Legislature(2003 - 2004)
04/24/2003 02:18 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 24, 2003
2:18 P.M.
TAPE HFC 03 - 63, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:18 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Reggie Joule
ALSO PRESENT
Joel Gilbertson, Commissioner, Department of Health & Social
Services; Bob Labbe, Deputy Commissioner, Department of
Health and Social Services; Kevin Jardell, Assistant
Commissioner, Department of Administration; Susan Cox,
Assistant Attorney General, Department of Law; Brad
Thompson, Director, Risk Management, Department of
Administration; Paul Grossi, Director, Division of Workers'
Compensation, Department of Labor & Workforce Development
PRESENT VIA TELECONFERENCE
None
SUMMARY
SB 108 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.
HCS CS SB 108 (FIN) was reported out of Committee
with a "do pass" recommendation and with fiscal
note #1 by the Department of Health and Social
Services.
SB 109 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.
SB 109 was HEARD and HELD in Committee for further
consideration.
SB 115 An Act allowing expenses of the correctional
industries program that may be financed from the
correctional industries fund to include the
salaries and benefits of state employees.
SB 115 was SCHEDULED but not heard. The bill was
POSTPONED until April 25, 2003, 9:00 A.M. meeting.
SB 120 An Act relating to the state's sovereign immunity
for certain actions regarding injury, illness, or
death of state-employed seamen and to workers'
compensation coverage for those seamen; and
providing for an effective date.
SB 120 was HEARD and HELD in Committee for further
consideration.
SENATE BILL NO. 108
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.
Co-Chair Harris MOVED to adopt work draft #23-GS1125\I,
Lauterbach, 4/23/03, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL
SERVICES, commented on the changes made to the committee
substitute. He stated that the 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 & Social Services. The bill
would modify the Alaska Statutes to parallel federal
statutory requirements for setting facility-based rates
under Medicaid. Originally, the structure was modified in
1997 to remove the Medicaid facility payment standards and
place them in the public process requirements of federal
law. The Alaska Statutes have not changed to reflect that
modification.
Commissioner Gilbertson continued, the legislation would
provide for the Alaska Statutes to mirror the federal
statutory requirement for rate setting. He noted that the
Department had worked with the Alaska State Hospital and
Nursing Home Association (ASHNHA) to provide compromise
language as adopted in the committee substitute. The
language clarifies that the State will continue to have
rates based on reasonable costs. The Administration agrees
that there should not be "unreasonable" costs or rates. The
Department does have an interest in grouping rates for
facilities. The current structure allows for the Department
to only adopt one rate setting structure and does not allow
differentiating between a ten-bed facility and a two
hundred-bed facility. The legislation is an effort to
provide a unique methodology in grouping facilities.
Commissioner Gilbertson pointed out that Section 5
references audits and are optional and would not be
required. Those audits would not happen every year. The
Department would retain their ability to have reasonable
access to medical assistance for auditing records.
Representative Croft referenced the committee substitute and
asked if the section regarding the reasonable costs for the
facility managers were listed on Page 2. Commissioner
Gilbertson replied that was correct.
Representative Croft asked if there had been any other
changes between the committee substitute and the prior
version of the legislation. Commissioner Gilbertson
responded that there were a number of small changes to
accommodate some concerns voiced by Legislative Legal
Services. The substantive changes were the ones concerning
the language on legal costs related to patient care.
Representative Croft asked if Section 5 would be changed.
Commissioner Gilbertson responded it would not.
Representative Foster MOVED to report HCS CS SB 108 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
HCS CS SB 108 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal note #1 by the
Department of Health and Social Services.
SENATE BILL NO. 109
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, explained 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. He maintained that 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.
Commissioner Gilbertson advised that the bill would repeal
the options list and replaces it with a singular direction
for the Department to engage in cost containment measures to
achieve the same level savings to operate the Medicaid
Program within the amount appropriated by the Legislature.
The proposed bill would replace the obsolescent language
with broad general authority for the Department to undertake
cost containment based on three key principles:
· The Department must pursue all other reasonable
cost containment measures before eliminating any
eligibility groups or services;
· The Department should aggressively pursue
strategies to maximize federal financial
participation in the Medicaid program; and
· Cost containment decisions should be made in a
manner that best reflects the needs and interests
of eligible Medicaid recipients.
Commissioner Gilbertson noted that the current list in
statute establishes a very rigid structure. The
Administration believes that the Department can engage in
similar cost containment measures within the Medicaid
Program and conduct cost containment in a manner that is
responsive to the Legislature's intent and responsive to the
needs of the beneficiary population.
He spoke to the fiscal note. Commissioner Gilbertson stated
that next year there would be a savings. At this point, the
Administration is not proposing any additional cost
containment in the Medicaid Program that is not currently in
the Governor's budget mission.
Co-Chair Harris asked about a deferred drug list.
Commissioner Gilbertson advised that included in the
Governor's budget submission this year was a proposal for
adopting a deferred drug list for the Alaska Medical
Assistance Program. A preferred drug list is not a
formulary. That drug list is a peered reviewed,
professionally designed list that establishes preferred
drugs within a drug class. These drugs would be purchased
at a similar or lower cost. Some other states use these
drug lists. He added that at this stage, the Department has
not formulated their preferred drug list and are not in the
process of developing one. Commissioner Gilbertson did not
believe that the Department would develop their own list.
There are a number of other lists adopted by other states
that have withstood litigation. It is foreseeable that
Alaska would take one from another state. That decision has
not yet been made. He acknowledged that the preferred drug
list is contentious.
Co-Chair Harris inquired the success rate that other states
have had in saving money using this system.
