general funds for the population over
those fiscal year spans.
3:55:27 PM
REPRESENTATIVE WOOL understood from a prior day's testimony that
138,000 people are currently Medicaid recipients in the State of
Alaska, and the expansion would add another 20,000 - 27,000
people over the next five or six years.
MR. SHERWOOD answered he thinks the number of 138,000 referred
to was the number of people who actually receive services. When
talking about the number that would be added by expansion, that
is the number of enrollees and not everyone who enrolls may
receive a service that year. In regard to the number of 138,000
recipients that was referenced, he said he thinks the number of
actual enrollees for that year was over 150,000. He declared he
would follow up and provide the committee with the specific
numbers.
CHAIR SEATON clarified the committee is asking the department to
provide information regarding the 20,000 - 27,000 as well as the
full number of 40,000 to see what the effects of 100 percent
enrollment would be.
CHAIR SEATON, responding to Representative Vazquez, said the
committee has asked the department to provide the average cost
per person as well as the average general fund cost.
3:57:41 PM
MR. SHERWOOD, responding to Representative Vazquez, said the
total expenditure in FY 2016 for all the fiscal notes for the
Department of Health and Social Services is $146,549,600. That
figure grows over the next five years and in FY 2021 is
$215,160,900. Of that, the federal portion exceeds the total
expenditures and would reduce general funds in the amount of
$2,320,800 in FY 2016 and further reduce general funds by
$97,916,400 in FY 2021.
4:00:03 PM
REPRESENTATIVE TARR recalled that if all newly eligible Medicaid
expansion folks enrolled the spending per enrollee would be
$7,248 for everyone, but the spending for the smaller group that
is expected to enroll is $6,560. She presumed these are the
numbers separating out the expansion population and asked
whether the question being asked by Representative Stutes is to
take those people and put them into the overall population and
average it.
MR. SHERWOOD replied he doesn't think the department ever
estimated the cost of enrollees for the expansion population
would be as low as $6,500 per year. He believed that was going
back to the cost of the adults currently being served through
family Medicaid. The department made a slight upward adjustment
to reflect that the department knew some of the individuals
would be moving over from CAMA and those are individuals with
chronic conditions that might be a bit more expensive to serve
than the family Medicaid population.
4:02:16 PM
CHAIR SEATON requested Mr. Sherwood to review the sectional
analysis for the bill, starting with Section 7.
MR. SHERWOOD explained Sections 7 and 8 are technical amendments
to the Medicaid eligibility statute. Certain individuals who
receive long term care services, nursing home services, and home
and community based waivered services are subject to a transfer
of asset penalty if they give away assets without obtaining
appropriate fair market value in return for the those assets.
There are some exceptions or situations where an individual can
give away his/her assets, such as to a minor or a disabled
child. The Patient Protection and Affordable Care Act clarified
that individuals who are determined eligible for Medicaid under
the eligibility categories that use the modified adjusted gross
income (MAGI) methodology are exempt from those transfer of
asset penalties. [These amendments would] put language in
Alaska statute "that clearly shows that [Alaska's] statute
around imposing transfer of an asset is consistent with federal
law ... on imposing penalties for transfer of asset."
Responding to Chair Seaton, he explained that MAGI is the new
way [the state] is to determine income for eligibility purposes
for its children, pregnant women, and parents and caretaker
relatives in the Medicaid expansion group. It is not used for
the categories that are specifically for the aged, blind, and
disabled.
REPRESENTATIVE TARR understood that in some conditions there are
hold harmless provisions, but that in general the asset test
applies for Medicaid. She asked whether the aforementioned is
more in line with the general provision.
MR. SHERWOOD responded some Medicaid eligibility groups have
asset limits in addition to income limits, and some do not. As
a result of the Patient Protection and Affordable Care Act, all
the eligibility categories that use the MAGI methodology are
exempt from the asset test, so there is no asset test for those
categories. Hence, the argument that it doesn't make sense to
apply a transfer of asset penalty to people who give away their
assets when in fact they would have been eligible for Medicaid
whether they retained or gave away their assets.
4:05:54 PM
REPRESENTATIVE VAZQUEZ requested the department to provide a
table listing all the programs that are dealt with under the
MAGI system and those that are not.
MR. SHERWOOD agreed to do so.
REPRESENTATIVE VAZQUEZ inquired why the federal government
decided to change to the MAGI and disregard all assets for
certain categories of Medicaid recipients.
MR. SHERWOOD offered his belief that it was to provide for a
seamless transition between healthcare coverage through Medicaid
and healthcare coverage through the health insurance exchange.
The tax subsidies that are available to subsidize health
insurance for individuals with incomes below 400 percent of the
federal poverty level use the same basic MAGI rules and do not
have an asset test applied to determine whether people are
eligible for those subsidies. He said he thinks the notion was
that if the same methodology and same asset requirements weren't
used, then some people would get left out if their income
increased and they then went through the marketplace, or, worse,
if their income decreased they then would have fallen into a
Medicaid category but there was a Medicaid requirement that made
them ineligible for Medicaid and then they wouldn't have
coverage in either place.
