Legislature(2003 - 2004)
04/09/2003 07:02 AM House BUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
April 9, 2003
7:02 a.m.
MEMBERS PRESENT
Representative Ralph Samuels, Chair
Representative Mike Hawker
Representative Beth Kerttula
Senator Gene Therriault, Vice Chair
Senator Ben Stevens
Senator Con Bunde
Senator Gary Wilken
Senator Lyman Hoffman
Senator Lyda Green, alternate
MEMBERS ABSENT
Representative Vic Kohring
Representative Jim Whitaker
Representative Reggie Joule, alternate
Representative Bill Williams, alternate
COMMITTEE CALENDAR
APPROVAL OF MINUTES
OTHER COMMITTEE BUSINESS
WITNESS REGISTER
JOEL GILBERTSON, Commissioner
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Provided information from the department
regarding the DHSS/DMA Internal Control Over Medicaid Payments
Audit.
JACK NIELSON, Executive Director
Medicaid Rate Advisory Commission
Division of Medical Assistance (DMA)
Department of Health & Social Services
POSITION STATEMENT: Responded to questions regarding the
DHSS/DMA Internal Control Over Medicaid Payments Audit.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information regarding the DHSS/DMA
Internal Control Over Medicaid Payments Audit.
ACTION NARRATIVE
TAPE 03-3, SIDE A
Number 0001
CHAIR RALPH SAMUELS called the Joint Committee on Legislative
Budget and Audit meeting to order at 7:02 a.m. Members present
at the call to order were Representatives Samuels and Hawker,
and Senators Ben Stevens, Bunde, Wilken, Hoffman, and Green.
Representative Kerttula and Senator Therriault arrived shortly
thereafter.
APPROVAL OF MINUTES
Number 0048
REPRESENTATIVE HAWKER made a motion to approve the minutes of
March 27, 2003.
CHAIR SAMUELS asked whether there were any objections. There
being none, the minutes from the meeting of March 27, 2003, were
approved as read.
OTHER COMMITTEE BUSINESS
Number 0123
CHAIR SAMUELS announced that at the last meeting [meeting of
3/27/03] the committee released the Department of Health &
Social Services, Division of Medical Assistance, Internal
Control Over Medicaid Payments audit report, dated January 31,
2003, to the public. Chair Samuels referred to his letter of
April 2, 2003, which indicated that the committee was not happy
with the tone and some specifics regarding the department's
response to the audit, adding that he appreciated Commissioner
Gilbertson's letter of April 4, 2003, which clarified and
revisited some key points.
Number 0142
JOEL GILBERTSON, Commissioner, Department of Health & Social
Services (DHSS), introduced John Gaisford, the new Director of
the Division of Medical Assistance (DMA) and Jack Nielson,
Executive Director of the Medicaid Rate Advisory Commission. He
said the audit was extensive and consumed many months during the
legislative interim and brought forth recommendations of value
for improved management of the Medicaid program.
Number 0210
COMMISSIONER GILBERTSON stated that he probably had not devoted
sufficient attention to the audit response that was submitted to
the committee, which was why he had submitted an additional
document [letter of April 4, 2003]. He said the business of
health care is tremendously complicated, which likely explains
the motivation for staff's lengthy response to the audit
recommendations - a response that provided too much detailed
information while failing to adequately address the fundamental
issues that were raised in the audit. Those same employees have
spent hundreds of hours during the past year in preparation for
a new HIPAA [Health Insurance Portability and Accountability
Act] system and for the procurement of a new claims processing
system for the Medicaid program. The new system, when approved,
will replace the 1970s architecture of the current computer
system and promises technological advances for better health
care management, as it includes an enhanced decision support
system, increased web-based capabilities, and greater
flexibility regarding program controls.
Number 0440
COMMISSIONER GILBERTSON said not only does he agree with the
audit recommendations, but prior to the audit report, he had
initiated activities to improve the Medicaid program. He said
that the administration is currently implementing many
improvements regarding the administration of an efficient
Medicaid program that provides quality health care while
safeguarding general fund dollars. He referred to the three
legislative items introduced by the governor: 1) freezing the
annual COLA [Cost of Living Allowance] for higher-income
eligibility groups involved in Medicaid, 2) eliminating the
options list so there will be more flexibility for cost
containment within the department, and 3) eliminating the
advisory rate commission and allowing for facility rates to be
established by regulation.
Number 0523
COMMISSIONER GILBERTSON continued that reorganization is
underway within the department to strengthen the programmatic
and financial accountability of the Medicaid program. The new
structure will include the Office of Program Review, to provide
financial oversight and coordination between divisions, maximize
federal fund contributions to the program, and reduce general
fund expenditures. It will also assure that each division has
active efforts promoting program integrity and accountability.
