Legislature(2015 - 2016)HOUSE FINANCE 519
03/24/2016 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 74 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 24, 2016
1:32 p.m.
1:32:32 PM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 1:32 p.m.
MEMBERS PRESENT
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mark Neuman, Co-Chair
ALSO PRESENT
Heather Shadduck, Staff, Senator Pete Kelly; Pam Perry,
Regional Vice President, Medical Health Plan, Texas,
Amerigroup; Jocelyn Pemberton, Executive Director, Alaska
Hospitalist Group, LLC; Rick Davis, CEO, Central Peninsula
Hospital, Soldotna; Valerie Davidson, Commissioner,
Department of Health and Social Services; Jon Sherwood,
Deputy Commissioner, Medicaid and Health Care Policy,
Department of Health and Social Services.
PRESENT VIA TELECONFERENCE
Carol Steckel, Senior Director, Wellness Health Plan,
Florida; Nancy Merriman, Alaska Primary Care Association,
Anchorage.
SUMMARY
CSSB 74(FIN) am
MEDICAID REFORM;TELEMEDICINE;DRUG DATABASE
CSSB 74(FIN) am was HEARD and HELD in committee
for further consideration.
CS FOR SENATE BILL NO. 74(FIN) am
"An Act relating to diagnosis, treatment, and
prescription of drugs without a physical examination
by a physician; relating to the delivery of services
by a licensed professional counselor, marriage and
family therapist, psychologist, psychological
associate, and social worker by audio, video, or data
communications; relating to the duties of the State
Medical Board; relating to limitations of actions;
establishing the Alaska Medical Assistance False Claim
and Reporting Act; relating to medical assistance
programs administered by the Department of Health and
Social Services; relating to the controlled substance
prescription database; relating to the duties of the
Board of Pharmacy; relating to the duties of the
Department of Commerce, Community, and Economic
Development; relating to accounting for program
receipts; relating to public record status of records
related to the Alaska Medical Assistance False Claim
and Reporting Act; establishing a telemedicine
business registry; relating to competitive bidding for
medical assistance products and services; relating to
verification of eligibility for public assistance
programs administered by the Department of Health and
Social Services; relating to annual audits of state
medical assistance providers; relating to reporting
overpayments of medical assistance payments;
establishing authority to assess civil penalties for
violations of medical assistance program requirements;
relating to seizure and forfeiture of property for
medical assistance fraud; relating to the duties of
the Department of Health and Social Services;
establishing medical assistance demonstration
projects; relating to Alaska Pioneers' Homes and
Alaska Veterans' Homes; relating to the duties of the
Department of Administration; relating to the Alaska
Mental Health Trust Authority; relating to feasibility
studies for the provision of specified state services;
amending Rules 4, 5, 7, 12, 24, 26, 27, 41, 77, 79,
82, and 89, Alaska Rules of Civil Procedure, and Rule
37, Alaska Rules of Criminal Procedure; and providing
for an effective date."
1:33:34 PM
Co-Chair Thompson discussed the meeting agenda.
HEATHER SHADDUCK, STAFF, SENATOR PETE KELLY, referenced a
handout she had previously provided the committee titled
"SB 74 - Medicaid Reform Topic and Section Reference" (copy
on file). She pointed to page 1 of the document and cited
"Coordinated Care Projects/Payment Reform" that associated
two sections of the bill with the topic as follows:
Sec. 31 - Coordinated Care Demonstration Projects -
pages 31 - 34
Sec. 28 - Medicaid Reform Program (a)(8) - Redesigning
the payment process - page 26
Ms. Shadduck noted that the focus of the discussion would
be Section 31. She noted that the topic of payment reform
was complicated; she provided two additional documents as
an aide. One was titled "The Payment Reform Glossary,"
(copy on file) that contained definitions and explanations
of the terminology used to describe methods of payment for
Healthcare services. The other was titled "Alaska Medicaid
Redesign: Approaches to Coordinated Care and Value-based
Purchasing," (copy on file) that provided the entire
spectrum of models of care in chart form for quick
reference during the discussions. She spoke to the process
of choosing options for value based purchasing. She shared
that Senator Kelly had initially examined a full risk,
capitated care, and managed care program. The
administration had come forward with "a pitch for
accountable care organizations," which were a step down
from managed care. Through the testimony process a
coordinated care project that "allowed anyone to compete,"
was chosen. She addressed page 31, line 16 of the bill
related to coordinated care. She read the following:
Sec. 47.07.039. Coordinated care demonstration
projects. The department shall contract with one or
more third parties to implement one or more
coordinated care demonstration projects…
Ms. Shadduck explained that the provision sought to
coordinate "whole person" care; primary care and or
behavioral care that "connected the individual to other
services and social supports as necessary." She added that
under Section a, on page 32, line 1, there was a list of 8
items the projects could include. A project must include
three out of the eight items. She listed the items as
follows:
(1) comprehensive primary-care-based management for
medical assistance services, including behavioral
health services and coordination of long-term services
and support;
(2) care coordination, including the assignment of a
primary care provider located in the local geographic
area of the recipient, to the extent practical;
(3) health promotion;
(4) comprehensive transitional care and follow-up care
after inpatient treatment;
(5) referral to community and social support services,
including career and education training services
available through the Department of Labor and
Workforce Development under AS 23.15, the University
of Alaska, or other sources;
(6) sustainability and the ability to achieve similar
results in other regions of the state;
(7) integration and coordination of benefits,
services, and utilization management;
(8) local accountability for health and resource
allocation.
1:37:38 PM
Ms. Shadduck explained that a project would be reviewed by
a project review committee (line 17, page 32). The
committee was comprised of the following:
(1) the commissioner of the department, or the
commissioner's designee;
(2) the commissioner of administration, or the
commissioner's designee;
(3) the chief executive officer of the Alaska Mental
Health Trust Authority, or the chief executive
officer's designee;
(4) two representatives of stakeholder groups,
appointed by the governor for staggered three-year
terms;
(5) a nonvoting member who is a member of the senate,
appointed by the president of the senate; and
(6) a nonvoting member who is a member of the house of
representatives, appointed by the speaker of the house
of representatives
Ms. Shadduck turned to page 33, Subsection (c) of the bill.
She relayed that the subsection outlined the types of
organizations that the Department of Health and Social
Services (DHSS) could contract with: a managed care
organization, primary care case manager, accountable care
organization, prepaid ambulatory health plan, or provider-
led entity. The payments could include innovative payments
such as: global payments, bundled payments, capitated
payments, shared savings and risk, or other payment
structures. She continued with Subsection (d) on line 10,
page 33:
(d) A proposal for a demonstration project under this
section must include, in addition to the elements
required under (a) of this section, information
demonstrating how the project will implement
additional cost-saving measures including innovations
to reduce the cost of care for medical assistance
recipients through the expanded use of telehealth for
primary care, urgent care, and behavioral health
services….
Ms. Shadduck reported that Subsection (e) page 33, line 17,
addressed the third-party review. She noted the following:
(e) The department shall contract with a third-party
actuary to review demonstration projects established
under this section. The actuary shall review each
demonstration project after one year of implementation
and make recommendations for the implementation of a
similar project on a statewide basis. The actuary
shall evaluate each project based on cost savings for
the medical assistance program, health outcomes for
participants in the project, and the ability to
achieve similar results on a statewide basis. On or
before December 31 of each year starting in 2018, the
actuary shall submit a final report to the department
regarding any demonstration project that has been in
operation for at least one year.