REPRESENTATIVE VAZQUEZ understood assets are not considered when
a person goes through the health insurance exchange and subsidy
is based only on income.
MR. SHERWOOD answered yes, that is what he was trying to say.
CHAIR SEATON understood both would be determined the same way -
the MAGI is used either with the exchange or with Medicaid,
except for certain special cases.
MR. SHERWOOD agreed there are some special cases, but said that,
in general, they would be determined the same way and neither
MAGI-based Medicaid nor the health insurance exchange uses an
asset test.
MR. SHERWOOD resumed the sectional analysis, saying Sections 9
and 10 of HB 148 outline the cost containment measures to be
taken by the department. The department is directed to seek the
Section 1115 demonstration waiver to look at ways to develop an
innovative service delivery system to improve care and increase
efficiencies, reduce costs and expand services for Indian Health
Service beneficiaries using services delivered through Indian
Health Service and tribal health facilities; apply for a 1915(i)
option to obtain the 50 percent federal match for home and
community services that are now 100 percent general funded;
apply for the 1915(k) option at the enhanced federal match rate
[of 56 percent]; evaluate and apply to the Centers for Medicare
and Medicaid Services (CMS) to participate in various
demonstration projects, including payment reform, care
management programs, workforce development and innovation, and
other innovative service delivery models; and enhance
telemedicine capabilities and reimbursement to incentivize its
use for Medicaid recipients.
REPRESENTATIVE TARR pointed out the language directs that the
department "shall" do these things, so they would be non-
optional and would for sure have to take place.
4:11:37 PM
MR. SHERWOOD returning to the sectional analysis, explained
Sections 11 and 12 both make amendments to Alaska Statute
47.07.900, the part of the Medicaid statutes which define the
terms. These sections remove the requirement that behavioral
health providers be a grantee of the State of Alaska. This
language has been in Alaska statute for some time and is not
viewed favorably by the Centers for Medicare and Medicaid
Services. [These sections] would potentially expand the pool of
Medicaid behavioral health providers.
CHAIR SEATON asked whether the grants are perfunctory, relating
he has heard that some people receive a $100 grant and then this
means they can provide services.
MR. SHERWOOD replied most of the grants are significant and
substantial. There may have been times the department has made
small grants in the awareness that it would enable somebody to
provide Medicaid services. He requested Mr. Wall to elaborate.
MR. WALL confirmed Mr. Sherwood is correct, responding that the
majority of those grants are large grants given to the
department's community treatment providers. In the past there
have been small grants that allowed providers to enroll as
Medicaid providers, but removal of this language would allow for
broader access to Medicaid and the potential enrollment of more
providers in the systems.
CHAIR SEATON inquired whether removal of the grant language
could in any way be detrimental to any current behavioral health
providers receiving grants.
MR. WALL answered there is a relationship with the providers
that the department must maintain carefully. There are some
concerns that the licensed care providers who are individual
members of the behavioral health agencies that provide services
may leave the agencies they are in and go out on their own and
provide services in that manner. The department is working with
its associations to address that issue. The overall effect on
the system of care would be a potential increase in the number
of providers and more access for Alaskans for Medicaid.
REPRESENTATIVE STUTES asked whether the department has certain
requirements for someone to be a provider and whether removing
this grant language could prevent someone such as a licensed
physician in mental health from becoming a provider.
MR. SHERWOOD replied all Medicaid providers must meet some kind
of provider standard. In some cases the department simply uses
an existing standard; for example, for physicians the department
would use license to practice in the state. For some provider
types that are not essentially licensed as such, the department
must put forth its own criteria. For instance, for the two
services directly impacted, behavioral health clinic services
and behavioral rehabilitation services, the department would
still need to establish standards through regulations and, in
the department's state plan, submit the standards for approval
by the federal government. They could be substantially the same
as the standards that are used currently for behavioral health
grantees or they could be somewhat different.
COMMISSIONER DAVIDSON added the department does not require any
other provider type in Medicaid to be a grant recipient before
the provider can bill Medicaid. For example, a physician
providing physician services can bill for Medicaid as long as
the physician meets the provider requirements and enrolls as a
Medicaid provider. Behavioral health is the only program in
which the State of Alaska requires the provider to be a grantee.
This is akin to the department saying a doctor cannot bill for
Medicaid unless s/he applies for and receives a separate grant
from the Department of Health and Social Services. At the time
the requirement served some purpose, but the department would
like to remove it through this legislation.
REPRESENTATIVE STUTES said she is concerned to hear that the
provider clinics are worried about some of their licensees going
out and practicing on their own, given she would think that
would be a benefit cost-wise to the department.
REPRESENTATIVE TARR commented this might provide better insight
into the types of services an individual is receiving and
through other opportunities with Medicaid expansion working on
the continuum of care and be able to better address someone's
health needs if there was more of this data. She asked whether
the department agrees with this and thinks this potential
exists.
