Legislature(2013 - 2014)HOUSE FINANCE 519

01/22/2014 08:30 AM FINANCE


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08:34:00 AM Start
08:34:12 AM Fy 15 Governor's Budget Overview: Department of Health and Social Services
10:11:00 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ FY15 Governor's Budget Overview TELECONFERENCED
Dept. of Health & Social Services
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 22, 2014                                                                                           
                         8:34 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
8:34:00 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Austerman called the House Finance Committee                                                                           
meeting to order at 8:34 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Pete Higgins,  District  5; William  Streur,                                                                    
Commissioner,  Department  of  Health and  Social  Services;                                                                    
Sana Efird,  Assistant Commissioner, Finance  and Management                                                                    
Services, Department of Health and Social Services.                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
FY 15 GOVERNOR'S BUDGET OVERVIEWS:                                                                                              
     Department of Health and Social Services                                                                                   
                                                                                                                                
^FY 15 GOVERNOR'S BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND                                                                   
SOCIAL SERVICES                                                                                                               
                                                                                                                                
8:34:12 AM                                                                                                                    
                                                                                                                                
Co-Chair Austerman  explained that the Department  of Health                                                                    
and  Social Services  (DHSS) would  testify  on the  interim                                                                    
subcommittee  processes.  He  noted that  Vice-Chair  Neuman                                                                    
would  chair the  DHSS  meetings. He  stated  that he  would                                                                    
attend upcoming leadership meetings  and turn the gavel over                                                                    
to  Vice-Chair   Neuman.  He  invited   Representative  Pete                                                                    
Higgins to the committee table for the discussion.                                                                              
                                                                                                                                
8:36:42 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman  noted  that  Commissioner  Streur  would                                                                    
provide a  basic overview during  the committee  hearing. He                                                                    
noted that  a five-year  budget was a  primary topic  of the                                                                    
subcommittee's  summer  meetings.   He  wished  for  further                                                                    
discussion  with the  department  regarding  the future  and                                                                    
Alaska.                                                                                                                         
                                                                                                                                
8:37:54 AM                                                                                                                    
                                                                                                                                
WILLIAM  STREUR,  COMMISSIONER,  DEPARTMENT  OF  HEALTH  AND                                                                    
SOCIAL  SERVICES,  introduced  himself  and  his  staff.  He                                                                    
commented  that the  summer's meetings  were productive  and                                                                    
allowed  for better  understanding  for  the department  and                                                                    
legislators. He stated that  interim progress would continue                                                                    
this session due to the urgency of the situation.                                                                               
                                                                                                                                
Commissioner Streur  introduced the  PowerPoint presentation                                                                    
"FY 15 Departmental Overview (copy on file)."                                                                                   
                                                                                                                                
8:40:22 AM                                                                                                                    
                                                                                                                                
Commissioner Streur  began with slide 1:  "Alaska Department                                                                    
of  Health  and  Social  Services  Organization  Chart."  He                                                                    
introduced the  staff listed on  the slide and in  the room.                                                                    
He  noted  that  many  staff  changes  occurred  during  the                                                                    
interim.                                                                                                                        
                                                                                                                                
Commissioner  Streur continued  with  slide  2: "Summary  of                                                                    
Summer Meetings."                                                                                                               
                                                                                                                                
   · Opportunity for Division-level deep dive into the                                                                          
     budget                                                                                                                     
   · Process evolved from meeting to meeting                                                                                    
   · Concluded with a better understanding of the budgetary                                                                     
     development challenges                                                                                                     
                                                                                                                                
8:43:01 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman stated  that  the subcommittee  requested                                                                    
that interim  meetings be held  in the Office  of Children's                                                                    
Services (OCS) for the summer  meetings in an effort to meet                                                                    
many  of the  employees  and evaluate  their very  difficult                                                                    
work.  He  stated that  the  discussions  and meetings  were                                                                    
favorable as  they had the  responsibility of  making budget                                                                    
cuts that affect real people.                                                                                                   
                                                                                                                                
8:44:29 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur  continued  with  slide  4:  "Financial                                                                    
Report."  He  noted  that the  annual  report  was  commonly                                                                    
distributed  to  legislative   offices.  He  encouraged  the                                                                    
members  to  read through  the  report  and bring  pertinent                                                                    
questions to the  department. He noted that  the first chart                                                                    
discussed the  budget allocation  by type. The  general fund                                                                    
was 3  percent while  the other funds  were an  additional 3                                                                    
percent.  He stated  that further  detail would  be provided                                                                    
later in the presentation.                                                                                                      
                                                                                                                                
