Legislature(2009 - 2010)BUTROVICH 205
02/23/2009 01:30 PM Senate HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SB32 | |
| SB52 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 98 | TELECONFERENCED | |
| += | SB 52 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 32 | ||
SB 32-MEDICAID:HOME/COMMUNITY BASED SERVICES
CHAIR DAVIS announced consideration of SB 32.
1:31:08 PM
MAX HENSLEY, staff to Senator Ellis, introduced himself.
CHAIR DAVIS asked if there is a committee substitute (CS).
MR. HENSLEY answered yes.
SENATOR ELLIS suggested that he provide an overview of the bill
and then Mr. Hensley will go through the CS that the committee
may choose to entertain.
CHAIR DAVIS agreed.
SENATOR ELLIS advised the committee that since the bill was
first heard about three weeks ago, he and his staff have been
working with Commissioner Hogan and his staff and with Senator
Davis's office to find a way to implement the goals of the
legislation while respecting the administrative difficulties the
department might have in minimizing overhead costs.
The intent of the language, that home and community-based
services are the key to improving the quality of life of seniors
and people, especially children, with developmental disabilities
is something he firmly believes. It has been conclusively proven
that home and community-based care can help replace or
ameliorate the need for institutional care and do so at a lower
cost to the state on an individual case basis and across the
whole system. A recent study in the Academic Journal of Health
Affairs found that states with long-established high proportions
of home and community-based services saw a three percent overall
decrease in long-term-care spending between 1995 and 2005, as
opposed to a 14.5 percent increase in states that have a low
proportion of home and community-based services.
According to Department of Health and Social Services (DHSS),
Medicaid spending in Alaska is projected to reach $3.6 billion
in 2028. Per enrollee spending is expected to go from $7400 to
$22,000; long-term care is expected to be the fastest growing
segment of those services and a DHSS report suggests that home
and community-based services are the reasons that institutional
spending is projected to be relatively flat over the years 2008
to 2028. That is not an attack on Alaska's wonderful long-term-
care facilities; it just means that home and community-based
services are the least restrictive level of care and the most
cost-effective.
1:34:25 PM
SENATOR ELLIS asserted that policy choices have a significant
impact on these projections; the state can control this growth
with a wise allocation of current resources. The Department of
Health and Social Services and the legislature together hired
Meyers and Stouffer, consultants to provide recommendations for
home and community-based service methodologies. There is a broad
acknowledgement that the current system is broken; the
department wants to do better and appreciates legislative
guidance in this regard.
Except for an across-the-board four percent increase in 2008,
most providers haven't seen increases since 2004; many haven't
seen any increase in ten years and have reached a breaking
point.
He admitted that there were serious problems in the contractors'
methodology; they left out testimony from most of the smaller
providers that this bill is aimed at helping.
This legislation specifically gives the department the
flexibility to devise a cost-based system that works while
fixing the disparity between home and community-based services
and institutional care rates. Hospitals and nursing homes have a
statutorily defined methodology and required rate review; there
is really no reason that home and community-based service
providers who are licensed by the State of Alaska should not
receive the same treatment by the state as institutional care
facilities.
1:36:20 PM
SENATOR PASKVAN moved to adopt the proposed committee substitute
(CS) for SB 32, labeled 26-LS0218\C, as the working document.
There being no objection, version C was adopted.
MR. HENSLEY said there are four major changes between the
original, R version, and this CS. The first is to move the
bill's location in statute from AS 47.07.070-074 to a new
section 47.07.069 to give the department the flexibility to
interpret the bill in a way that is more appropriate for the
many small providers.
1:38:01 PM
SENATOR ELLIS interjected that this proposed change was easy to
do and deals with the concerns of the Alaska Hospital and
Nursing Home Association from their long-litigated portion of
the statutes. It was never his intent to affect what is going on
currently with nursing homes.
MR. HENSLEY continued; the second change is on page 1, lines 8-
11 and adds two other categories of service to the provision of
home and community-based waiver services: the provision of
personal care services in a recipient's home (lines 8 and 9) and
assisted living homes for needy or vulnerable persons (lines 10
and 11).
The third change is on pages 2 and 3 in Sections 2 and 3 and is
conforming language to change the references for assisted living
homes to match the fact that their rates are now being
determined by this new process of rate review as opposed to the
older process, which was a minimum of $70 with the department's
ability to adjust in regulation.
Fourth, page 3, Section 4, lines 12-26, state that the
department will give an annual report on the trends in rates for
each of the next five years to keep them informed of what this
rate-review process is doing to the rates and how it is being
implemented and received. The report will be provided to [the
governor and] the legislature through the presiding officers of
each house, the chairs of the two finance committees and the
chairs of the two health and social services committees.
1:40:52 PM
Section 5 repeals the reporting requirement after five years, at
which point the program will be well-established.
Finally, Section 6 contains a change made in consultation with
the department; it provides for a two year delayed effective
date to allow the department time to develop a methodology for
determining costs in a way that will work with the small
providers.