There will be a department-wide fraud coordinator working with
fraud enforcement in the Department of Law, and with fraud
investigators within a number of programs such as Medicaid and
public assistance.
Number 0611
COMMISSIONER GILBERTSON explained that the reorganization will
streamline business practices and focus on enhancing customer
service while working in coordination with faith-based
organizations. The Office of Rate Review will be established to
coordinate Department of Health & Social Services (DHSS) rate-
setting functions. Within the Division of Health Care Services,
which Director Gaisford will be overseeing, quality management
in acute care settings will be addressed, involving provider
audits, medical reviews, and establishing [external review
systems]. There will also be enhanced capabilities to maximize
third-party liability for financial recovery for health care
services and the assurance of high-quality, cost-effective
service delivery to individuals who receive services from the
Medicaid program.
Number 0643
COMMISSIONER GILBERTSON stated that the department supports
Senator Green's efforts to pass fraud-and-abuse enforcement
legislation. This new legislation will direct the department to
increase the number of external audits, to increase enforcement,
and also to decrease erroneous payments. He said he also
intends to issue a new contract for provider audits shortly, and
will retain an experienced person within the Office of Program
Review to oversee the quality assurance functions within each
division - that person will be the department-wide fraud
coordinator.
Number 0724
COMMISSIONER GILBERTSON said that much of the effort to improve
accountability focuses on provider education and training
regarding record keeping and billing. He referred to prior
conversations with Representative Hawker about the level of
Medicaid fraud nationwide, noting that the statistics may or may
not apply to Alaska but that a better understanding is needed of
what the rate of fraud is in the state. He said "we do know
that we have a relatively small number of providers, and we know
most of them personally."
Number 0757
COMMISSIONER GILBERTSON pointed out that facilities in Alaska
are limited; there are 19 hospitals, 15 nursing homes, and many
providers of the "mom and pop variety" - small pharmacies, solo
practitioners, and clinics. The majority of providers are not
attempting to defraud the state but are dealing with other
problems such as staff turnover and an untrained billing staff.
He emphasized that the department must do a better job of
providing education to providers so that accurate claims are
submitted the first time.
Number 0809
COMMISSIONER GILBERTSON suggested that many parts of Alaska have
access problems due to too few providers, which is why the
department will be working to build capacity. There were
references in the audit report to General Accounting Office
(GAO) reports on the high risk of Medicaid programs for fraud.
On a number of occasions the report cites that high risk in
Medicaid fraud includes the inappropriate use of funds in inter-
governmental transfers such as ProShare and FairShare
arrangements. These financing concepts have been used by the
state for decades and are allowed by federal law and regulation.
He said that Alaska will continue the waiver programs, and noted
that according to the GAO report, waiver programs have increased
federal liability because states have used Medicaid dollars to
tackle difficult issues such as immigrant health care.
Number 0901
COMMISSIONER GILBERTSON said he understood the federal
government's desire to control federal spending, since there are
other priorities and a lot of competing interests for federal
monies, and that it's equally clear that states want to maximize
the amount of federal funds, especially during an economic
downturn. He offered the perspective that the administration is
committed to looking at ways to continue to refinance as much as
possible, saying that the governor's budget submittal includes
$19 million of general-fund savings through the refinancing of
grants. He noted that there are activities that meet with
compliance under the ProShare arrangement - an approved plan
with the federal government, submitted through the Region 10
Office - and that those activities would continue.
Number 0947
COMMISSIONER GILBERTSON mentioned one caveat was that the state
should not mix efforts to optimize federal funds with
compromising on Medicaid program integrity. He said the
department will ensure that health care funds are spent
appropriately and that funds are dedicated toward providing care
and not to providing undeserved riches to providers.
Number 1013
COMMISSIONER GILBERTSON then referred to the 13 recommendations
outlined in the audit report. He read the following:
Recommendation No. 1: DMA's health and programs
manager should review MMIS [Medical Management
Information System] administrative controls and edits,
and the related disposition policy, in order to better
utilize the payment system's capacity to evaluate
claims.
Commissioner Gilbertson responded that the department concurs
and needs to review administrative controls and edits to ensure
appropriateness, consistency, and the promotion of payment for
only valid and medically necessary claims.
COMMISSIONER GILBERTSON read Recommendation No. 2:
Recommendation No. 2: DMA's provider and beneficiary
services manager should develop and implement stronger
Medicaid provider enrollment controls consistent with
Federal regulations and to prevent enrollment of
unqualified service providers.
Commissioner Gilbertson responded that the department concurs
and must take steps to ensure that required disclosures of
criminal convictions are made. The department endeavors to
enact an agreement with [the Division of Occupational Licensing]
to receive timely information from licensing board activities.