Ms. Shadduck offered that Subsection (f) on line 26, page
33 required the department to prepare a plan regarding
regional or statewide implementation of a coordinated care
project based on the results of the demonstration projects.
On or before November 15, 2019, the department shall submit
a plan to the legislature stating the projects they chose
for a wider launch. She remarked that the final Subsection
(g) referred to an earlier definition for telehealth.
1:40:34 PM
Ms. Shadduck commented that the coordinated care provisions
were linked to a provision in Section 28 that instructed
the department to implement redesigned fee agreements that
included items like bundled rates and global payments.
Representative Wilson thought it was atypical to put a
detailed pilot project in statute. She questioned why a
bill was necessary to implement the pilot project. Ms.
Shadduck answered that the department could do pilot
projects "all the day long." She thought that the
legislature should set the benchmarks for reform and lay
out the process for pilot projects that would "lead to a
full on change" on how the state would pay for Medicaid.
She voiced that the goal was to achieve a new and different
payment model and a departure from fee for service.
Representative Wilson commented that her reason made it
appear that the legislature did not trust DHSS. She
wondered whether the coordinated care project had been
modelled after another program. Ms. Shadduck replied that
the language in SB 74 had been modified from the original
that mandated DHSS to implement a managed care organization
(MCO) and expanded it based on the feedback from the Senate
Medicaid reform subcommittee. She reiterated the provision
that mandated the department to contract with one or more
third parties. She clarified that the issue was not trust
but the desire to contract with groups outside of the
department. Representative Wilson asked where the model was
developed. She wondered whether it was a completely new
plan or was based on a successful model.
1:44:04 PM
Ms. Shadduck replied that over the past two years the
sponsor had heard various testimony from many contractors,
stakeholders, organizations including ACO's and MCO's, and
through the committee process about which projects the
reform process should utilize and took ideas from all of
them. She shared that the language had been crafted by the
sponsor. The Senate was cautious of initially choosing just
one method in order to allow for the best projects to prove
themselves, based on the analysis from the actuarial
review, and then launch on a statewide or regional basis.
Representative Wilson was concerned about putting a pilot
project into statute, which would make the program much
more difficult to make adjustments to. Ms. Shadduck
clarified that the structure for starting the projects were
set in statute, but the department managed the contracts
and could terminate projects that were failing.
Vice-Chair Saddler referred to the Project Review Committee
established on page 32 of the legislation. He wondered
whether the make-up of the committee was the best possible
mix of participants. Ms. Shadduck revealed that the make-up
of the review panel was the focus of much discussion. She
answered that the commissioner of the Department of Health
and Social Services (DHSS) had significant knowledge of the
Medicaid program. She spoke to the reasons for including
the other positions on the committee. She noted that the
Commissioner of Administration's familiarity with the
statewide health plans would offer a different perspective.
The chief executive officer of the Alaska Mental Health
Trust Authority (AMHTA) offered information on how to
integrate behavioral health into whole person care.
Stakeholder group representatives were chosen since they
provided the services. Finally, members of the legislature
were included to ensure that the legislative intent was
being met. However, due to the separation of powers the
legislative members had to abstain from voting.
Vice-Chair Saddler wondered whether a "more precise"
definition of stakeholder groups was considered. Ms.
Shadduck answered that the idea of narrowing the focus to
an entity that actually managed the type of health plans in
a Medicaid and non-Medicaid setting was discussed. Vice-
Chair Saddler cited page 31, line 30 of the legislation:
…and must include three or more of the following
31 elements:…
Vice-Chair Saddler questioned why so much discretion was
given to the department.
1:49:55 PM
Ms. Shadduck replied that the first iteration only required
one programmatic element but the sponsor determined that a
higher threshold was necessary. However, the sponsor wanted
to keep the door open to as many different options as
possible.
Vice-Chair Saddler stated there were many goals in the
section and wondered how achievable they were. Ms. Shadduck
answered that it was difficult to measure. She shared that
the larger goal was to eliminate the fee for service model
and the projects were the "baby steps" towards that goal
and were more quantifiable. Vice-Chair Saddler surmised
that the immediate goal was to test the waters and gain
information that informed the next steps forward. Ms.
Shadduck answered in the affirmative.
Representative Gara referenced redesigning the payment
process on page 26 [part of the Medical assistance reform
program provisions]. He was concerned that in cases of life
threatening or serious conditions, the managed care process
would not allow the patients to find the provider that
would best serve the patient; in-state or out-of state. He
asked for clarification. Ms. Shadduck replied that Medicaid
individuals had the option to choose providers. However,
she reported that the state could not force providers to
accept Medicaid. She deferred to the department for a
detailed response.
1:55:54 PM
Representative Gara wanted to hear further from the
department. He believed in patient choice in the instances
he described.
Representative Gattis asked what the difference between
managed care, accountable care, and coordinated care was.
Ms. Shadduck referred to the chart she provided titled"
Alaska Medicaid Redesign: Approaches to Coordinated Care
and Value-based Purchasing." She pointed out that managed
care and accountable care and all of the other models
listed on the chart fell under the banner of coordinated
care. She restated that all of the models could be tested
under the coordinated care approach defined in the
legislation. The project was set up to allow all models to
compete equally under the bill.
Representative Gattis had been under the impression that
the bill included great savings. She stressed that it was
the time to take a "bold" approach to achieve savings. She
stated that if a true opportunity existed that was proven
to produce savings she would choose that model as opposed
to a pilot project.
1:59:24 PM
Ms. Shadduck thought that her perspective was accurate.
She shared that providers had offered feedback that they
were fearful of a radical project failing and needed to
ensure that a new approach would work in both rural and
urban settings. Representative Gattis stated that from time
to time programs that work in the Lower 48 can work in
Alaska. She was not convinced that an existing program
would not work in the state. She believed it was time to
find great savings and boldly implement an entirely new
approach.
Representative Guttenberg addressed the coordinated care
demonstration projects. He expressed concern that the
projects were not able to integrate with each other. He
wondered how contractors with different data bases would
coordinate their project with the other projects chosen to
remain as part of the reform system.
Ms. Shadduck answered that the sponsor's goal was to find
projects that would be sustainable and duplicative from the
outset. She detailed that the intent of establishing the
review committee was to evaluate the proposals and assess
the projects guided by the items listed in the bill. The
process included the filter of the review committee to
accomplish the goal of implementing successful payment
reforms. The recommendations for reforms for wider
implementation were due in a report to the legislature by
November 15, 2019. Representative Guttenberg did not want
to micromanage. He simply wanted to ensure that the
projects were able to integrate with other projects and
worked when necessary. Ms. Shadduck replied that the intent
was for all of the programs to integrate with each other
from the outset.
Representative Kawasaki had general questions on managed
care. Ms. Shadduck noted that other speakers would address
the topic.
2:06:23 PM
Co-Chair Thompson introduced the following speaker.
PAM PERRY, REGIONAL VICE PRESIDENT, MEDICAL HEALTH PLAN,
TEXAS, AMERIGROUP, provided prepared remarks:
Honorable Chair and distinguished members of the
Alaska House Finance Committee. My name is Pam Perry,
and I am Regional Vice President for Public Affairs at
Anthem, one of the nation's leading health benefits
companies. We serve more than 38 million Americans,
including 5.8 million Medicaid members in 19 states,
soon to be 20 next month as we launch our Medicaid
operations in Iowa. Anthem has deep organizational
expertise and passion for serving individuals with
complex needs through a variety of state-sponsored
programs.