Commissioner Gilbertson offered to provide that information
to the Committee at a later date. He added that some states
have shown large savings. There is disagreement regarding
the net effect of Medicaid expenditures. Most of the
Medicaid growth now is within the seniors and disabled
individual population area. Seniors have a high drug
utilization cost. The preferred drug list would not prevent
access to pharmaceutical products that perform certain
benefits. The Commission would decide which there might be
two drugs that serve the same purpose, which one should be
clinically approved for dispensing.
Co-Chair Harris requested that Commissioner Gilbertson work
with Representative Hawker and other interested parties who
have concerns regarding this legislation.
Co-Chair Williams recommended that Commissioner Gilbertson
also work with Representative Croft, the maker of the
proposed amendments.
Co-Chair Williams noted that SB 109 would be HELD in
Committee for further consideration.
SENATE BILL NO. 120
An Act relating to the state's sovereign immunity for
certain actions regarding injury, illness, or death of
state-employed seamen and to workers' compensation
coverage for those seamen; and providing for an
effective date.
KEVIN JARDELL, ASSISTANT COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, explained that SB 120 consists of two
issues:
· The policy question of whether or not State
employed seamen should be under a worker's
compensation model or allowed to continue to
pursue the Jones Act remedy through litigation;
· The legal issue. (He noted that the Department of
Law would discuss that concern.)
Mr. Jardell stated that the policy call of the
Administration has been around for approximately eight
years. During the 1980's, the Alaska Marine Highway System
(AMHS) union labor agreements stipulated the State to pay
Alaska Workers' Compensation Act (AWCA) benefits in lieu of
the traditional Jones Act and other maritime remedies. Many
employees preferred the AWCA as a more complete and
immediate no-fault payment (non-taxable wage indemnification
rather than a modest daily maintenance stipend) - avoiding
controversy, delays, and the extra costs inherent in
protracted civil litigation. A single employee's
constitutional challenge resulted in the Alaska Supreme
Court System decision, which precludes the practice under
current law.
Mr. Jardell pointed out that the issue has been around for
the past eight years and has finally "come to the table".
The Administration has determined that placing State
employees under workmen's compensation for injuries would be
the best policy. There are several benefits to that, most
of which center around the benefit to the employee not
needing to litigate before receiving compensation. There
would be an additional benefit of a cost savings to the
State.
SUSAN COX, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
reiterated that the legislation would take the State
employees that are seamen and put them into the State
compensation system. It would remove the State from the
business of providing traditional maritime remedies under
the Jones Act. The legal vehicle by which the State can do
that is the amendment of State statute that waives sovereign
immunity. The State can withdraw the consent to be sued and
assert our sovereign immunity. Or instead, the State can
provide worker's compensation for the State seamen
employees.
Ms. Cox pointed out that the employees affected would
include the workers on the Alaska Marine Highway vessels,
additional seamen employed by State agencies who work on
research vessels and law enforcement vessels. The objective
would be to provide a uniform system of compensation for on
the job injuries for all State employees.
The Alaska Supreme Alaska Court System, in a decision in
1990, approved the approach that the bill takes. That
decision involved a public safety seaman, the State of
Alaska, Department of Public Safety versus Robert Brown.
The Alaska Supreme Court stated that the State could take
this approach if it was the Legislature's desire. Ms. Cox
stated that case should not be confused with the disapproved
collective bargaining which involved Dale Brown.
Ms. Cox noted that this approach has been taken by other
jurisdictions in other states. She emphasized that this
will not affect the rights of seaman in the private sector.
Ms. Cox pointed out that the idea has been a remedy that was
in effect for an eight-year period until 1991. There was
legal disagreement some years ago whether the bill would
work as a matter of federal law that could override the
State sovereign immunity even if the State choose to amend
the statute. Given the Alaska Supreme Court System
decisions of the last five years, the proposed approach is
legally viable.
Ms. Cox advised that it is expected that this approach will
save the State money in litigation costs. Additionally,
there would not be the same types of damages available in a
worker's compensation remedy that is available in a lawsuit.
Another significant savings would be in the area of illness.
Currently, an employee that becomes ill on the vessel can
leave work and be paid their unearned wages until the end of
the voyage without docking their sick leave. Under the
worker's compensation plan, unless they suffer from an
occupational disease, they would not be receiving a similar
amount of maintenance payments. Those expenses would be
transferred into their sick leave account. She acknowledged
that the system handling illness claims would be changed
dramatically.
Ms. Cox added that the effective date provision states that
st,
the change in the law would go into affect July 12003 and
would address new injuries and illnesses arriving after that
date. There is a three-year statute of limitation for
maritime lawsuits. The Department will continue to handle
litigation for a couple years into the future for those
injuries which occurred prior to the effective date of the
legislation.
BRAD THOMPSON, DIRECTOR, DIVISION OF RISK MANAGEMENT,
DEPARTMENT OF ADMINISTRATION, stated that Risk Management
acted as the insurance agency for State agencies including
maritime claims. He pointed out a zero fiscal note in the
packet, however, anticipated fiscal savings.
Risk Management is funded uniquely on a cash flow basis for
the anticipated costs on claims due to be paid back on a
fiscal period. That appropriation is collected on
assessments from State agencies based on experience in
claims, loss or exposure. The amount is calculated on the
actual costs incurred on a claim. The costs are anticipated
to decrease with the change of remedy. In time, the cost to
the Department of Transportation & Public Facilities,
Department of Public Safety and Department of Fish & Game
will decrease with a cost savings and will reflect in future
assessments. At this time, Risk Management is funded each
year on the anticipated State claims and a negative amount
is not indicated. It is a reflection of a type and method
of funding of the Risk Management program.
Mr. Thompson pointed out the analysis of the Alaska Marine
Highway claims as compared to the other State employee
claims. He reiterated that there would be a savings.
At-Ease: 2:55 P.M.
SB 108 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 3:58 P.M.
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