In addition appropriate processes will be reviewed in order to
suspend inactive providers.
Number 1056
COMMISSIONER GILBERTSON read the next recommendation:
Recommendation No. 3: DMA's health program and policy
manager should strengthen controls over transportation
claims.
Commissioner Gilbertson reported that the department concurs and
will review recommendations of the auditors.
COMMISSIONER GILBERTSON read Recommendation No. 4:
Recommendation No. 4: The Director of DMA should
evaluate the costs and possible savings that may be
involved in various administrative alternatives to
managing non-emergency transportation costs.
Commissioner Gilbertson responded that the department again
concurs and mentioned that included in the governor's budget
submittal to the legislature were savings associated with moving
towards a transportation brokerage service for non-emergency
care. He stated that the department will act upon the
recommendation and will initiate a transportation brokerage
service for non-emergency services.
Number 1146
COMMISSIONER GILBERTSON addressed the next recommendation:
Recommendation No. 5: DMA's director should direct
resources to assist the Program/Recipient Review
(P/RR) section to develop a comprehensive case
management system to better manage the operations of
this important internal review function.
Commissioner Gilbertson said the department concurs and that the
"decision support system" in the enhanced MMIS will provide the
tools necessary for enhanced tracking and monitoring. He
explained that the department is currently a "bystander" in a
litigation effort between two competing providers, Electronic
Data Systems Corporation (EDS) and First Health Services
Corporation ("First Health"), and involves a dispute over the
"Alaska Bidders Preference." He said that the new system is not
currently on line because litigation has delayed the
department's ability to implement the new contract.
Number 1230
COMMISSIONER GILBERTSON referred to Recommendation No. 6:
Recommendation No. 6: The director of DMA should
carry out a comprehensive risk assessment to estimate
the level of improper Medicaid payments that may be
associated with different types of services and
providers.
Commissioner Gilbertson responded that the department concurs
that a comprehensive risk assessment would provide insight into
where audit and inspection efforts should be focused. He
reiterated that the decision support system of the new MMIS
system will provide the necessary tools for further cost-benefit
assessment.
Number 1258
COMMISSIONER GILBERTSON referred to Recommendation No. 7:
Recommendation No. 7: DMA's director should provide
for a full-time, ongoing service provider audit
function.
Commissioner Gilbertson said the department concurs and is
currently preparing another audit contract.
Number 1309
COMMISSIONER GILBERTSON read the next recommendation:
Recommendation No. 8: DMA's director should implement
more aggressive monitoring of problem providers,
particularly prepayment review of claims, and utilize
administrative remedies to prevent abusive and
unsupported billing practices.
Commissioner Gilbertson said the department concurs that the
aggressive monitoring of problem providers can be an important
tool in preventing abusive and unsupported billing practices.
Claims should be paid only to qualified, enrolled providers for
services rendered to eligible persons. All claims are subject
to numerous edits, and some services are preauthorized before
being rendered.
Number 1339
COMMISSIONER GILBERTSON referred to Recommendation No. 9:
Recommendation No. 9: DMA's manager of the provider
and recipient review unit should improve the
confirmation of service provision process and utilize
the process to monitor providers in a risk-based
manner.
Commissioner Gilbertson reported concurrence, saying that 400
random letters are sent monthly to recipients, inquiring if the
rendered service was actually received. The current MMIS system
is of 1970s technology and is incapable of incorporating
recommendations such as focusing on specific provider types,
geographic location areas, or specific providers, without costly
reprogramming. He said the department has recognized this need
and is looking forward to the implementation of the new system.
Number 1422
COMMISSIONER GILBERTSON then addressed Recommendation No. 10:
Recommendation No. 10: DMA Medicaid policy
administrator and DMHDD's [Department of Mental Health
& Developmental Disabilities] program administrator
should address home and community-based (HCB) agency
payment rate issues to ensure costs paid are
reasonable and contained.
Commissioner Gilbertson reported concurrence and stated that
upon completion of a cost-study, this recommendation would be
pursued further.
Number 1436
COMMISSIONER GILBERTSON read the next recommendation:
Recommendation No. 11: DMHDD program managers should
adopt regulations requiring the business relationship
between the care coordinators and home care community
service agency providers are maintained at arm's
length.
Commissioner Gilbertson said the department recognizes the
potential conflict of interest and that the Division of Mental
Health & Developmental Disabilities (DMHDD) has sought and
obtained funding for incremental improvements including working
with the Developmental Disabilities (DD) Systems Reform
Initiative, providing additional care coordination training, and
working with the Real Choice Systems Change grant, all of which
will alter the present system structure. He said consideration
is being given to moving the assessment function and plan of
care development to an administrative capacity, adding that he
thought this would assist in reducing the number of erroneous
payments.