As one of the few remaining states without managed
care for Medicaid, we are pleased to see Alaska
consider this model as you seek to reform your
Medicaid program.
Section 29 of Senate Bill 74 includes a provision to
allow managed care organizations to compete for the
opportunity to improve access to care and quality
improvements for Alaska's Medicaid beneficiaries. We
believe that a robust competitive environment among
models in this initiative will ensure the best
outcome, in terms of innovation, quality of care and
cost savings.
Managed care is a proven, patient-centered approach,
and Managed Care Organizations, or MCOs, work directly
with providers to ensure the right care is delivered
at the right time and in the right place. MCOs are
accountable for the care of their members, and are
able to bring all patient care into a coordinated plan
by the timely and effective use of data and care
managers.
MCOs work with state agency and legislative partners
to design, implement, and measure improvements to
care. MCOs hire local staff, who understand the
culture, landscape and needs of clients. MCOs develop
and implement innovative programs that draw upon the
latest best practices in areas as local provider
networks, service coordination, care management,
specialized populations, and value-based purchasing,
customized to meet state-specific needs.
MCOs work directly with members, especially those with
complex medical and behavioral health conditions, to
understand their health needs. We help ensure our
members have a health home, understand how to access
care and are educated about their medical needs. MCOs
also work with a range of organizations that serve our
members to address non-medical, but critical needs
such as housing, coordination with other social
services, and employment.
These assurances, innovations, and accountability are
not available via the fee for service system, which
may be nicknamed 'fend for self.' Service is not
patient centric, there is virtually no incentive for
providers to accept
Medicaid patients or to innovate, and unnecessary
expenses are incurred, health care is compromised, and
taxpayer dollars are wasted.
There will be challenges in any Medicaid model, but
much about the art and science of Medicaid managed
care has evolved, and Alaska will benefit from lessons
learned in other states.
I would suggest that a level playing field exist for
the types of entities that participate in the
demonstration, meaning that the requirements to
participate are equivalent across the models seeking
to participate. Also, MCOs may require a Certificate
of Authority and other models may not, so we would
respectfully request network adequacy not be required
in the COA application, as this will be managed by the
Medicaid agency.
The roadblocks to success identified in consultant
reports are issues that have all been dealt with in
other markets and I am confident that in
collaboration, we can find solutions for Alaska. We
are eager to partner with the State of Alaska in
overcoming these barriers. Thank you.
2:11:02 PM
Ms. Perry elaborated that the Amerigroup Company served a
number of rural states with "rural frontier geography" such
as Texas, Nevada, Washington, and New Mexico. She observed
that many of the challenges identified in the consultants'
reports could be overcome.
Co-Chair Thompson stated that the state was spending $1.4
billion of General Fund (GF) dollars on the issue. He
wondered if managed care would truly save the state money.
Ms. Perry answered that the Center for Medicare and
Medicaid (CMS) set criteria for managed care plans. She
delineated that the federal government required managed
care programs to provide 5 percent savings over a fee for
service program. Savings were "built into the system" of
managed care. Managed Care Organizations (MCO) were paid a
capitated rate; per member, per month rate for its
membership and had to operate within its budget. She
communicated that the risk transferred from the state to
the MCO which provided greater budget predictability, care
coordination, health outcomes, and cost savings. She
provided some examples from recent state studies that had
identified Medicaid savings. Louisiana had launched its
program in 2011 and discovered that MCO's had saved the
state approximately $440 million. She reported that
Milliman's [actuarial consultants] analysis found that over
the last 6 years MCO's reduced Medicaid costs by $3.8
billion and further predicted an $3.3 billion in additional
savings over the next 3 years and $7.1 billion over the
subsequent 9 years. She relayed that most states
established a program after defining the geography,
populations, and services up front, which better quantified
savings. She endorsed the approach over allowing the
companies to define the parameters.
2:14:39 PM
Co-Chair Thompson offered that Alaska was different. He
noted that Amerigroup was currently operating in 19 states.
He wondered if all were experiencing up to 5 percent in
savings. Ms. Perry answered that the savings varied. She
shared that Iowa was the newest state set to launch next
week that expected to save $51 million and she was looking
forward to tracking the results. She qualified that some
"phenomena" occurred when setting up managed care. When
implementing capitated payments some residual fee for
service claims would still require payment for services
already rendered overlapping the new system. She referred
to the situation as "financing the tail." The phenomena may
challenge the initial savings estimates. In addition, the
design of the program affected the savings and "tended" to
accelerate over time. She expounded that many states began
managed care with smaller programs and as the program
matures grow it over time. The more "robust" program would
produce greater savings. Fewer savings would be gained, the
more a state parceled out different aspects of care, carve
out services, or limit populations and geography.
Vice-Chair Saddler understood that multiple MCO's operating
in a market resulted in more competitive efficiencies with
the MCO model. Ms. Perry responded that CMS set certain
regulations and requirements about how the managed care
programs operated and one required providing options, with
limited exceptions for rural jurisdictions. Medicaid
mandated choice for the member, providers, and competition
in order to manage the program effectively. More states
chose statewide participation over regional participation.
She communicated that since enrollee's participation in
MCO's was mandatory, Medicaid required choice between at
least two plans.
2:18:55 PM
Ms. Perry interjected that Oklahoma had a managed care
system until 2008 and returned to fee for service, but
currently intended to return to managed care for age,
blind, and disabled beneficiaries statewide. The state
solicited a request for information last year and received
22 proposals, which indicated the level of interest from
MCO's. She continued that Iowa, with a Medcaid population
of 520 thousand through a statewide program, received 11
responses from MCO's for a request for proposals (RFP) and
made three awards. She believed that Alaska would attract
"robust interest" with a well-designed, sustainable
program.
Vice-Chair Saddler noted that coordinated care in Alaska
would specifically serve Medical Assistance recipients
totaling approximately 170 thousand individuals. He asked
how a managed care model would work encompassing all of the
state's health care populations such as retirees,
employees, and teachers as well as Medicaid beneficiaries
through a health care authority. He wondered how an MCO
model would work in that situation as opposed to
exclusively serving Medicaid recipients. Ms. Perry was
uncertain. She noted that Delaware was the only state that
implemented an inclusive plan. She reported that the type
of plan was a relatively new phenomenon and its success
depended on how well it was designed. The model had been
tested in New Mexico but only for behavioral health and she
did not know the results. She offered that the MCO model
starting out with a Medicaid population was common and many
experienced companies were in existence.
2:22:45 PM
Vice-Chair Saddler wondered whether the demonstration
process in SB 74 was a "typical" model other states adopted
to transition away from fee for service. Ms. Perry replied
in the negative. Many states proceeded in a more
"comprehensive and directive manner" based on the many
years of experience, information and analysis, and trial
and errors with Medicaid and in transitioning away from a
fee for service model. She thought that the "uncertainty"
with the bill's approach may lead to ineffective models
that could only serve regional areas of the state.
Vice-Chair Saddler referred to the 8 elements for
coordinated care listed in the bill and asked which three
of the 8 were essential for managed care. Ms. Perry replied
that number 1, 7, and 8 were the most important.