MR. WALL agreed with Representative Tarr's statement, saying
that right now data for behavioral health clients is tracked
through two separate systems. That will continue, but the
services will shift from one source to the other. Both of those
systems have some different capacity for reporting, but the
department sees that capacity growing in the future.
4:20:09 PM
REPRESENTATIVE VAZQUEZ inquired why providers were originally
required to be grantees before they could bill to Medicaid.
MR. SHERWOOD responded the provisions existed prior to his time.
A decision was made in the development of these services that
this provision would be put in statute and without researching
the legislative history and he cannot tell the committee why.
REPRESENTATIVE VAZQUEZ expressed her understanding that a
behavioral health provider could get a grant and at the same
time bill Medicaid.
MR. SHERWOOD replied that grantees can provide services to
individuals. If they are Medicaid eligible they can bill
Medicaid. He deferred to Mr. Wall to answer the question, but
said he thinks there are provisions in the grant that would
prohibit duplicative billing, and that it is generally a
requirement of most grants that when a provider is charging
Medicaid, the provider cannot also charge it off to the grant.
REPRESENTATIVE VAZQUEZ asked why the provider is first able to
get a grant before the provider can bill Medicaid if the
provider is not allowed to bill both programs.
MR. SHERWOOD replied that is why the department is trying to
eliminate the provision as it does not see the need for it.
REPRESENTATIVE VAZQUEZ inquired whether the Division of Behavior
Health has a database that identifies this type of double
billing.
MR. WALL responded the Alaska Automated Information Management
System (AKAIMS) tracks clients in both systems and the division
has a quality assurance (QA) unit that does exactly that.
REPRESENTATIVE VAZQUEZ asked whether the division has caught any
providers.
MR. WALL replied he cannot answer that specifically. He
believed there have been instances of investigations which were
then generally handed over to the Medicaid fraud unit. The
Division of Behavioral Health may encounter issues in its QA
process and then hand that over to the Medicaid fraud unit.
4:23:11 PM
MR. SHERWOOD turned back to the sectional analysis, stating that
Section 13 instructs the department to amend its state Medicaid
plan to be consistent [with HB 148] and submit the amended plan
to the federal government. The Section 1115 waiver would
essentially be an addendum to the department's Medicaid state
plan. So, Section 13 is really instructing the department to do
what it knows it has to in order to keep itself in federal
compliance.
MR. SHERWOOD explained Section 14 authorizes the department to
engage in emergency rule making [under the Alaska Administrative
Procedure Act]. It allows the department to be clear that it
can move fast on some of these provisions and start implementing
reforms and obtaining savings. The sooner the department can
get these in place, the sooner it can start achieving the
savings.
REPRESENTATIVE VAZQUEZ said historically the courts have been
strict in allowing administrative agencies to issue emergency
regulations. She inquired as to how much time the department
expects it will be saving by using this mechanism [for emergency
rule making].
MR. SHERWOOD responded he doesn't know that the department has
calculated an average. A fairly swift moving regulation process
through the normal process would take three to four months to
become effective, while emergency regulations are effective
immediately. With regard to the courts, while these situations
can rise to the level of emergency, having it in statute
eliminates one point of contention should a group try to
obstruct the department's implementation of regulations or
emergency regulations.
REPRESENTATIVE VAZQUEZ offered her understanding that the
department plans to implement this immediately if the bill
passes. Commenting this may affect thousands of people in
Alaska, she asked where the due process is by rushing it so
fast.
MR. SHERWOOD answered that the provisions in the Administrative
Procedures Act for regulations do provide for a notice and a
hearing. In simplistic terms, the normal process for adopting
regulations is replicated, but the department is allowed to
begin implementing them before that process is complete. So,
the department would put the regulations into effect and then
would go through that process. That said, that is at the state
level; there are still some notice requirements that must be met
at the federal level - 30 days' notice to providers for changes
in reimbursement, timely notice to recipients if making a change
that would result in the elimination or reduction in any of
their benefits.
REPRESENTATIVE VAZQUEZ requested the federal regulatory and
statutory federal citations that enable the department to
immediately implement this bill without needing to first apply
for a change to the state plan.
MR. SHERWOOD did not recall the specific cite that allows state
plan amendments effective in the quarter in which they are
submitted. However, any state plan amendment submitted before
the end of March 2015, the end of the first quarter, will have
an effective date of January 1, 2015, he said. He offered to
provide the citation to the committee. In response to Chair
Seaton, he confirmed that any state plan amendment would be
retroactive to the first day of the quarter in which it was
submitted. For example, if a state plan amendment was submitted
on March 31, the state could request an effective date of
January 1, 2015.
CHAIR SEATON referred to proposed Section 17 of HB 148 and asked
whether the effective date would be July 1, 2015.