Number 1523
COMMISSIONER GILBERTSON addressed the next recommendation:
Recommendation No. 12: The legislature should
consider adopting specific criminal statutes related
to Medicaid fraud to enhance the Medicaid Fraud
Control Unit's effectiveness.
Commissioner Gilbertson stated that the department is reviewing
legislative proposals; the department and the administration are
supportive of Senator Green's efforts to provide criminal
sanctions regarding Medicaid fraud.
Number 1542
COMMISSIONER GILBERTSON read the final recommendation:
Recommendation No. 13: The legislature should include
program integrity "mission and measures" statement and
performance objectives for DMA.
Commissioner Gilbertson said the department concurs completely
and is looking forward to working with the legislature to
develop missions and measures for the department.
Number 1606
CHAIR SAMUELS questioned the timeline for the internal audit
function.
Number 1641
JACK NIELSON, Executive Director, Medicaid Rate Advisory
Commission, Division of Medical Assistance (DMA), responded that
a request for proposals (RFP) is currently being worked on and a
contract will likely be in place by August or September if
"things go well" and qualified auditors are located.
Number 1715
CHAIR SAMUELS then asked what the timeline was regarding the new
software system.
Number 1730
COMMISSIONER GILBERTSON replied that regretfully, he could not
answer that question. He explained that the department had gone
through a clean procurement for a contract that was awarded to
First Health. However, EDS, also a large Medicaid fiscal agent,
had a dispute over the Alaska Bidders Preference - a preference
given to Alaska-based corporations - and the choice to litigate
has delayed finalization of the contract because the department
is currently a bystander in litigation between EDS and First
Health. He said that the department is stuck with the court's
schedule regarding the decision as to whether the preference is
constitutional or unconstitutional.
Number 1824
COMMISSIONER GILBERTSON further explained that initially the
contract was awarded to First Health and was certified as a
clean procurement by the Department of Administration. The
department went through the normal process - negotiating to
actually hammer out the contract. He said he thought the
contract was even submitted to the federal government for review
but then the department received a court order to not enter into
the final agreement; essentially, the department is involved in
litigation between two parties, each believing that it should
rightfully have the contract.
MR. NIELSON noted that currently the superior court has the
disputed contract under advisement.
Number 1906
SENATOR HOFFMAN referred to the department's concurrence with
the auditor's recommendations and findings; he asked if the
timeframes for implementation, inclusive of both starting dates
and completion deadlines, could be provided in writing.
Number 1952
COMMISSIONER GILBERTSON suggested that the timelines would be
different for the differing recommendations. He stated that the
review [of timelines] would be submitted to Senator Hoffman's
office as well as to the committee.
Number 2003
SENATOR BUNDE suggested that emblematic of the initial response
and the philosophical bent behind it was the term "retroactive
prior approval" and asked, "Could you delve into that a little
bit."
CHAIR SAMUELS emphasized Senator Bunde's comment, saying, "That
phrase is why we are all here, to be perfectly honest. ... When
that phrase came up, it was time to have a chat."
Number 2108
COMMISSIONER GILBERTSON said he did not really have a good
answer and responded, "I don't think you'll hear that term again
from us." He said the department reviews payments when claims
are submitted, and on the front end, edits are made to verify
that there are clean claims. In addition, post-payment reviews
are done on a number of claims.
Number 2132
SENATOR HAWKER referred to previous conversations that he had
with Commissioner Gilbertson, saying he was convinced that the
commissioner was committed to doing what had to be done to fix
problems that had been inherited. He asked if the commissioner
had the resources available to do the work needed to fix those
problems and asked if there were any systemic problems that
would impede departmental efforts to move forward.
Number 2222
SENATOR HAWKER then acknowledged that the department is huge,
noting that it's the largest department in the State of Alaska
and is extraordinarily complex, as evidenced by the number of
acronyms that were referenced in the report. He asked if there
were inside resources available or if additional outside funding
would be necessary to really address the problems that exist.
Number 2305
COMMISSIONER GILBERTSON responded that the department doesn't
have resource problems in terms of dollar amounts, but
technologically doesn't have the resources to address every
problem in the audit report, explaining that without the new
system, it's difficult to enact a number of the recommendations.
He said the administration's position is to take the path
leading to having a contract in place in the quickest period of
time and that the Department of Law is working to represent the
state's interest.
Number 2413
COMMISSIONER GILBERTSON continued that much of the work the
department plans on doing will be funded through savings
associated with departmental activities. He mentioned projected
savings in the governor's budget from having a transportation
brokerage service and from having greater fraud-and-abuse
enforcement. He noted that savings in the governor's budget
submittal reflect a decrease in projected total savings to the
state because the submittal includes the costs associated with
enhanced fraud-and-abuse enforcement.