2:25:57 PM
Representative Kawasaki asked whether Anthem was a for
profit agency. Ms. Perry answered in the affirmative.
Representative Kawasaki asked how a MCO realized profits.
Ms. Perry explained that a state contracted with an MCO and
set forth a contract that outlined the geographic area,
services, and population of the program. The MCO received a
capitated rate depending on the beneficiary make-up, i.e.,
how many children, developmentally disabled, etc. She
elaborated that "within the rate," the MCO had to provide a
network of providers and services, and negotiated contracts
within the network. The Medicaid waiver offered a state
flexibility when designing a program. She reminded the
committee that a "menu approach" was associated with the
fee for service model but "under managed care the "silos
did not exist" which enabled MCO's to coordinate care
around a recipient's needs. Potentially, care and outcomes
were improved and costs to the state were less. She
remarked that the Medicaid MCO was able to make a profit of
between 2 and 4 percent per year.
2:29:15 PM
Representative Kawasaki asked about the capitation rate and
wondered how the rate was set. Ms. Perry responded that the
state, working in conjunction with a consulting actuary set
the rate based on its fee for service experience. The
reduction rate was built into the capitation rate. She
noted that some states accepted bid rates; i.e., an MCO set
the rate it wanted. She cautioned against accepting bid
rates and stated "that it was not an ideal situation." A
state needed to maintain certainty over rates and ensure
the rates were actuarially sound.
Representative Kawasaki asked her to discuss the situation
where an MCO was serving one rural area and how it impacted
a smaller rural area without an MCO. Ms. Perry answered
that the legislation addressed the issue through provisions
that enhanced the ability of an MCO to serve a rural
population such as telemedicine. She furthered that options
existed to encourage the participation of physicians in
Medicaid in rural areas. She shared that in other states
the company incentivized providers to set up satellite
offices serving rural areas, open one or two days a week.
She believed there were "innovations" that could be
"hatched" in Alaska that were only possible under a managed
care program.
Representative Gara referred to the negotiated contracts.
He mentioned the higher medical costs in Alaska and noted
that it was often less expensive to send a patient out of
state for treatment. He wondered whether a patient could
choose a physician outside of Alaska with a managed care
system. Ms. Perry answered affirmatively. She qualified
that depended on what the state allowed regarding out of
state providers. She communicated that "out of network
contracting" existed within a managed care system that
enabled the MCO to negotiate with providers out of the
contracts scope. However, some states dictated the
parameters of out of network contracting.
2:34:02 PM
Representative Gara mentioned having had prostate cancer
and his ability to obtain the "best doctor in the country"
at a much lower rate than charged in Alaska. He wondered
whether she was aware of any other states that allowed
Medicaid to negotiate a rate with the doctor of the
patients choosing. Ms. Perry answered that it depended on
what the state allowed and whether the service was a
covered benefit under the Medicaid program. She reminded
the committee that certain benefit restrictions applied
under Medicaid that did not exist under commercial health
care coverage. The MCO was guided by the contractual
arrangement with the state. She surmised that ultimately
the state and federal government were paying for the
program and would likely identify a provider who could
serve a broader range of members. Representative Gara
maintained his concern.
Representative Munoz referred to the previous day's
testimony from an Emergency Room (ER) doctor who provided
an example of over utilization of ER services and spoke
about an individual who had received 22 CT scans in one
year. She asked how an MCO would prevent a similar
situation. Ms. Perry answered that a member of a MCO had a
health home, primary care provider, and other necessary
services or service providers addressed through care
coordinators. She related that the MCO would work with the
provider to ensure the member was seeing their primary care
provider and following up with the member to ensure they
understood how to manage their condition and had the
appropriate follow up visits with their primary provider or
specialists. She voiced that a coordination occurred under
managed care that did not exist under the fee for service
model.
Representative Munoz pointed to page 29 of the bill and
cited the expansion of 1915i and 1915k programs with
reimbursement rates set at 50 percent. She thought that the
reimbursement rate was much higher under Medicaid
expansion. Ms. Perry stated she would familiarize herself
with the issue and provide follow up.
2:39:26 PM
CAROL STECKEL, SENIOR DIRECTOR, WELLCARE HEALTH PLAN,
FLORIDA (via teleconference), read from prepared testimony
as follows:
Mr. Chairman, members of the committee, thank you for
allowing me to participate by phone today. My name is
Carol Steckel; I am Senior Director for Alliance
Development at WellCare Health Plans. I very much
appreciate the work you are doing to reform the
Medicaid program. I have served as a Medicaid
Director in Alabama and North Carolina and had the
honor of chairing the national association of Medicaid
Directors for several years. In that capacity, I had
the opportunity to work with your previous Director of
DHHS, Bill Streur, and learned from him a great deal
about the unique challenges faced by Alaska Medicaid.
WellCare is headquartered in Tampa, Florida, and
serves more than 3.8 million members who are
participants in Medicare, Medicaid and the Children's
Health Insurance Program. We offer Medicaid managed
care services in 9 states (soon to be 10) serving the
full spectrum of Medicaid beneficiaries from healthy
mothers and their children to individuals with severe
physical, mental and developmental disabilities.
For more than 25 years WellCare has focused
exclusively on serving individuals who receive their
health care services through government programs. It
is based on both my personal experience running large
and complex Medicaid programs and WellCare's long
experience that I offer our comments today.
We appreciate the thoughtful approach you are taking
in reforming the Alaska's Medicaid program. We believe
that Medicaid managed care would be an important tool
in assisting you to achieve the goals laid out in the
Menges report.
An integrated, fully capitated MCO model ensures
members with diverse and complex needs receive all of
the physical, behavioral and social benefits and
services they need to take control of their health. It
also ensures that barriers and gaps in care are
effectively and efficiently identified and mitigated
so that members can achieve their individual goals for
health, wellness and quality of life. Unlike Alaska's
current fee for service program, risk based managed
care offers a single point of entry through which
members are able to access the full array of needed
health services and care coordination they need
without having to navigate multiple agencies,
providers and community partners.
The true success of Medicaid managed care is that we
succeed when our members succeed. The beauty of
adopting a full risk managed care model is that when
done correctly, a managed care partner like WellCare
is responsible for the needs of the whole member,
eliminating the fragmentation and duplication inherent
in Alaska's current system, In addition, unlike the
many less integrated models identified in the Agnew
Beck report, a risk based managed care approach can
incorporate those initiatives such as health homes,
patient centered medical homes and accountable care
organization within the managed care model. Thus, a
full risk managed care program is the only model that
creates a single, accountable plan partner responsible
for enhancing each members' quality of life, improve
health outcomes and control costs.
In order to achieve these goals we utilize a holistic,
member centered, care management model designed to
serve the unique needs of each of our members. Our
care plan platform, which has been built and proven in
the service of nearly 2.4 million Medicaid members
nationwide, integrates physical health including
pharmacy and behavioral health with the social needs
of our members to empower the member to fully manage
their health care needs. A successful managed care
organization uses a robust network of provider
partners and has the flexibility to offer supplemental
benefits over and above the current Medicaid benefit
package. WellCare designs its products to improve each
members' health and quality of life.
Much of what affects our member's health occurs
outside of the doctor's office. WellCare is unique in
its commitment to the member by linking three
components - physical health, behavioral health and
the social determinants of health - those issues that
prevent a member from taking control of their health.