1:41:35 PM
CHAIR DAVIS asked Mr. Hensley what exactly will be different if
the bill passes in this new form.
MR. HENSLEY answered that the changes he went through were
changes from the original bill; the language of the bill itself
remains basically unchanged. It has moved to a different
section, but the bill requires Department of Health and Social
Services to review rates paid through Medicaid to the providers
of home and community-based services annually based on costs, so
that the providers are paid a rate that reflects the actual cost
of providing those services.
CHAIR DAVIS queried, "So with this bill it will not give a rate
increase in year 2010?"
MR. HENSLEY answered no, the bill does not take effect until
July 2011 and any future rates will be determined by this
review. In the opinion of the sponsor, it is early to determine
what will happen to the rates; they will probably increase but
there is no way to say how much because it has been so long
since there has been any comprehensive study done.
1:43:21 PM
SENATOR THOMAS said the fiscal notes show increases in 2010, and
asked what those represent.
MR. HENSLEY responded that the fiscal notes refer to the
original version of bill. He suggested that there are some
representatives from the department who may be able to address
how the proposed CS would change those fiscal notes; but a major
reason for the new version is to lower the administrative and
overhead costs shown in those fiscal notes.
SENATOR THOMAS asked if he is correct in believing that the new
process isn't phased in, but happens all once.
MR. HENSLEY confirmed that is correct.
1:44:31 PM
CHAIR DAVIS asked Jon Sherwood from Department of Health and
Social Services to come forward.
JON SHERWOOD, Administrator, Medicaid Special Projects,
Department of Health and Social Services, Juneau, said the
department has been working with the committee and the sponsor
to come to some understanding about the best way to move
forward. They do want to improve their rate-setting methodology
and a number of their concerns are addressed in the committee
substitute; they still have concerns about setting out the way
rates are set in statute and it may be that they simply continue
to be in disagreement over that issue. With regard to the fiscal
notes, the way this bill has been restructured, they would not
expect the same kind of administrative costs either factored
into the rate the providers pay to do Medicaid cost reporting or
into the department's audits and review of those cost reports.
So although they have not had an opportunity to recalculate the
fiscal notes, they would expect a substantial decrease in the
amounts. The delayed effective date means that they would not be
seeing FY 2010 expenditures with regard to the rate increase.
CHAIR DAVIS asked if the department will be submitting a zero
fiscal note based on this CS.
MR. SHERWOOD answered that it would not be a zero fiscal note
for the life of bill and that there may be some small
administrative expenses required this year; he reiterated that
they have not had a chance yet to recalculate the fiscal notes
based on the committee substitute.
1:47:12 PM
SENATOR DYSON asked what the administration would prefer be
different in the rate-setting mechanism.
MR. SHERWOOD responded that the department doesn't mind having
to do the regulations, to set rates or to subject them to some
kind of annual review, but their attorneys always get nervous
when the specific language about exactly what they have to look
at when they calculate the rates goes into statute. It is one
more opportunity for people to argue about what the legislature
meant.
1:48:19 PM
SENATOR DYSON said he can appreciate that; he wondered if the
administration is concerned that this puts the review and
changing of the rates on "auto pilot" and out of their control.
MR. SHERWOOD said they are concerned that it would restrict
their ability to constrain rates if necessary.
SENATOR DYSON asked if the state would be required to fund an
increase or if it would be subject to legislative appropriation.
MR. SHERWOOD was not sure, but noted that the Division of Senior
and Disabilities Services receives an appropriation that covers
nursing homes and home and community-based services and would be
affected by both the rates they pay and the people they serve.
So if there is some constraint in their budget and they are
required by statute to give a rate increase, then something else
would have to change... the number of people they serve, some of
the service limitations or something else.
1:50:14 PM
SENATOR DYSON asked, "So you are not required to provide service
to everyone who applies?"
MR. SHERWOOD explained that for Medicaid waiver services they
are not required to serve everyone who is eligible; they tell
the federal government how many people they are going to serve.
They cannot directly constrain the number of people served by
personal care services, although they could change the
eligibility criteria.
1:51:23 PM
SENATOR DYSON asked if they have traditionally seen line items
for these services showing up in the supplemental budget.
MR. SHERWOOD said he did not know.
1:51:44 PM
SENATOR ELLIS thanked Mr. Sherwood for assisting the committee
with this legislation and stated that he wants it made clear for
the record, that the legislature always retains its right to
appropriate. The governor does not have a budget; she has a
budget proposal and the legislature appropriates the money or
does not. If there is a cost-based rate review process on an
annual basis, the department will make a proposal to the
legislature and the legislature will fund or not fund the
services as they do in all other areas. While he appreciates the
department's discomfort with setting cost-based rates in
statute, all logic dictates that costs would be a significant
factor in the setting of rates; so he does not believe the
committee has gone beyond reason in this legislation. They are
trying to set up a system to get a better handle on how to
establish those rates and ultimately any system of rate-review
would consider the cost of providing these services by home and
community-based services just like they do for nursing homes and
hospitals.