MR. SHERWOOD acknowledged that the state's statutory effective
date for Section 17 is July 1, 2015, but he was referring to the
effective date as it relates to the Medicaid state plan being
sent to the federal government for approval, which can be
retroactive to the beginning of the quarter in which the
amendment was submitted.
CHAIR SEATON asked for further clarification.
MR. SHERWOOD clarified that nothing precludes submitting a state
plan amendment prior to that date; however, the effective date
per state statute requires the effective date to be on or after
July 1, 2015.
CHAIR SEATON related his understanding that the implementation
date was in Section 17 and even though federal law allows
retroactive provisions, state statutes do not allow an effective
date prior to July 1, 2015.
MR. SHERWOOD expressed the dates can be challenging to track.
CHAIR SEATON next directed attention to Section 15.
4:31:19 PM
MR. SHERWOOD stated that Section 15 would provide an instruction
to the revisor of statutes to make technical amendments to the
title of AS 47.07.036 to conform to the amendments of this act.
MR. SHERWOOD stated that Section 16 would provide immediate
effective dates for Sections 13 and 14 of the bill, sections
that allow the state to submit state plan amendments and to
begin developing emergency regulations. As just discussed,
Section 17 would provide an effective date of July 1, 2015 for
the remainder of the bill.
CHAIR SEATON asked for further clarification that the state plan
amendment could be submitted and the department can proceed with
emergency regulations, but these will not be effective until
after the statutory date of July 1, 2015 as per Section 17 of HB
148.
MR. SHERWOOD answered that was correct since the types of things
the department would be trying to implement with the
aforementioned state plan amendments and regulations would not
be effective until July 1, 2015. Thus the effective dates of
those provisions would not be prior to July 1.
4:33:11 PM
CHAIR SEATON moved to adopt Amendment 1, labeled 29-GH1055\A.2,
Glover, 3/24/15, which read:
Page 7, following line 15:
Insert a new bill section to read:
"* Sec. 9. AS 47.07.030(d) is amended to read:
(d) The department shall [MAY] establish [AS
OPTIONAL SERVICES] a primary care case management
system or a managed care organization contract in
which certain eligible individuals, including super-
utilizers as identified by the department, are
required to enroll and seek approval from a case
manager or the managed care organization before
receiving certain services. The department shall
establish enrollment criteria and determine
eligibility for services consistent with federal and
state law."
Renumber the following bill sections accordingly.
Page 9, following line 3:
Insert a new bill section to read:
* Sec. 14. The uncodified law of the State of
Alaska is amended by adding a new section to read:
MEDICAID MANAGED CARE FOR SUPER-UTILIZERS. On or
before January 1, 2017, the Department of Health and
Social Services shall
(1) establish a primary care case
management system or a managed care organization
contract under AS 47.07.030(d), as amended by sec. 9
of this Act, for super-utilizers, as identified by the
department; and
(2) deliver a report on the system or
contract to the senate secretary and the chief clerk
of the house of representatives and notify the
legislature that the report is available."
Renumber the following bill sections accordingly.
Page 9, line 12:
Delete "sec. 10"
Insert "sec. 11"
Page 9, line 17:
Delete "10"
Insert "11"
Page 9, line 23:
Delete "Sections 13 and 14"
Insert "Sections 15 and 16"
Page 9, line 24:
Delete "by sec. 16"
Insert "in sec. 18"
REPRESENTATIVE TARR objected for the purpose of discussion.
CHAIR SEATON explained that the amended Section 9, related to
the establishment of a primary care case management system, or
managed care organization for certain individuals, changed from
"may" to "shall" and includes the super-utilizers as identified
by the department as eligible persons. He reported that the
proposed amendment would also add a new Section 14 to the
proposed bill, which would add the requirement that the
department establish the primary care case management for a
managed care contract by January 1, 2017. It would require the
department to provide a report, plan, or contract to the
legislature. He stated that the genesis of this amendment was
to address super-utilizers, as they had been identified for a
large potential savings; however, AS 47.07.030(d) has been in
statute without action.
CHAIR SEATON explained that the department is committed to
seeing action. He recognized the difficulties of travel and
small populations means it is not practical to institute case
management for the entire state. The department has been given
leeway to select the type of care management and to identify
eligible individuals who require attention. He acknowledged
that some tweaks may be necessary.
CHAIR SEATON tabled Amendment 1 for further consideration,
noting it would be taken up at a later date.
REPRESENTATIVE TARR asked if this was a current reform. She
agreed that several million dollars has been saved with
expansion of efforts related to "super utilizers." She asked if
he could compare whether this amendment will change what is
currently being done and whether the department can continue its
cost savings efforts without language changes.
MR. SHERWOOD did not think the proposed amendment was necessary
to continue the department's efforts to curb costs by addressing
"super utilizers," and the aforementioned changes will not
interfere with the department's current actions.
CHAIR SEATON noted that the required reporting will provide
accountability to inform the legislature on the progress being
made.