WellCare's distinctive CommUnity Commitment program is
designed to create lasting connections between our
health plan and the social service agencies and
community organizations already deeply rooted in each
community. Our CommUnity Commitment program evaluates
community needs, catalogues existing resources,
connects our members to needed social support services
and, where appropriate, supports these agencies to
expand or enhance services to meet the needs of our
members and the communities where they live.
In addition to improving quality and controlling
costs, utilizing full risk managed care aligns with
the goals laid out by the Legislative leaders in
Alaska. Leveraging the contracting lessons learned in
the 38 states that utilize a Medicaid managed care
model, plans can and should be held to performance
standards aligned with achieving the state's
accountability goals. Examples of such standards
include quality withholds and service level agreements
for data submission. In addition, by placing a managed
care plan fully at risk for the cost of care, the plan
and the state are aligned in their incentives to
vigorously identify and root out any fraudulent or
abusive activity.
Medicaid managed care provides budget predictability
and bends the cost curve while improving a member's
quality of care. Some examples are:
· In its first seven years of Medicaid managed
care, Georgia's cost growth rate was 2.64
percent, while the fee-for-service growth rate
was estimated at 6.18 percent. Managed care's
cost containment resulted in a savings of over
$940 million.
· From 2011-2015, moving to a managed care model
has saved Kentucky more than $1.3 billion in
state and federal funds while simultaneously
improving the delivery of health care services to
the state's Medicaid population
· Louisiana saved $135.9 million in its first full
year of Medicaid managed care and a recent found
that the state's capitated managed care program
saves the state approximately $30 per recipient
per month, a greater than 12 percent reduction in
costs over fee-for-service Medicaid spending
· Between 2010 and 2013, Missouri saved an average
of $27 million per year from its Medicaid managed
care program
In closing, our experience has shown that even in
states where full risk managed care was viewed as
"impossible" by many of the state's stakeholders,
Medicaid managed care has not only been successfully
implemented but has grown to additional geographies
and populations. We have no doubt that the same would
be true in Alaska.
2:46:25 PM
Representative Wilson asked whether the state could have
accomplished the same goal by simply issuing an RFP. Ms.
Steckel deferred the question to staff in Alaska.
Representative Wilson questioned how WellCare procured
contracts with other states and how detailed the states
criteria for the contract was.
Ms. Steckel answered that it varied depending on the state.
She explained that all states utilized an RFP or
competitive bid process to award a managed care contract.
Some states set very specific criteria written into its
RFP. The MCO could better achieve a state's expectations
when the criteria was specific and clearly delineated.
Representative Gattis expressed doubt that utilizing a
statewide MCO was currently the wrong approach.
Vice-Chair Saddler asked whether WellCare would likely bid
on any of the coordinated care contracts in the state. Ms.
Steckel responded that WellCare was interested and was
waiting for the RFP. She reiterated that a well-crafted RFP
created a more advantageous scenario for an MCO to
participate in the state. She pointed out that when a state
moved to a managed care system it sparked "robust"
competition among MCO's. She divulged that if the state
parceled out services and benefits to smaller portions of
the Medicaid population it would lose the sense of
comprehensive care coordination and weakened the ability
for managed care to achieve optimal results. Vice-Chair
Saddler assumed that the MCO industry would endorse the
state taking an aggressive approach and fully embrace
managed care. He requested that Ms. Steckel share her
thoughts on the "sample and plan process" in the
legislation. Ms. Steckel replied that she understood the
"trepidation," but there was much to learn from the 39
states that had already adopted a managed care approach and
to look to their "sophisticated" experiences with MCO's as
pilot projects, where managing contracts to meet goals had
already been "played out." She thought that the answers to
the lessons to be learned through Alaska's pilot were out
there in some of the other states.
2:52:12 PM
NANCY MERRIMAN, ALASKA PRIMARY CARE ASSOCIATION, ANCHORAGE
(via teleconference), read from a statement:
Good afternoon, Co-Chairs Thompson and Neuman, and
members of the House Finance Committee. For the
record, my name is Nancy Merriman, and I am the
Executive Director of the Alaska Primary Care
Association. APCA is a statewide membership
organization of Alaskan Community Health Centers.
Across our system of 29 organizations and about 170
clinics, 1 in 7 Alaskans receive primary medical,
dental and behavioral health care. A little over 24%
of Community Health Center patients are enrolled in
the Medicaid program.
Thank you for the opportunity to provide comments
today on Senate Bill 74 on medical assistance reform.
We appreciate the time the House Finance Committee is
spending to learn about the details of the Medicaid
program and the complexities of the healthcare
landscape. We share the goals of providing quality
care and improving health outcomes, while making the
system more sustainable. Today my comments center on
Accountable Care Organizations (ACOs), and primary
care's role in them.
ACOs are formal, legal networks of healthcare
providers who take responsibility for a defined
patient population's health. They align their clinical
programs to focus on getting patients the most
efficient care possible, and are incentivized to
reduce the total cost of care and to maximize clinical
outcomes for an assigned patient population. Often,
they do this with the addition of new data sets that
allow them to target high-risk, high-cost patients who
are using the healthcare system inefficiently. For
example, in a very successful Medicare ACO program,
the providers receive half of the savings they create
against a target established by Medicare.
Safety Net primary care providers, especially
Community Health Centers, are well-positioned to lead
and coordinate ACO formation and operation, and
addressing the healthcare needs of Medicaid patients
for the following reasons:
1. Health Centers have served these populations
historically. There is a trust between patients and
providers, and Health Centers are situated in
communities where high-risk and high-cost patients are
likely to live.
2. They have the know-how, infrastructure and operating
principles to most effectively plan for the population
health outcomes of these groups.
3. Health Centers have the EHR data - and are continually
improving their data analytics capabilities - to be
accountable for performance and quality.
4. Value-based payments, such as Medical Home payments or
shared savings payments, will allow for the key
component for ACOs: primary care case management.
5. Care coordination in Health Centers involves a team-
based approach and relies on good electronic and other
communication with patients' other providers.
ACOs are being fostered across the country by CMS for
Medicare patients. And about 10 states now have
Medicaid ACOs.
2:56:43 PM
Ms. Merriman continued to read from prepared remarks:
The characteristics of successful State-run ACO
programs that lead to successful Safety Net ACOs are:
1. The program does not alter the base compensation for
the Safety Net providers, nor the hospitals, in its
initial years.
2. The program allows for ACOs to operate state-wide or
across geographies larger than a single region.
3. The program does not require a hospital to be the
sponsor of the ACO, but does allow for the ACO to
enter into participation agreements and gain-sharing
agreements with hospitals and other providers.
4. The program offers some financial incentives to
provide the primary care case management function,
which can include care coordination payments and/or
shared savings payments.
5. The State commits to providing key data on the
attributed Medicaid population to the Safety Net ACO
so that it can prioritize the use of its resources.
We hope that as the Alaska State House considers the
ongoing development of an ACO or ACO-like program, it
will leave room for innovation in the healthcare
provider delivery system that would include the
emergence of Safety Net- or Health Center-led ACOs.
