Legislature(2003 - 2004)
03/31/2003 03:25 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 31, 2003
3:25 P.M.
TAPE HFC 03 - 41, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 3:25 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Eric Croft
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Richard Foster
ALSO PRESENT
Joel Gilbertson, Commissioner, Department of Health & Social
Services; Bob Labbe, Deputy Director, Department of Health
and Social Services
PRESENT VIA TELECONFERENCE
None
SUMMARY
HB 152 An Act relating to payment rates under the
Medicaid program for health facilities and to
budgeting, accounting, and reporting requirements
for those facilities; abolishing the Medicaid Rate
Advisory Commission; and providing for an
effective date.
HB 152 was reported out of Committee with a "do
pass" recommendation and with fiscal note #1 by
the Department of Health and Social Services.
HB 153 An Act repealing the statute that sets priorities
for the Department of Health and Social Services
to apply to administration of the medical
assistance program when there are insufficient
funds allocated in the state budget for that
program; authorizing the department to make cost
containment decisions that may include decisions
about eligibility of persons and availability of
services under the medical assistance program; and
providing for an effective date.
HB 153 was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note
#1 by the Department of Health and Social
Services.
HOUSE BILL NO. 152
An Act relating to payment rates under the Medicaid
program for health facilities and to budgeting,
accounting, and reporting requirements for those
facilities; abolishing the Medicaid Rate Advisory
Commission; and providing for an effective date.
JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL
SERVICES, introduced HB 152. He explained that under the
authority of Article III, Section 18, of the Alaska
Constitution, HB 152 was being transmitted to provide
greater flexibility to the Department of Health & Social
Services to set Medicaid payment rates for Alaska's
hospitals, nursing homes and other health care facilities.
The proposed bill would eliminate the Medicaid Rate Advisory
Commission and place the responsibility for calculating and
setting Medicaid payment rates for health care facilities
under the general authority of the Department of Health and
Social Services.
Commissioner Gilbertson added, historically, the Medicaid
facility rate setting process has been extremely cumbersome
and costly for both the State and the health care
facilities. The current rate-setting process is both a
barrier to effective cost containment as well as problematic
for assuring adequate reimbursement for Alaska's diverse mix
of health care facilities.
Passage of the legislation would allow the Department to
develop in regulation a more flexible, cost-effective rate
setting process that would allow the Department to take into
account the appropriations made by the Legislature for the
Medicaid program when establishing rates.
Commissioner Gilbertson offered to answer questions of the
Committee.
Representative Croft asked what "fair and reasonable" rates
would be replaced with.
BOB LABBE, DEPUTY DIRECTOR, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, responded that it would be facility specific, fair
rates for reasonable costs. The Department is interested in
looking at grouping facilities of a certain type or size as
an option rather than facility specific. He observed that
when the change was complete, the Department would aim to
provide a fair rate while reimbursing reasonable costs.
Facility specific does not provide cost management
incentives.
Representative Croft recommended that there should be
overriding standards indicated somewhere. Mr. Labbe
explained that the replacement standard would comply with
what the federal government now provides, rates that are
adequate and with reasonable service. There are federal
requirements, which the State will have to follow. The
Department is proposing not to do any more than the feds
require.
Commissioner Gilbertson referenced the fiscal note, noting
the savings. He explained that the bill eliminates the need
for expenditures that support commission members' travel,
per diem and other related support costs.
Representative Croft inquired who currently sits on that
Commission. Mr. Labbe replied that there are five members
on the Commission:
· A physician,
· A certified public accountant (CPA),
· A public member,
· A Department of Health & Social Services
representative, and
· A facility administrator.
Co-Chair Harris referenced the letter contained in the
member's packets from the Governor, who recommends
eliminating the Medicaid Rate Advisory Commission. That
agency has the responsibility of establishing Medicaid
rates. He thought such action would provide the Department
more flexibility for determining the Medicaid payment
amounts, thus, saving money.
Commissioner Gilbertson advised that Commission currently
serves only in an advisory capacity and that rate setting
authority currently rests with the Department. He pointed
out that associated with that legislation is an appeal of
the Bouren amendment. By repealing that language, there
would be additional discretion within the Department to
develop multiple methodologies, which is where the savings
emerges. Having one methodology for all the facilities
would not necessarily reflect the relative efficiency of the
various facilities. This action would reduce any excess
payments being made to any facility.
Co-Chair Harris asked how long had the Bouren Amendment been
in place. Mr. Labbe replied it was placed in federal law in
1982 and repealed in 1997. The Bouren Amendment was
initially intended to provide flexibility to the states in
establishing rates. Because of extensive litigation, the
amendment had the reverse effect and years later, after many
federal lawsuits, the amendment was repealed.
Co-Chair Harris questioned if it had been the policy of the
previous Administration to do things in less beneficial ways
to relieve the Medicaid amount the State receives.
Commissioner Gilbertson commented that there are always
various considerations when making changes to Medicaid and
those individuals affected by the changes. At present time,
the Administration believes that the State must have greater
authority and discretion in setting rates that reflect the
actual costs.
Co-Chair Harris remembered that in past years, he had
requested the Department to get the costs of the Medicaid
program down. He voiced frustration that there had not been
the motivation to accomplish that. He voiced his support
for the current work of the Department.
Representative Croft pointed out that the bill would save
about $10 thousand dollars by getting rid of a significant
public process. He claimed that the public input, which
comes from the Commission, is worth that amount of money.
Co-Chair Harris rebutted that eliminating the Commission
would only save about $10 thousand dollars, however, the
process that the Department would then go through will save
considerably more by being more flexible in rates and the
optional rates.