4:37:49 PM
CHAIR SEATON moved to adopt Amendment 2, labeled 29-GH1055\A.3,
Glover, 3/24/15, which read as follows:
Page 9, following line 3:
Insert a new bill section to read:
"* Sec. 13. The uncodified law of the State of
Alaska is amended by adding a new section to read:
MEDICAID REDESIGN; REPORT TO LEGISLATURE. The
Department of Health and Social Services shall present
to the legislature on or before the 10th day of the
Second Regular Session of the Twenty-Ninth Alaska
State Legislature the results of the Medicaid Redesign
and Expansion Technical Assistance study, advertised
under request for proposal number 2015-0600-2986,
issued February 25, 2015. The department shall deliver
a report describing the results of the study and a
program for reforming the medical assistance program
to the senate secretary and chief clerk of the house
of representatives and notify the legislature that the
report is available."
Renumber the following bill sections accordingly.
Page 9, line 23:
Delete "Sections 13 and 14"
Insert "Sections 14 and 15"
Page 9, line 24:
Delete "by sec. 16"
Insert "in sec. 17"
REPRESENTATIVE TARR objected for the purpose of discussion.
CHAIR SEATON explained that Amendment 2 would add a new section
to uncodified law requiring the department to report to the
legislature the results of the Medicaid Redesign and Expansion
Technical Assistance study describing the results of the study
and a program for reforming the medical assistance program on or
before the 10th day of the second regular session of the
legislature.
CHAIR SEATON stated that the department has already committed to
moving forward with the third-party consultant on Medicaid
reform, but this report ensures that the legislature will be
informed of the results of the study and program progress.
4:39:33 PM
MR. SHERWOOD commented that the department has intended on
sharing the results of the aforementioned work with the
legislature.
REPRESENTATIVE TARR expressed her concern for any additional
staff time to produce a report. She asked whether the
contractor's report will be repackaged.
MR. SHERWOOD replied that the department would not intend to do
substantially more work to prepare the report.
COMMISSIONER DAVIDSON added that the final report could be
presented as well as in a condensed PowerPoint to provide
information to the legislature and the public in a condensed
format in an effort to provide transparency in the process.
REPRESENTATIVE TARR asked whether Amendment 2 would adversely
impact the timeline for the contractor.
MR. SHERWOOD answered that it should not impact the timeline.
CHAIR SEATON said that prior reports have not been shared with
the legislature in a timely manner. He emphasized that
Amendment 2 would clarify the reporting expectation.
REPRESENTATIVE TARR maintained that she did not want to take
away any staff time to meet the reporting requirement. She
recalled a recent example of the committee waiting on a report
relating to Medicaid expansion.
4:42:54 PM
REPRESENTATIVE TARR removed her objection.
REPRESENTATIVE VAZQUEZ asked whether the bill would provide for
a pilot project on case management.
CHAIR SEATON answered that [Amendment 2] was limited to the
report for the Medicaid Redesign and Expansion Technical
Assistance study.
REPRESENTATIVE VAZQUEZ said she had no objection.
4:43:35 PM
There being no further objection, Amendment 2, labeled 29-
GH1055\A.3, Glover, 3/24/15, was adopted.
CHAIR SEATON said that further consideration on proposed HB 148
would be set aside. He opened public testimony on HB 148.
4:46:33 PM
ILONA FARR, MD, Alaska Family Medical Care, LLC, stated that she
was representing herself and several family practice physicians.
She spoke in opposition to HB 148. She explained that she has
served on the [MRAG] Medicaid Reform Advisory Group and the
group was advised that [Medicaid expansion] would cost the state
$6.2 billion by 2032 with the state paying $2.8 billion that
year. This cost projection did not take into consideration
Medicaid expansion. She asked where this money would come from.
She expressed her concern about the provider tax. Other states
have implemented some of these taxes, consisting of 19 different
categories. She expressed concern, noting she has a copy of the
study [Lewin Group study], noting her concern related to the
potential impact this would have on small businesses, such as
physical therapy and physicians. Most physicians are paid about
72 percent of the costs, with increased audits, regulations, and
other requirements necessary with Medicaid and she feared this
will drive small businesses out of business and increase large
facilities and corporations. Further, the cost differential
could mean some providers will be paid $540 for services while
private practice physicians would be paid $50, she said.
DR. FARR stated that some people graduate from medical school
with $400,000 - $500,000 in debt so it will be virtually
impossible for them to set up as small private practices. She
expressed concern about the increasing number of Medicaid
patients, noting that currently 140,000 - 160,000 patients are
on Medicaid. She said the studies do not tell how many patients
will be added with Medicaid expansion. She has seen studies
that report that Medicaid expansion will add 40,000, others show
it will add 64,000 to the system. She offered her belief that
in other states that have adopted Medicaid expansion, it has
been triple that number. She expressed concern about the cost
and number of audits that will be conducted, since the audits
can be costly. She has heard the Medicaid patient costs are
high, with an average of $7,500 per patient, although she
understood one patient's cost was $65,000. Over 2,000 existing
Medicaid patients with hepatitis C were estimated to cost
$300,000 per patient, which she has not seen budgeted. Further,
some individuals are still on the list to receive Medicaid
services that are not being covered. Medicaid was supposed to
provide services for the elderly and the disabled, but the
program is being increased, which could cause the state to reach
a financial crisis.