Representative Wilson asked whether accountable care was
done in conjunction to managed care or if a state chose one
or the other. Ms. Merriman answered that an Accountable
Care Organization (ACO) differed from an MCO. She defined
that an ACO was a group of providers. Representative Wilson
asked whether "a person would be taking advantage of one
program or the other." Ms. Merriman answered in the
affirmative. Representative Wilson asked for the page
number in the legislation that referred to ACO's. Ms.
Merriman pointed to Section 31, page 33 of the bill.
Vice-Chair Saddler asked whether Alaska's "disparate
geography and distribution of health care facilities" was
an unsurmountable challenge for managed care. Ms. Merriman
believed that Alaska's rural geography had been the issue
that the department and legislature had struggled with. She
believed an ACO scenario would fit the rural situation
better in rural communities. Vice-Chair Saddler asked
whether there were sufficient primary care facilities and
providers in Alaska to accommodate the shift in care. Ms.
Merriman answered that the workforce needs of the
healthcare industry was challenging. She elaborated that
Medicaid reform allowed a variety of healthcare providers
to "practice at the top of their licensure." She had
"worked with the Alaska Mental Health Trust Authority
(AMHTA) to craft language in the legislation regarding
behavioral health providers who were situated in a variety
of care sites including community health centers." She
thought that care coordination allowed a variety of
providers to participate in a patients care leaving the
most complicated and serious cases to physicians and nurse
practitioners.
3:02:05 PM
Vice-Chair Saddler requested clarification regarding
primary care and coordinated care would allow more advanced
practitioners and M.D.'s (medical doctors) time for the
more serious and complicated cases. Ms. Merriman responded
that Medicaid reform allowed the expansion of services at
the "lower level" of providers so the midlevel providers
could practice at the top of their licensure and the
physicians could focus on cases that required their level
of skill and expertise. She added that care coordinators
could perform "a critical role in a patient's care."
Representative Gattis referred to an answer to a question
by Vice-Chair Saddler stating that a rural village
situation being better served by an ACO. She wanted to hear
the managed care response to the question and was
interested in the comparison. Ms. Steckel answered that an
MCO could include a subset of ACO's and primary care
medical homes and sought to meet the needs of rural
communities through telemedicine or other means. The MCO
worked with the communities in rural areas to link with
providers in more populous areas.
3:05:38 PM
JOCELYN PEMBERTON, EXECUTIVE DIRECTOR, ALASKA HOSPITALIST
GROUP, LLC, read from a prepared statement:
For the record, my name is Jocelyn Pemberton and I am
the executive director for The Alaska Hospitalist
Group, a large physician practice as well as a
founding member of Alaska Innovative Medicine (AIM), a
local physician driven, Care Coordination Company.
More importantly, I was born and raised in Alaska, I'm
raising my three beautiful girls in Anchorage and I am
watching my parents grow old in Alaska.
I agree with the other comments that we need to bend
the cost curve and that the pure fee for service model
ultimately needs to change. Financial incentives need
to be aligned between patients, providers and payers,
in this case, the State. As you know, this is much
easier said than done.
The vast majority of our provider community are in
private practice; Alaskan physicians and nurse
practitioners running small businesses to provide
medical care in their community. To make sweeping
changes in the payment model is extremely risky and
could be a hugely damaging to our industry, especially
in pediatrics which often have 50% or greater
percentage of Medicaid patients. However, there are
models that would allow physicians that are willing to
take risk and participate in shared savings to do so,
thereby aligning the incentives.
The model that we have experience with is the Bundled
Payment for Care Improvement, or BPCI, which is a
demonstration project we are participating in with
Medicare. Essentially, BPCI sets a cost, based on
historical data, for the episode of care initiated
from a hospitalization plus 90 days post discharge and
aligns incentives to provide better care at a lower
cost. For example, the total cost for a patient with a
hip fracture might be $20,000 on average. If we are
able to provide services for less, by working to avoid
readmissions for example, there are shared savings
back to the providers who are working to reduce cost
and improve outcomes. BPCI allows for utilization
management by incentivizing models of care the prevent
re-hospitalizations, over-utilization of the ER or
duplicative testing, rather than merely slashing
payments to providers or restricting access for
patients.
We appreciate the work that the legislature has done
and the recognition of the impact care coordination
can bring to the Medicaid program. As physicians, we
have recognized this as well and have created Alaska
Innovative Medicine or AIM for short. AIM is a local,
physician driven care coordination company, a result
of a collaboration between primary care physicians and
hospitalists. AIM has initially contracted with
Premera Blue Cross to improve the care of their high
risk members. AIM has a multi-disciplinary approach
including case managers, social workers, a clinical
nursing staff, dieticians etc.
Think of AIM as a mobile patient centered medical home
deploying services as needed. AIM social workers
collaborate with Primary Care Physicians as well as
specialists to best support the health plan for the
patient. Our clinical nursing staff, as well as our
physicians are able to meet patients in their home to
avoid over ER utilization, educate on medications and
nutrition to promote health. With the local provider
relationships and Alaskan experience, the AIM model
has the ability to have huge impact to improve patient
care and reduce cost in our state.
3:10:58 PM
Co-Chair Thompson asked about the term "hospitalist." Ms.
Pemberton replied that it was a primary care physician
working in the hospital and providing care for the
hospitalized medical patients.
Representative Gara asked whether there had been any
progress between the ACO and DHSS towards utilization of
the provider model instead of managed care in order to save
money. Ms. Pemberton relayed that she had engaged in
several discussions with the department but that the model
was a fairly new; formed January 1, 2015.
3:12:50 PM
RICK DAVIS, CEO, CENTRAL PENINSULA HOSPITAL, SOLDOTNA, read
from prepared remarks:
Mr. Chairman, members of the committee, thank you for
the opportunity to testify today. For the record, my
name is Rick Davis and I am the Chief Executive
Officer at Central Peninsula Hospital in Soldotna.
Central Peninsula Hospital is a 49 bed acute care
hospital that is owned by the Kenai Peninsula Borough
and leased to CPGH, Inc., a local nonprofit
Corporation.
I was asked to provide testimony today to the House
Finance Committee regarding Managed Care and
Accountable Care Organizations as they pertain to SB
74, Medicaid Reform.
The Centers for Medicare and Medicaid Services defines
ACO's as groups of doctors, hospitals, and other
health care providers, who come together voluntarily
to give coordinated high quality care to their
Medicare patients. The goal of this coordinated care
is to ensure that patients, especially the chronically
ill, get the right care at the right time, while
avoiding unnecessary duplication of services and
preventing medical errors.
The CMS definition I just provided speaks directly to
Medicare, however my discussion about ACO's today will
refer to specifically Medicaid. In this context, I am
talking about an Accountable Care-like structure that
I will refer to as a Coordinated Care Organization, or
CCO. The key to the effectiveness of both the ACO and
the CCO models is that both of these relationship
structures take the majority of the risk away from the
payer, and place it directly on the providers. These
relationships make the provider responsible for
maintaining low cost and high quality, or the provider
suffers the consequences - not the payer. Which makes
a lot of sense because the provider and the patient
are the only two entities who really have the ability
to affect health outcomes.
A Managed Care Organization differs from and ACO or
CCO in that MCO plans are a type of health insurance.
MCOs have contracts with health care providers and
medical facilities to provide care for members at
reduced costs in return for steerage of patients to
those providers. The obvious difference between
Managed Care Organizations and Accountable or
Coordinated Care Organizations is that - in the MCO
model - the payer is taking on the risk both in terms
of quality and cost. Instead of as I mentioned
earlier, the providers taking that risk in the ACO/CCO
model.