Number 2516
COMMISSIONER GILBERTSON added that obviously, additional
resources are always appreciated, but said that within the
governor's budget submittal, he thought the necessary funds
would be available to move forward on the majority of the
recommendations contained within the audit finding. He informed
the committee that an Office of Program Review and an Office of
Rate Review will both be established within the department. In
addition, there will be a department-wide fraud-and-abuse
coordinator and a talented team of individuals to work on re
financing efforts to generate the necessary resources to carry
out other activities. Commissioner Gilbertson added that one
caveat that was that the new computer system needed to be put in
place.
Number 2622
SENATOR GREEN questioned if, in the committee process, there was
a mechanism by which the letter submitted from the commissioner
could be incorporated as part of the audit - either to replace
the original response, or to make it an addenda item so as to
reflect the department's intention and to include the
commissioner's comments.
CHAIR SAMUELS said that the commissioner's response wouldn't
replace but could certainly be added to the audit as an
addendum.
Number 2646
SENATOR GREEN moved that the committee [adopt the additional
response by Commissioner Gilbertson in a letter dated April 4,
2003, as part of the audit materials pertaining to Audit Control
Number 06-30018-03].
CHAIR SAMUELS asked if there were any objections. There being
none, it was so ordered.
Number 2706
CHAIR SAMUELS referred to Commissioner Gilbertson's letter of
April 4, 2003, noting that the response to Recommendation No. 3,
read in part, "In particular, items 2 through 5 could be
important tools in strengthening...." He referred the committee
to page 45 of the actual audit report and suggested that item 1
"verification of services" was perhaps the most important of the
recommended items. He questioned why item 1 was not specified
in the commissioner's response and also asked when a plan to
reduce transportation costs would be devised.
Number 2802
COMMISSIONER GILBERTSON replied that it may have been due to
poor drafting in terms of language, but the separation [between
item 1 and items 2 through 5] was due to a time difference - it
is easier to implement items 2 through 5 than it is to implement
item 1. He said the department agrees with and will move
forward on items 1 through 5, and predicted that the department
would move forward on the transportation brokerage service very
quickly, as it is already included in the governor's budget for
FY 2004. He said the service is primarily for non-emergency
transport of Medicaid patients and is an easy savings.
COMMISSIONER GILBERTSON responded to Chair Samuels' question
regarding timelines and said that the department is projecting
implementation within the next fiscal year, with plans to
realize savings in the governor's budget. He added that the
department is moving internally on the transportation
initiatives, and was doing so even before the audit
recommendations had been released. Commissioner Gilbertson
noted that regarding item 1, the department supports the
recommendation, but acknowledges that it will take more time to
integrate that into the system.
Number 2952
SENATOR BUNDE commented on attending a briefing by U.S. Senator
Ted Stevens several years ago regarding the use of
telemedicine, and said that he would like to have an update on
that topic. He then stated that coincidentally, he had just
received an e-mail from a constituent who worked at a medical
facility, indicating that there is an incredible problem with
Medicaid recipients' meeting their appointments. At that
particular office, Medicaid appointments are just not made
anymore because beneficiaries are allowed to show up on a walk-
in basis due to their habitually making appointments and not
showing up, thereby causing an expense to the office. Senator
Bunde noted that people are on Medicaid because they don't have
money, and he asked whether the department would "charge them
for the transportation" if people did not show up for
appointments. He suggested that perhaps the PFD [Permanent Fund
Dividend] could be a source, saying that "you can't stop
providing medical service."
Number 3114
COMMISSIONER GILBERTSON responded to the first question
regarding telemedicine and said that obviously U.S. Senator Ted
Stevens was instrumental in moving forward on the AFHCAN
[Alaska Federal Health Care Access Network] system, which is
moving aggressively to establish the telemedicine structure
throughout the state. He said the department has moved forward
on reimbursement for telemedicine services and he believes those
regulations are finished, as the department is currently
reimbursing for telemedicine services.
Number 3148
COMMISSIONER GILBERTSON continued that obviously savings are
involved with not having to transport people for medical
conditions to Anchorage, in particular, from rural communities.
He said that a lot of telemedicine services involve federal
beneficiaries, individuals technically within the old Indian
Health Care System, U.S. Department of Defense (DOD)
beneficiaries, and [U.S. Department of Veterans Affairs]
beneficiaries, adding that a number of Medicaid beneficiaries,
40 percent, are Alaska Natives, many of whom live in rural
communities. He stated that there are ways in which
telemedicine services can be better utilized, and doing so
involves working with U.S. Senator Ted Stevens to build up
capacity in the state.