SENATOR ELLIS added that he has been surprised by some of the
people in the legislative process who are viewing this
legislation positively as a management tool for the legislature.
He asked Mr. Sherwood to comment on the report and how it might
be used to help the department and the legislature to be better
policy makers and budget writers.
1:54:48 PM
MR. SHERWOOD said he's glad Senator Ellis asked that question.
The department sees the report as a vehicle for accountability
to give them a forum in which to state what they are doing and
encourage open discussion about it. As the talking about this
report, he was reminded of the annual developmental disabilities
wait-list; by providing that information to people, they have
been able to sustain substantial progress at removing people
from the wait-list and getting them into service. They think
this report will provide a similar vehicle for discussion about
rates and to see if the legislature supports the direction they
are going.
1:56:12 PM
SENATOR ELLIS commented that reports required by the legislature
are sometimes seen by departments as a hassle and he is pleased
that DHSS thinks this is a good idea; it can be a good
management tool.
1:56:41 PM
CHAIR DAVIS said she is a co-sponsor on this bill and
appreciates the work that has been put into it, but she does not
think this gets them where they need to be. She has a real
problem with the two-year delay when they've been waiting for
years for this rate review to be completed so they can begin to
give these organizations the increases they need; she gets calls
almost daily from people who are concerned about lack of money
to run their programs. Just today she received a letter from a
grantee saying that they had just been through a rate review and
were told they have to hire 4.5 more staff members in order to
continue the program; they said it will cost them about $300,000
and yet the state is not going to assist them in any way with
funding. She believes there should be some increase forthcoming
during this 90-day session.
1:58:24 PM
MR. SHERWOOD said the department's concern with the delayed
effective date had to do with having a statutory rate-setting
mechanism in place that they could implement and be ready to
comply with when the statute becomes effective. Experience with
their contractors, Meyers and Stouffer, didn't get them as far
as they'd hoped it would toward determining how to do that rate-
setting or get reasonable cost information from providers. They
don't want to put anyone in the position of having to come into
statutory compliance immediately. That said, they do have the
ability through regulation to change rates and if there is
adequate funding in the budget they can look at changing the
rates in that way.
2:00:06 PM
CHAIR DAVIS asked if he is saying there is a way to provide a
rate increase immediately.
MR. SHERWOOD said there is no reason they can't; it depends on
the availability of funds.
2:00:54 PM
SENATOR ELLIS noted that the House and Senate HSS finance
subcommittees are in the process of reviewing the department's
budget and asked what line item would need to increase for a
rate adjustment in the near term.
MR. SHERWOOD said it would be primarily the Senior and
Disabilities Medicaid Services; if they want to increase the
amount for assisted living homes paid through the General Relief
Assisted Living and Adult Protective Services, that would be the
Community and Protection section of the Senior and Disabilities
Services budget.
SENATOR ELLIS asked if he would be willing to provide the
committee with two or three options regarding what amount of
money would need to be appropriated for those lines in the
budget to provide for a reasonable rate increase in the near
term; they will forward that information to the finance
subcommittee.
2:02:19 PM
MR. SHERWOOD said he believes he can.
2:02:38 PM
SENATOR PASKVAN said, as he understands it, while the department
may have the option of providing personal care in a recipient's
home, he wonders what options the department can exercise if a
person has to be institutionalized.
MR. SHERWOOD was not sure he understood the question. If someone
is institutionalized and goes into a nursing home or a facility
for the developmentally disabled, he said, that person is still
covered in the same budget component for Medicaid, the Senior
and Disabilities Services; it would just be paid for a different
provider and those rates are established under the statutory
authority in [AS 4]7.07.070. He wondered whether he had answered
Senator Paskvan's question.
SENATOR PASKVAN clarified that he is trying to establish whether
people might not be covered if they are staying at home, but
must be covered if they are in an institution.
MR. SHERWOOD confirmed that there is mandatory coverage for
individuals in an institutional setting, but personal care is
either provided through state option or through home and
community-based waivers, which are essentially a state option.
With regard to assisted living services, some of what Medicaid
will not cover falls under the adult protection statutes and is
covered at 100 percent general funds.
2:04:56 PM
SENATOR PASKVAN stated that the cost is less for personal care
services in a person's own home.
MR. SHERWOOD agreed that is generally the case.
SENATOR ELLIS asked if it is a policy of the state to encourage
a person to stay in the least restrictive, most cost-effective
level of care.
MR. SHERWOOD assured him that is correct; the department
attempts to offer people the option of staying out of
institutions if that is their choice.
2:05:58 PM
CHAIR DAVIS asked if personal care assistants (PCAs) are
included in the bill now.
MR. SHERWOOD answered that they are.
CHAIR DAVIS said she has decided to hold SB 32 to gather
additional information.
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