Now I'd like to give you some background about why and
how CPH became interested in a variant of an ACO and
our desire to pilot a demonstration project on the
Kenai Peninsula.
3:16:02 PM
Mr. Davis continued to read from a statement:
Because we are a single stand-alone community hospital
and are not part of a system or affiliated with a
larger hospital, CPH must be diligent when considering
future financial risk. We are keenly aware of the
changing health care landscape and believe that a
major transformation is beginning to take place. The
changes I am referring to will cause reimbursements
for health care services to be directly tied to
quality, outcomes, and efficiency. This type of
payment transformation is moving health care away from
volume and towards value.
We have already begun to see these changes take place
under Medicare with Value Based Purchasing and bundled
payments. Because of this, we have elected to be
proactive and prepare for anticipated changes in an
effort to lessen the impact of shrinking
reimbursements going forward. Nearly two years ago, we
began to explore different options and payment models
in order to better prepare for the compression on
reimbursement as it begins to show up in Alaska.
We are interested in piloting an ACO variant that is
based on an existing Community Care Organization or
CCO that is operating in Eastern Oregon. Data released
in February in the Journal of American Medical
Association indicates that: Compared with a 2011
baseline, the Oregon Health Authority reported that
per-member per-month spending for inpatient care had
decreased in 2014 by 14.8%. Per-member per-month
spending on outpatient care was also lower, by 2.4%.
However, outpatient spending trends masked a 19.2%
increase in spending on primary care services because
care transitioned away from high cost specialty care,
and over to the Primary Care Medical Homes that are
part of the CCO. This improved coordination of care -
lead by the primary care provider is the key to
lowering costs and improving care.
We would anticipate this model covering the entire
Medicaid population on the Kenai Peninsula. CCO's
differ from ACO's in their acceptance of full
financial risk in the form of the global budget. They
are similar in that they are both locally governed;
are accountable for access, quality and health
spending; and both emphasize primary care medical
homes. Both require Robust Data Systems to support a
Clinically Integrated network for clinical and
business functions in addition to permitting the flow
of data required to make informed decisions.
The CCO would operate on a fixed global budget, reduce
medical cost inflation as part of the contract,
improve the quality of care and outcomes and create a
healthier population. The current Alaska trend of
growth per capita for Medicaid expenditures averages
just over 6% per year and we believe this
demonstration could help put Medicaid on a predictable
and sustainable path by reducing the growth trend in
per capita Medicaid expenditures.
3:19:25 PM
Mr. Davis continued to read from prepared remarks:
We view the CCO as the next step beyond traditional
managed care. This belief is simply based on the
funding structure and risk bearing nature of the
program. More importantly, providers will no longer be
paid for treating illness but instead for providing a
highly coordinated system that prevents illness and
the high costs associated with it.
The CCO structure requires a great deal of front-end
work to bring the stakeholders together and agree on a
payment structure within the organization. We will
need to form a network, a shared savings distribution
program, and develop quality targets and metrics for
accountability.
Currently, Alaska does not utilize Managed Care
Organizations or Managed Health Plans. There are
different kinds of managed care, and we encourage you
to structure any legislation broadly enough to allow
for local innovation like CCO's. We believe that a
provider-led model like a CCO will work on the Kenai
Peninsula and we are willing to pilot it.
A CCO will have the flexibility to support new models
of care that are patient-centered and team-focused,
and reduce health disparities. We believe a CCO will
be better able to coordinate services and also focus
on prevention, chronic illness management and patient-
centered care. We would have flexibility within our
budget to provide services alongside medical benefits
with the goal of meeting the Triple Aim of better
health, better care and lower per capita costs for the
population we serve.
Thank you for the opportunity to testify and please
give consideration to a global budget CCO
demonstration in any legislation you discharge from
the subcommittee.
3:21:34 PM
Vice-Chair Saddler referenced the handout titled "Alaska
Medicaid Redesign: Approaches to Coordinated Care and
Value-based Purchasing," and asked where a Coordinated Care
Organization (CCO) would be listed on the chart's
continuum. Mr. Davis answered that he put the CCO between
the ACO and the MCO. He delineated that the CCO would
assume the full risk in contract with an insurance partner.
Vice-Chair Saddler asked if the bill currently allowed a
CCO to submit an application for the demonstration project.
Mr. Davis answered in the affirmative.
3:23:18 PM
Representative Gara asked whether Medicaid allowed the
department to negotiate a rate with a doctor of the
patients choosing in cases of serious illness.
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, replied that the answer was complicated.
She elaborated that Medicaid required that care must be
provided in the closest community as possible. Federal law
required provider choice for Medicaid beneficiaries but the
state mandated that care must be provided in their home
community to avoid unnecessary travel.
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, clarified
that if care was not accessible in a community, the state
would pay the travel costs for a person to receive care.
Regulations would not prevent an enrollee from seeing a
Medicaid provider in another community, but the travel
costs would not be covered by the state if a Medicaid
provider was available in their community.
Representative Gara reiterated his question regarding
patient choice. Mr. Sherwood replied in the negative. He
reported that when travel was necessary the department
allowed a person to travel to the closest community and if
the community was in another state and there was not a
significant difference in expense DHSS would most likely
authorize travel to the community of choice. He exemplified
a person wanting to see a provider in Portland as opposed
to the designated Medicaid provider in Seattle. He added
that the provider had to agree to enroll in the Medicaid
program and accept the allotted rate. The department did
not negotiate individual rates for providers.
Representative Gara asked what it meant that a provider had
to be enrolled in a Medicaid program. Mr. Sherwood answered
that an out-of-state provider would have to be enrolled in
the Alaska Medicaid program. He revealed that if a
recipient was in another state and needed treatment, the
default was that the state would pay the particular state's
Medicaid rate or refer to regulation to determine how to
pay an appropriate rate if the provider would not enroll in
Alaska's Medicaid program.
3:28:32 PM
Representative Gara asked whether anything in the bill
would prevent the process Mr. Sherwood described from
happening. Mr. Sherwood answered in the negative. He added
that a proposal under a managed care model that would
restrict freedom of choice was possible in the future under
provisions of reform.
Representative Wilson recalled testimony from Central
Peninsula Hospital (CPH) the previous session that adopted
a similar CCO model and reported that the hospital in
Unalaska had as well. She wondered whether there would be a
negative impact on the entities or communities that already
employed a coordinated care model if Medicaid adopted a
statewide plan. Commissioner Davidson answered that one of
the things the department liked about the bill was that it
offered flexibility to allow the use of different models
that fit different communities. She illustrated that what
worked in Unalaska might not work in Anchorage. She
referred to testimony from CPH that noted its interest in a
CCO model, which might differ from a model the Bethel
region was interested in piloting. The department
appreciated the broad flexibility the bill provided to
tailor demonstration projects to models chosen by
communities that worked for them. Representative Wilson
voiced concern about putting the pilot projects in statute.
She supported the overall concepts of the bill and felt
that the specific provisions in statute would limit the
department from piloting other possible models not listed
in the bill. She wondered why the department could not
issue an RFP under direction from the legislature based on
the best ideas from other states without adopting
legislation.