DR. FARR offered to provide copies of reports she has
accumulated. She further asked members to support the WWAMI
[Wyoming, Washington, Alaska, Montana and Idaho] program, as
well as some of the provisions in HB 74.
4:51:42 PM
BECKY HULTBERG, President, CEO, Alaska State Hospital & Nursing
Home Association (ASHNHA), stated that her testimony was
previously submitted in written form. The ASHNHA supports HB
148 because it expands Medicaid, but also because the state's
health care system must be reformed. She stated that health
care reform was real, possible, and attainable and this bill
will set the framework for meaningful Medicaid reform. She
cautioned that reform should not be considered one point in time
but that reform is process that needs to happen each year. She
said that states that have had good experiences with cost
containment are ones who analyze their system each year.
MS. HULTBERG characterized the state as being at a crossroad,
one in which important choices must be made on Medicaid
expansion and reform that will have fiscal and economic impacts
and will impact people's lives. The choice to engage in
meaningful reform remains one of the most important choices the
state can make. The legislature has indicated that Medicaid
must be reformed. The ASHNHA agrees and supports these efforts,
and would like to partner with the state to achieve that goal.
MS. HULTBERG provided two quick examples of reform.
PeaceHealthKetchikan received a CMS innovation grant for care
coordination, she said, and the project saved money and improved
quality, which sounds good, except that the hospital "spent
money to lose money" in order to improve care. She offered her
belief that the state's financial incentives are not aligned.
The current payment system does not give incentives for
efficiency and quality and instead rewards volume. Medicaid
reform will help to change that dynamic to align incentives, she
said.
MS. HULTBERG said that Central Peninsula Hospital in Soldotna
has been considering forming a Coordinated Care Organization
(CCO) pilot program. The CCO would be paid a global payment to
cover all health care needs for a defined population, with
metrics and accountability for quality and outcomes. Within
that global budget the CCO is empowered to shift resources where
they are needed to ensure optimal cost and quality outcomes.
The CCO takes risks and in the event the costs exceed the
budget, they must "eat" it. However, if the CCO can manage care
more efficiently with better quality outcomes they will be
rewarded and incentives will be aligned. She said, "That is the
destination."
MS. HULTBERG said Medicaid expansion will provide health care
for those who could never afford it, transforming lives, plus it
provides the engine of health care transformation, which
benefits everyone. Innovation requires investment, she said,
and transforming the health care system, the state needs the
risk capital to invest in those transformative efforts. She
said that Medicaid expansion through reduction in uncompensated
care provides the risk capital that will enable the state to
continue this journey. Besides risk capital, the state needs
health care reform because financial incentives must be aligned
and pay for outcomes, not volume. In conclusion, she said that
[health care] reform is real, possible, achievable, and Medicaid
expansion is critical to achieving it. Finally, the Alaska
State Hospital and Nursing Home Association (ASHNHA) and
hospitals are ready to partner on this journey.
4:55:43 PM
JOHN GAGUINE stated that he is a longtime Juneau resident. He
offered his belief that people have firmly endorsed Medicaid
expansion. During the last election in Alaska, an incumbent
Democratic U.S. Senator was voted down and even though the
Republicans maintain strong control of both houses of the
legislature, an incumbent Republican governor was defeated. One
primary issue between Governor Walker and former Governor
Parnell was Medicaid expansion. The former governor opposed it
vociferously and [as a candidate Mr.] Walker was very strongly
in favor of it. Obviously, there were other issues as well;
however, he offered his belief that it was the one of the
primary issues between the two. The people have spoken and if
the legislature does not produce a bill on Medicaid expansion
that it will be flouting the will of the electorate.
4:57:20 PM
ALYSON CURREY stated that her education and background are in
social work. She offered her belief that is an injustice when a
childless adult without any disability in Alaska who earns less
than $20,000 per year - just under $10 per hour - cannot afford
health care coverage. In her work as a social worker, she has
seen individuals work multiple jobs just to make ends meet and
forego necessary health care in order to pay utility bills,
rent, or groceries. She offered her belief that health care
represents a basic human right and no one should have to choose
between seeking medical care and paying rent. Access to
affordable health care should not depend on who you are, where
you live, or on your income level. Medicaid expansion would
ensure that all Alaskans have health care coverage for
preventative care, which would reduce the number of emergency
room visits and allow currently uninsured individuals to remain
productive members of the Alaskan economy. Reforms to the
state's Medicaid program are necessary to ensure that the state
has the most effective and efficient system available, and
certainly evaluation and re-evaluation should continually occur.