Number 3326
MR. NIELSON responded that there are questions about the
department's ability to "kick someone out" of the Medicaid
program. He said there are new regulations in effect, and as of
March 26th, some authority is being given to look at the
"recipient fraud side" of the equation. He commented that it's
not as much real authority as is needed, but at least individual
cases can be looked at and potential solutions on individual
cases can be worked towards. Regarding the problem of missed
appointments, he announced that there is a focus on educating
recipients as to the importance of showing up to appointments;
the department is working with the Division of Public Assistance
to put together and to distribute pamphlets that emphasize the
importance of showing up for appointments and meeting
obligations.
Number 3418
SENATOR BUNDE reiterated that there is nothing that can be done
because it is symptomatic of the "free lunch syndrome" in which
people don't usually value or have ownership when they get
"something for free."
Number 3438
COMMISSIONER GILBERTSON said that the department concurs with
Senator Bunde and experiences access problems in a number of
different areas, dental care in particular. One of the comments
frequently heard from providers is their reluctance to accept
Medicaid patients, not because of the rate that is paid but
because of clients' not showing up for appointments. He
reiterated the department's desire to work on this problem,
noting that providers lose the ability to have paying customers
because of allowing time for Medicaid clients who then don't
show up. Additionally, he pointed out that in Senator Green's
bill, the department will have greater authority to look towards
sanctioning beneficiary behavior regarding fraud.
Number 3550
REPRESENTATIVE HAWKER referred to the issue of transportation
and shared an anecdote that had been shared with him. One
evening, shortly after he was elected to office, he met with
highly compensated medical professionals who worked as medevac
contractors, who told him that an entire medevac team had been
mobilized to bring a child and the child's family to Anchorage
because of a "duck bite," which he explained was similar to a
pinch on the arm. Representative Hawker asked if there was any
kind of gate keeping that could be done to avoid mobilizing an
entire medevac team to bring a duck bite [victim] back to
Anchorage.
Number 3656
COMMISSIONER GILBERTSON replied that a key component to
addressing decreases in the large amount of expenditures in
transportation involves building up capacity [in rural Alaska]
to allow for a greater level of evaluation. He reported that
the department has been working with the federal government to
have what are called "frontier extended-stay clinics" and is
building up resource capacity to provide for a higher level of
care in the rural areas to reduce the need to medevac
individuals to Anchorage, where the transportation costs tend to
exceed the actual cost of providing the care itself. In trying
to handle care locally, the department has been working
cooperatively with the Yukon Kuskokwim Health Corporation and
other Native corporations to build up capacity.
COMMISSIONER GILBERTSON pointed out that because of Alaska's
size, sometimes providers will be far from where the individual
reports a situation of harm or injury, resulting in the need to
send out additional resources. He said the department wants to
have a system in place in which quality resources are available
to rural and remote regions, but there will, in fact, be cases
in which someone is transported unnecessarily because of the
difficulty in differentiation on the front end, even with the
help of technology and telemedicine.
Number 3909
REPRESENTATIVE HAWKER said that he was hearing that there was
not an ability to do triage in the rural areas prior to
mobilizing very expensive resources.
Number 3923
COMMISSIONER GILBERTSON replied that he didn't think this to be
correct. He said the evaluation ability exists in a number of
regions but not in every 560,000 square miles of Alaska. He
said the department is moving towards having sub-regional
clinics and working towards having hub facilities and community
health aid program, expanding the access for primary care
services, and working through the Denali Commission to build
primary care centers throughout the rural regions - all of which
have improved the amount of primary care services that are
locally available. The department currently works to create new
designations such as frontier extended-stay primary-care
clinics, which will allow facilities to be compensated for
providing overnight services rather than having to use medevac
services. He again acknowledged that with Alaska's size, there
will be areas where clinics won't be in place, saying that the
department will try to build up the rural health care
infrastructure and that by working with tribal health partners,
the federal government will bear some responsibility for costs
associated with care for Alaskan Native Medicaid beneficiaries.
Number 4030
SENATOR BUNDE asked who authorizes the use of medevac services.
Number 4048
MR. NIELSON explained Medicaid transportation services, saying
that for pre-authorization of non-emergency travel, someone from
the doctor's office contacts First Health and describes the
situation to a person at the pre-authorization desk, and if it
is determined that there is a medical necessity, the trip is
pre-authorized. Regarding the authorization of emergency
travel, medical professionals basically make that decision.
Number 4203
COMMISSIONER GILBERTSON said that in the health care system,
there is a host of uncompensated care and a variety of third-
party insurance payers, adding that there are individuals who
are eligible who aren't yet signed up for the Medicaid program
and that a wide variety of individuals who live in the rural
areas are not Medicaid beneficiaries. He said that the level of
evaluation tends to be what is available, and within the
Medicaid program attempts are made to preauthorize as much as
possible, regarding emergency and non-emergency transportation
services. He said the department is not in the position to have
at least a midlevel health practitioner available whenever an
individual is hurt, injured, or sick.