Commissioner Davidson answered that the bill allowed the
department to do just what she described; issue an RFP with
defined criteria. She cited page 33 of the legislation,
under subsections d, e, and f, lines 10 through 31 and
noted that the proposals must include cost saving measures,
innovation, integrate behavioral health, telehealth, and
actuarial follow up. She reported that the department
wanted an independent actuary to show whether the program
had achieved its goal and would work on a wider basis. She
believed the provisions benefitted the legislature.
3:35:46 PM
Representative Wilson did not disagree with anything in the
bill. She disagreed with the use of statute. She believed
that there were existing models working well. She did not
want to "tie the state's hands" any further. She declared
that she liked the ideas in the legislation but felt they
were not necessary to place in statute in order for the
department to implement. Commissioner Davidson understood
her concern. She shared the department's concern. She
commented that even though the projects existed in another
state, some regions of Alaska were very unique and did not
exist elsewhere in the country. She noted that in large
remote road less regions travel was critical to access
care. She added that communities lacking adequate
sanitation facilities impacted public health. She
emphasized that things were uniquely different in rural
Alaska. She understood that other companies may have had
experience in rural areas in other states, but she repeated
that Alaska was very different. The demonstration projects
were necessary to prove effective in rural Alaska with its
unique set of challenges. Representative Wilson asked
whether the committee was going to hear from any of the
Native organizations related to what they may be doing in
their regions of the state. Co-Chair Thompson would look
into the idea.
Vice-Chair Saddler agreed that Alaska was unique, but
believed it was not so unique. He asked whether the
commissioner envisioned how the process would play out in
the next 3, 5, or 10 years. Commissioner Davidson answered
that there were different things that could be done on a
regional or community basis. She felt that what worked in
Anchorage or Juneau may not work in Bethel or another
community. She cited page 33, Subsection (e) of the bill
that provided for actuarial analysis and emphasized that it
would provide critically beneficial information for the
department on how to proceed.
Vice-Chair Saddler referred to page 32, line 17, Section 2
of the bill, which set up a project review committee and
page 33, line 17 that allowed the department to contract
with a third party. He asked whether there would be some
value in using the project review committee to help
evaluate the demonstration projects as well. Commissioner
Davidson answered that the provisions took place at two
different points in time. She clarified that the project
review committee would decide which projects would be
selected to move forward. The actuarial analysis took place
after the projects were implemented.
3:42:16 PM
Vice-Chair Saddler pointed to page 33, Subsection (f) and
read the following:
(f) The department shall prepare a plan regarding
regional or statewide implementation of a coordinated
care project based on the results of the demonstration
projects under this section. On or before November 15,
2019, the department shall submit the plan to the
senate secretary and the chief clerk of the house of
representatives and notify the legislature that the
plan is available. On or before November 15 of each
year thereafter, the department shall submit a report
regarding any changes or recommendations regarding the
plan developed under this subsection to the senate
secretary and the chief clerk of the house of
representatives and notify the legislature that the
report is available.
Vice-Chair Saddler did not understand what the implication
of the subsection was. He asked whether the plan would be
statewide or if there would be 10 different regional plans.
Commissioner Davidson responded that the subsection and
bill contemplated both options. She offered that some
services may work on a statewide basis and some may only
work on a regional basis. The legislation provided the
flexibility that would allow both to happen. She
exemplified that Medicaid related travel was currently
arranged on a statewide basis and in the past some of the
travel had been arranged on regional basis, which she felt
might work better. She noted that recently a national
policy change was made to address travel differently and
could be beneficial to the state.
Representative Munoz pointed to page 29 of the bill related
to the reimbursement rates for the expanded Medicaid
program and wondered whether the 90 percent rate applied to
any of the options under discussion. Mr. Sherwood
referenced page 29, Section 30, and paragraph d items 1, 2,
and 3.
(d) Notwithstanding (a) - (c) of this section, the
department may
(1) apply for a section 1915(i) option under 42 U.S.C.
1396n to improve services and care through home and
community-based services to obtain a 50 percent
federal match;
(2) apply for a section 1915(k) option under 42 U.S.C.
1396n to provide home and community-based services and
support to increase the federal match for these
programs from 50 percent to 56 percent;
(3) apply for a section 1945 option under 42 U.S.C.
1396w-4 to provide coordinated care through health
homes for individuals with chronic conditions and to
increase the federal match for the services to 90
percent for the first eight quarters the required
state plan amendment is in effect;
Mr. Sherwood explained that (d) (1) was the 1915i option
for Home and Community based services, which provided 50
percent coverage of some state funded program's Medicaid
services and a portion of that population were eligible for
the enhanced rate. He continued that the "K" option was
another home and community based program intended for
people to meet institutional levels of care, which would
receive an extra 6 percent over the base match rate and
were not eligible for the enhanced rate. He reported that
the last option, Section 1945 regarding health homes for
individuals with chronic conditions, allowed for the
enhanced rate of 90 percent federal match for the first 8
quarters of the program.
3:48:11 PM
Representative Munoz pointed to section 1915i and asked
whether the expanded population that might qualify for a
higher rate was the 90 percent enhanced rate. Mr. Sherwood
replied in the affirmative and clarified that the rate
would begin at 100 percent and drop to 90 percent over the
next few years. He expounded that an individual who was
eligible in the expansion group receiving the services
listed would qualify for the higher rate. Representative
Munoz asked why the legislation would reference the 50
percent rate if the expanded population was eligible for
the higher rate. She also wondered what the rate was
expected to be after two years for the 1945 population. Mr.
Sherwood answered that after 8 quarters the rate would fall
to 50 percent.
3:50:32 PM
Ms. Shadduck clarified that if the state chose managed
care, the consultants recommended that three or more
organizations should be involved. She elaborated that if an
MCO dropped out beginning with only two the state was "on
the hook" and the situation complicated the interactions
with rural populations and tribal health. She added that
the sponsor felt that the "the feedback loop for the
legislature" in the form of the review committee and
actuarial results were an important provisions to place in
statute. She reminded the committee that the legislature
had seats on the "RFP review committee" and if the reform
provisions were not in statute the department would not
have to be accountable to the legislature. She emphasized
the flexibility that existed in the bill and noted that if
in the future the CMS offered other options for innovation
the department was authorized to utilize them. She cited
the language in Subsection C, on page 33, "the department
may contract with…" which was not exclusive language and
suggested amended language that quelled the concerns that
the bill restricted other areas of innovation and reform.
CSSB 74(FIN) am was HEARD and HELD in committee for further
consideration.
Co-Chair Thompson discussed the schedule for the following
day.
ADJOURNMENT
3:54:06 PM
The meeting was adjourned at 3:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB74 Supporting Documents -HFIN 032416 DHSS Document_Approaches to Coordinated Care and Value Based Purchasing.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |
| SB74 Supporting Documents - HFIN 032416 Payment Reform Glossary.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |
| SB74 Supporting Documents - HFIN 032416 KFF Medicaid Payment Reform_Guide to key terms and concepts.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |
| SB 74 - Managed Care HFIN 20160324 testimony- AP edits.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |
| SB 74 Managed Care Testiomony Rick Davis CEO Central Peninsula Hospital Testimony 3.24.16.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |
| SB 74 Pemberton House Finance 3.24.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |
| SB 74 Responses- HFIN 3-24-16.pdf |
HFIN 3/24/2016 1:30:00 PM |
SB 74 |