Medicaid expansion does not need to wait for Medicaid reform.
Thus the state cannot afford to wait to expand Medicaid and
expansion does not need to wait for reform.
4:59:16 PM
MELISSA ENGEL spoke in support of Governor Walker and
Commissioner Davidson's tireless efforts on Medicaid expansion.
As a United Methodist Church youth pastor she looks to the
ethics for guidance and HB 148 is a step in the right direction
toward embodying compassion and Christian love. As a youth
pastor working with five churches, she often meets low-income
families and individuals who will benefit from Medicaid
expansion and reform. Although she also sees people reach out
to help out others, the church can only do so much. She
acknowledged that people can help others financially, but not
every faith community can do so. The church family cannot
provide health care or act as a "go between" for people and
their insurance companies. She urged members to reflect the
needs of the people and in the spirit of kindness to give people
access to the health care they deserve, which could allow them
to get a "leg up" and experience transformation in their lives
and in their current low-income bracket. She urged members to
be authentic and kind. She concluded by quoting John Lewis, a
civil rights activist who said, "If not us, then who? If not
now, then when?" She suggested the answer could be "yes" and
"now" and urged members to please support HB 148.
5:01:42 PM
KARENZA BOTT stated that she stands before members today because
of Medicaid. She stated that she wasn't always poor, but one
day in 2006 she was driving home from her job at the Division of
Elections and a young woman talking on a cell phone while
driving ran into her at 55 miles per hour. Her life changed
dramatically with her brain no longer talking to her body.
Ultimately she was certified 100 percent disabled by the [U.S.]
Social Security Administration (SSA) retroactive to 2009.
However, she learned that social security benefits do not cover
physical therapy and restorative dental work, but Medicaid does.
She described her ordeal, noting she was able to get off pain
medication in 2012-2013 and is currently in the SSA's Ticket to
Work program, and has successfully completed an internship with
U.S. Senator Mark Begich in Juneau. She credited her success
due to Medicaid. She said she was enrolled in Alaska Native
Studies at the University of Alaska Southeast. She concluded by
stating she was proud to be an Alaskan and hoped that members
will "put a face to the Medicaid reform." She offered her
support for Medicaid reform and HB 148.
5:04:04 PM
VERNE BOERNER, President, CEO, Alaska Native Health Board
(ANHB), spoke in support of HB 148. The ANHB serves as the
statewide organization for the Alaska Tribal Health System that
serves over 145,000 Alaska Natives and American Indians.
Although tribal programs are often equated with health insurance
for tribal members, the ATHS does not provide health insurance
for individuals nor does it guarantee benefits. In fact, the
ATHS has been chronically underfunded since its inception and
most tribal programs must ration care. Not expanding Medicaid
carries opportunity costs that will not only impede economic
growth but will result in higher costs to the statewide system
and sadly affect mortality, she said.
MS. BOERNER stated that the U.S. Indian Health Service (IHS)
sources of funding are below the level of need and are finite.
Therefore, tribes have been innovative in designing and
developing programs that increase resources that depend on
third-party billings to extend the capacity to provide care.
Heartbreakingly; however, Alaska Natives suffer the highest
rates of uninsured and poverty rates in the program, and so
Tribal programs are still forced to direct resources to cover
uncompensated care and are not able to apply those resources
towards capacity building. Rationing care means that diagnosis
and treatments are delayed, diseases progress, treatment is more
costly, and outcomes are poorer. She said that Medicaid
expansion will alleviate pressure on the health system and allow
for more resources to be dedicated to capacity building and
innovation. In fiscal year (FY) 2012, Alaska Natives made up
nearly 40 percent of Alaska's Medicaid recipients; however,
payments to those tribal programs only totaled about 16.4
percent. She said, "If that percentage was pushed up to 20-30
percent, the dollar savings to Alaska's general fund would have
been $25.8 million and $97.3 million, respectively." Tribes are
ready to work with the state and federal government on
developing ways to better utilize the Alaska Tribal health
system, noting the system has been impacted by underfunding and
fiscal pressure and leaving Medicaid expansion funding on the
table costs lives. "That is on your and my shoulders as
leaders," she said. It limits the ability to innovate and
develop sustainable programs and help improve the health status
and quality of life for Alaskans. She strongly urged members to
pass HB 148.
5:08:37 PM
MICHAEL DZURISIN stated that he had been a state licensed
insurance agent in California and considers himself to be an
expert on health insurance. He spoke in favor of Medicaid
expansion since it will create 4,000 jobs and $1.2 billion in
wages and salaries in Alaska. He said that it will also save $6
million in the budget. It will provide insurance for an
estimated 40,000 who do not currently have health insurance.