Number 4317
CHAIR SAMUELS referred to the restructuring efforts and inquired
if the staff in the Office of Program Review would be reporting
directly to the commissioner.
Number 4330
COMMISSIONER GILBERTSON said that he believed the Office of
Program Review was budgeted for nine positions, consisting of
the transfer of existing positions to be located off of the
commissioner's office and who would be reporting to the
commissioner [to himself]. He outlined that the Office of
Program Review will include an individual to work on department-
wide fraud, will serve as liaison with the Department of Law,
and will also work with the fiscal agent, currently First
Health, on fraud-and-abuse enforcement activities. The Office
of Program Review will have an individual working on general
program integrity outside of fraud-and-abuse enforcement,
including work related to good customer service and faith-based
[organizations]. He said that staff will work to refinance
efforts of Medicaid operations and will work to refinance grants
and find additional services eligible for federal program
matching funds. The department will also have individuals
working on state plan amendments.
Number 4436
COMMISSIONER GILBERSTON continued that there will be a variety
of tasks but staff will be exclusively assigned to work on fraud
and abuse. Department-wide coordination and interaction will
occur with prosecutors at the Department of Law and also with
the fiscal agent, who, he added, is actually a great gatekeeper
in trying to prevent fraudulent activity from occurring in the
program. He said this effort extends beyond the Medicaid
program, since there are other programs administered by the
department, such as the Welfare to Work program, that also have
fraudulent activities hampering the department's ability to
guarantee the highest level of program integrity.
Number 4524
REPRESENTATIVE HAWKER referred to prescription drug costs,
saying that he was somewhat familiar with the commissioner's
budget and recognized that significant efforts have been
incorporated in the budget to control prescription drug costs.
He referred to a specific item in the audit report on page 34
that discusses pharmacy-dispensing fees. He noted that those
practices were outside of policy and resulted in an overpayment
of $150,000. He read the following from page 34:
Previously, providers were required to bill no more
than once a month for dispensing fees. Pharmacy
providers would now be allowed to bill Medicaid for
dispensing fees up to four times per month for a
prescription for 30 days of medication. As a result
of DMA's retroactive endorsement of these billing
practices, MFCU [Medicaid Fraud Control Unit]
terminated their investigations.
TAPE 03-3, SIDE B
Number 4624
REPRESENTATIVE HAWKER asked who retroactively endorsed this
policy and wondered if, under bargaining agreements, people in
the department who had been conducting operations as documented
in this audit report would be held responsible for their
actions.
Number 4554
COMMISSIONER GILBERTSON said that he did not have the capacity
to answer the specifics of "who and when" right now. He stated
that the division operates under the guidance of an executive
branch that makes programmatic decisions and he believes the
division's personnel carry out those decisions. He said he
would look further into this, but pointed out that a policy
decision is made when dealing with the Medicaid program and with
cost containment. He stated that the Murkowski Administration
is leaning more towards being stringent on making policy
decisions. Commissioner Gilbertson said that it's not
necessarily fair to assume that division staff are responsible
for making policy and programmatic decisions. He emphasized
that it was not his intention to blame the previous
administration, but said that some policy decisions had been
made and that some of those decisions would be changing.
Number 4410
MR. NIELSON mentioned that regarding the pharmaceutical
dispensing fees of 30 days versus 7 days, the department had
been in correspondence with a nursing home administrator who
felt that the department should work to dispense drugs more
frequently because of many situations in the nursing home
wherein, through the Medicaid program, a 30-day drug supply was
paid for, but early in the month, if the patient passed away or
if the drug changed, there was a loss. This point of view was
that the state was wasting money on the drugs when they were
prescribed for a longer period of time. Mr. Nielson said that
sort of input was being weighed in the policy analysis area.
Number 4240
COMMISSIONER GILBERTSON said this area is being reviewed, and he
could not commit right now as to exactly how the department will
move forward on this. He noted that there are savings
associated with moving towards a larger window for the
dispensing of a drug in terms of using a 30-day dispensing
period for one dispensing fee and that there may be some areas
where the department can modify the policy. He said he didn't
know if the flexibility to make modifications for certain
treatment or provider settings existed. Commissioner Gilbertson
commented that the audit was correct regarding the policy
decision to move towards shorter dispensing windows and
therefore increasing the number of dispensing fees that can be
awarded during a 30-day period, and he reiterated that this was
a policy decision made by the previous administration.