Representative Croft emphasized that it would lower the
rates paid to providers in many areas, which are already too
low. He added that stopping the benefits to these people
have caused tremendous political fights. He emphasized that
they can be called "cost containments", but in reality, they
are getting rid of services.
Co-Chair Williams stated that the bill would be HELD for
further discussion.
HOUSE BILL NO. 153
An Act repealing the statute that sets priorities for
the Department of Health and Social Services to apply
to administration of the medical assistance program
when there are insufficient funds allocated in the
state budget for that program; authorizing the
department to make cost containment decisions that may
include decisions about eligibility of persons and
availability of services under the medical assistance
program; and providing for an effective date.
JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL
SERVICES, stated that under current law, if funds
appropriated to the Medicaid program are insufficient for a
given fiscal year, the Department is directed to eliminate
optional Medicaid services based on a priority list that is
out-of-date. The existing list is not an effective
management tool and if used, would result in the denial of
necessary and cost-effective services to Alaskans in need of
health care.
He continued that the proposed bill would replace that
obsolescent language with authority for the Department to
undertake cost containment based on three key principles.
· First, the Department must pursue all other reasonable
cost containment measures before eliminating any
eligibility groups or services;
· Second, the Department should aggressively pursue
strategies to maximize federal financial participation
in the Medicaid program;
· Third, cost containment decisions should be made in a
manner that best reflects the needs and interests of
eligible Medicaid recipients.
Commissioner Gilbertson noted that it is imperative to slow
the growth of State funding for Medicaid while at the same
time maintaining health care coverage for needy Alaskans,
which is an issue that can no longer be avoided. Passage of
the legislation will give the Department additional tools to
meet these challenges.
Representative Stoltze asked if the Department would see
benefit in being able to prorate the amount of payment to
eligible persons.
BOB LABBE, DEPUTY DIRECTOR, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, stated that the payments made in the Medical
Assistance Program are to health care providers rather than
to individual beneficiaries. It is difficult to prorate
once they have provided the service.
Representative Croft pointed out that the Department could
determine to eliminate item #11, mammography screening, if
the bill was passed.
Commissioner Gilbertson acknowledged that under the current
options list, item #11 could go. The Department would
maintain the discretion to help achieve cost containment.
Representative Croft commented that the Department could get
rid on any item on the list and that they would not be
required to move in the order already established.
Commissioner Gilbertson acknowledged that was correct.
Representative Croft asked if there was any intent language,
which would require the Department to come back to the
Legislature before eliminating any one provision.
Commissioner Gilbertson replied that there is not a
provision in the bill that would require that, however, the
Department would be working with the coordination of the
Legislature, to find ways to insure that the funding was
available for services that are needed. There is direction
from the Legislature to the agency to provide for cost
containment of the Department to manage the Medicaid budget
within the amount that the Legislature appropriates. The
Department needs the flexibility, which the bill provides
to, accomplish that mission.
Representative Hawker commented on the latitude the
Department needs in order to provide for cost containment.
He inquired if situations might occur when the Legislature
is not in session.
Mr. Labbe responded that in the past, the Department has
projected the expenditures for the Medicaid program while in
session. If the Department realizes that they have a
significant reduction, they would bring the choices to the
Legislature at that time. However, with only the option
list available, there have been unintended consequences
resulting from the high federal matching rate to achieve any
savings. Mr. Labbe anticipated that if there were
significant budget actions taken, the Department would then
indicate a plan on how to meet that, such as:
· Eligibility levels
· Eliminating services and/or
· Providing enhancements
Mr. Labbe added that there would be a package deal in order
to achieve the program outlined. The intent is to preserve
the benefit and the eligibility levels. He pointed out that
taking the proposed actions requires regulation change,
which does not move very quickly. Based on the proposed
budget, the Department will not be able to make it through
this next year without taking some additional measures.
Commissioner Gilbertson pointed out that the fiscal note
indicates zero expenditures. The Department believes that
if the Governor's budget passes as submitted, that budget
contains all the cost containment intended.
Representative Hawker understood that the bill would give
the Department latitude and/or flexibility to choose amongst
alternate means to meet the budget shortfall.
Commissioner Gilbertson agreed that was correct. The
current structure limits the Department's flexibility and
disproportionately places the burden on a number of services
that may not be efficient, such as the elimination of
prescription drug coverage. The Department would have to go
after some needed services before affecting the eligibility
standards. The additional flexibility would allow the
Department to manage the program to the same level of
responsiveness to maintain costs. It would also reduce the
impact on the consumers.
Co-Chair Williams noted that HB 153 would be HELD for
further consideration.
HOUSE BILL NO. 152
An Act relating to payment rates under the Medicaid
program for health facilities and to budgeting,
accounting, and reporting requirements for those
facilities; abolishing the Medicaid Rate Advisory
Commission; and providing for an effective date.
Representative Croft MOVED to report HB 152 out of Committee
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
HB 152 was reported out of Committee with a "do pass"
recommendation and with fiscal note #1 by the Department of
Health and Social Services.
HOUSE BILL NO. 153
An Act repealing the statute that sets priorities for
the Department of Health and Social Services to apply
to administration of the medical assistance program
when there are insufficient funds allocated in the
state budget for that program; authorizing the
department to make cost containment decisions that may
include decisions about eligibility of persons and
availability of services under the medical assistance
program; and providing for an effective date.
Representative Hawker MOVED to report HB 153 out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 153 was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note #1 by the
Department of Health and Social Services.
ADJOURNMENT
The meeting was adjourned at 3:54 P.M.
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