It's not ethical to leave people uninsured, plus the uninsured
go to the emergency room for care plus emergency room care costs
more and affects hospitals. He predicted the overall effect of
passing Medicaid expansion will be to lower health premiums. He
applauded the governor for supporting Medicaid expansion since
Medicaid expansion is the "right move." In fact, many
Republican governors in other states have adopted Medicaid
expansion including John Kasich of Ohio, Chris Christie of New
Jersey, as well as, he believed, in Kentucky. He appreciated
earlier testimony by the physician who testified with her
concerns with Medicaid expansion; however, he suggested that
issues with Medicaid can be fixed by increasing the payments.
Speaking as an expert in the field health insurance, he offered
that insurance is a game. He advocated for public insurance,
which most industrialized nations have, except for Switzerland,
which tightly regulates its insurance industry. He reported
that the overhead for Medicaid and Medicare is 2 percent as
compared to private insurance with 10-20 percent. He said that
insurance companies deny people coverage on claims since
insurance companies lose money when they pay out big claims.
Lastly, he emphasized his primary reason for supporting Medicaid
expansion is because he believes everyone's health care costs
will go down. People think that if everyone has Medicaid, taxes
will need to be raised, but he offered his belief that
everyone's insurance payments represent a second tax.
5:12:01 PM
ROBIN SMITH asked to speak as a business owner in Anchorage.
She expressed concern about the Alaska's future. According to
Northern Economics, Inc. [a consulting firm], Alaska's economy
is heading toward recession. She said that Medicaid expansion
was one of the bright spots. With the drop in oil prices,
Alaska needs to cut the budget, but if the budget is cut too
much it will drive Alaska into a recession. In fact, there was
little in sight that will bring money into economy, but Medicaid
expansion will do so since it will bring $1 billion to the state
in the next five years. If Alaska does go into a recession,
businesses will be dramatically impacted and will be forced to
increase the "bottom line" for their companies, which will mean
eliminating costs, such as health care insurance for employees.
Currently, emergency room fees incurred for the uninsured are
passed on to Alaska's businesses and individuals in the form of
higher premiums for health care, which also impacts hiring
decisions for businesses. Health care costs have dramatically
risen in the past 30 years, but Medicaid expansion will reduce
health care costs and improve business profits. Further, if for
some reason Medicaid expansion did not reduce costs, Medicaid
can be cancelled in the future. Still, two years of health care
would better than no health care, she said. In closing, she
urged members to take Alaska future economy into consideration
by supporting Medicaid expansion and passing HB 148.
5:14:51 PM
ANDREW SMALLWOOD stated that he works as a commercial fisherman
and he is on Medicare. He urged members to support and pass HB
148. He offered his belief that the state has refused Medicaid
expansion in an attempt to hinder implementation of the [Patient
Protection and] Affordable Care Act. He stated that Anchorage
ranks as the highest in the nation and arguably in the world for
most medical procedures. An uninsured patient in Anchorage must
pay about double what an insured patient pays. Further, coastal
Alaska also has highest percentage of uninsured people in the
nation, which he characterized as a "pretty dismal situation."
Anything that can be done to improve this situation should be
done. During declining revenues in Alaska, it makes absolute
sense to adopt Medicaid expansion and members should consider
the PPACA in a separate issue. He suggested that if the
intention of the majority is to block implementation, he hoped
the legislative leadership has an alternative plan in mind since
the present system in Alaska is broken for low-income
individuals.
5:16:47 PM
JEFF JESSEE, Chief Executive Officer, Alaska Mental Health Trust
Authority, Department of Revenue, asked to focus on first line
of the legislative intent, which read, "The legislature finds
that the current Medicaid program is not sustainable." He said
that reform is not optional, noting the Alaska Mental Health
Trust Authority (AMHTA) is a long-term thinker. He urged
members not to let the Medicaid's "house of cards" continue to
get bigger since it will collapse at some point and will take
the AMHTA's beneficiaries down with it. As Ms. Hultberg of the
Alaska State Hospital and Nursing Home Association (ASHNHA)
testified earlier, the AMHTA remains committed to work with the
legislature, the department, and the governor on reform to bring
the Medicaid budget into a sustainable level. Certainly from
the Alaska Mental Health Trust Authority beneficiaries'
standpoint, Medicaid expansion is absolutely critical. First,
some beneficiaries are homeless and often suffer from substance
abuse disorders or have mental health issues. Secondly, 65
percent of inmates in correctional facilities have a mental
health diagnosis and 80 percent have a substance use disorder
diagnosis. Thus expanding Medicaid would serve as a means for
them to obtain services they need to get off the street or stay
out of jail, which not only makes good health sense, but it also
makes good economic sense. He pointed out substantial
discussion has been taking place in the legislature on
recidivism and trying to avoid building another prison; however,
the state needs to support recovery in order to keep people out
of prison. In closing, he said that financial support can
either be paid out of the general fund, which is what currently
happens, or by passing Medicaid expansion and getting the
federal government to help with that effort.
[HB 148 was held over]
5:20:50 PM
ADJOURNMENT
There being no further business before the committee, the House
Health and Social Services Standing Committee meeting was
adjourned at 5:20 p.m.