Number 4107
COMMISSIONER GILBERTSON reported that the department is working
towards cost containment within the pharmacy programs in the
following ways: looking towards adopting a preferred drug list,
looking for savings associated with drugs that are deemed more
cost-efficacious within a particular drug class, looking towards
expanding preauthorization for some drugs that have a high rate
of abuse and also looking at ways to reduce pharmacists'
dispensing and compounding fees. He reported movement from an
average wholesale price (AWP) of minus-5 percent to an AWP of
minus-10 percent. Commissioner Gilbertson said that the
department will be looking at the windows during which drugs are
dispensed.
Number 4046
REPRESENTATIVE HAWKER said that he believes the commissioner's
response was defending the department's practice regarding folks
who did not use the month's supply of drugs and said he believed
the audit division's did not support that claim.
Number 4026
COMMISSIONER GILBERTSON responded that in the auditors'
response, there was agreement regarding costs associated with
decreasing the dispensing window and increasing the number of
dispensing fees that could be awarded within a particular time
period; the overall cost outweighs the savings. He said that
perhaps the department could work with certain provider-types,
possibly in nursing homes, to find a way to differentiate and
clarify the policy in order to decrease the amount of waste that
exists in the system.
Number 3926
SENATOR HOFFMAN remarked that doctors prescribe medicine for
arthritis, for example, for a certain length of time and that
the prescription may then change.
Number 3841
COMMISSIONER GILBERTSON said that he agreed and that for acute
care facilities, including nursing homes, there are individuals
whose drug regimen changes routinely.
SENATOR HOFFMAN suggested that in such cases, a 30-day supply
shouldn't be prescribed.
COMMISSIONER GILBERTSON agreed and suggested moving toward
differentiation in dispensing policies, dependent on the actual
provider setting.
Number 3800
SENATOR THERRIAULT commented that when he looked through the
original departmental response of 32 pages, what struck him was
the sense of "protecting the palace walls" as a response to
almost every suggestion. He said he was disappointed to see
Janet [Clarke's] signature for Bob Labbe. He said it was "Janet
or Bob and probably other people in the department" who wrote
portions and then pieced it together, because certain parts had
more "attitude" than others. He asked, "Have you tracked down
who was involved in this original response?"
Number 3708
SENATOR THERRIAULT continued that he was glad that Senator Green
asked that the letter [of April 4, 2003] be included [in the
departmental response] but said he thought that the original
letter should also remain. He emphasized that a message that
came through loudly in the department's response was, "Who are
you to question my program." Senator Therriault said he sensed
that this was not the commissioner's attitude, but that somebody
else had written the response.
Number 3623
COMMISSIONER GILBERTSON said his response was not to be
construed as an excuse for the report, but explained that the
reason for the signatures was that he was out of town for two
weeks and was unavailable for the signature. He said he
believed that Deputy Commissioner Labbe was also on travel when
the report was prepared and ready for signature during the
specified window for departmental response.
Number 3538
COMMISSIONER GILBERTSON said that he had made a poor decision in
having the division provide a large amount of the response,
stating that the response should have been handled by the
Division of Administrative Services. Commissioner Gilbertson
confirmed that the response was handled by individuals who had
been going through a 12-month, back-and-forth process with
auditors. He said that although the process was beneficial and
educational, it should not have continued into the actual
response letter that was drafted and submitted to the committee.
Nonetheless, that's what occurred, and as commissioner, he said
he had made an erroneous decision and that it was his
responsibility.
Number 3419
CHAIR SAMUELS thanked the commissioner and said that the
committee would add the letter of April 4, 2003, as an addendum
to the report. He said the committee would be interested in the
timelines on all of the [13] recommendations as well as answers
to the pharmaceutical concerns. He asked, "What's the
implementation schedule of the entire recommendation of the
audit."
Number 3355
COMMISSIONER GILBERTSON said he shared the same interest in
making sure that the department address the recommendations in
the shortest amount of time possible. He said that after an
analysis was done on implementation, a response to the committee
would be drafted. He reiterated that the Murkowski
Administration is wholly committed to moving forward and
increasing program integrity within the Medicaid program and
other cash-assistance programs within the department and that
the department would be moving forward at an expedited pace. He
added that legislative enforcement elements such as Senator
Green's legislation were necessary to accomplish the level of
program integrity that is expected from the program.
Number 3308
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, stated that because the audit
involved a federal program, the findings and recommendations
would be followed up annually as part of the statewide single
audit. She reported that the department will be asked to re-
respond to the findings, probably at the end of May, and then,
until it is resolved, the committee will be afforded an annual
update. She said this would provide the department the ability
to address the timelines and communicate with the committee
about the successes achieved in implementing the audit
recommendations.
ADJOURNMENT
There being no further business before the committee, Chair
Samuels adjourned the Joint Committee on Legislative Budget and
Audit meeting at 8:10 a.m.
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