Vice-Chair  Neuman  asked   about  projections  or  patterns                                                                    
involving federal contributions.                                                                                                
                                                                                                                                
Commissioner    Streur    responded   that    the    federal                                                                    
contributions  were   status-quo.  He   expected  reductions                                                                    
following sequestration.  He pointed  out some  small budget                                                                    
increases.  He noted  that  sequestration  had its  expected                                                                    
effects.  He noted  that Alaska's  budget would  continue to                                                                    
move  in a  conservative  manner regardless  of the  federal                                                                    
contributions.  The state  must  weigh  all availability  of                                                                    
federal dollars against state dollars.                                                                                          
                                                                                                                                
Vice-Chair  Neuman assumed  that  a  five-year budget  would                                                                    
show zero growth on federal levels.                                                                                             
                                                                                                                                
Commissioner Streur  agreed with  the assumption,  but noted                                                                    
that  for every  dollar  of federal  money,  the state  must                                                                    
contribute one  dollar. He  did not  expect growth  in state                                                                    
revenue.                                                                                                                        
                                                                                                                                
8:48:09 AM                                                                                                                    
                                                                                                                                
Commissioner Streur suggested that efficiency was the key.                                                                      
                                                                                                                                
Representative Gara  asked about the term  sequestration. He                                                                    
asked if the  newly passed federal budget  was now relevant.                                                                    
He  wondered if  the  numbers put  forth  by the  department                                                                    
reflected the new budget or the sequestered budget numbers.                                                                     
                                                                                                                                
Commissioner  Streur replied  that  the  new budget  numbers                                                                    
were reflected. He clarified  that certain public assistance                                                                    
program  funding was  subject to  change. He  explained that                                                                    
the  federal government  allocated an  amount of  money, but                                                                    
the  allocation  process  was  incomplete.  The  departments                                                                    
within  the federal  government  could  further portion  the                                                                    
allocations.                                                                                                                    
                                                                                                                                
8:49:29 AM                                                                                                                    
                                                                                                                                
Representative Gara  discussed Medicaid expansion  and noted                                                                    
that  for  every  nine dollars  received  from  the  federal                                                                    
government the state must contribute one dollar.                                                                                
                                                                                                                                
Commissioner Streur replied that  his figures were not quite                                                                    
as favorable as those cited by Representative Gara.                                                                             
                                                                                                                                
Commissioner  Streur continued  with  slide  6: "Health  and                                                                    
Wellness Across  the Lifespan." He  introduced results-based                                                                    
budgeting as  a budget  based on  outcome. He  prioritized a                                                                    
different  view  of  the  budget   for  the  department.  He                                                                    
commented on his private sector  work for the Sisters of St.                                                                    
Joseph. He  recalled a  quote from  that experience,  "to do                                                                    
good  we  have  to  do  well."  He  noted  that  with  state                                                                    
government,  to  "do  well  we have  to  do  good."  Further                                                                    
funding relied  on good  performance. Every  dollar received                                                                    
mush  show  a  proven  return.   He  noted  that  the  three                                                                    
priorities were:                                                                                                                
                                                                                                                                
   1. Health and Wellness Across the Lifespan                                                                                   
        a. Core Service; Protect and Promote the Health of                                                                      
          Alaskans                                                                                                              
        b. Core Service; Provide Quality of Life in a Safe                                                                      
          Living Environment for Alaskans                                                                                       
   2. Health Care Access Delivery and Value                                                                                     
        a. Core Service; Manage Health Care Coverage for                                                                        
          Alaskans in Need                                                                                                      
        b. Core Service; Facilitate Access to Affordable                                                                        
          Health Care for Alaskans                                                                                              
   3. Safe and Responsible individuals, Families and                                                                            
     Communities                                                                                                                
        a. Core Service; Strengthen Alaska Families                                                                             
        b. Core Service; Protect Vulnerable Alaskans                                                                            
        c. Core Service; Promote Personal Responsibility and                                                                    
          Accountable Decisions by Alaskans                                                                                     
                                                                                                                                
Vice-Chair  Neuman  asked  about  slide 5.  He  asked  which                                                                    
division had the largest potential for growth.                                                                                  
                                                                                                                                
Commissioner  Streur   replied  that  expanded   growth  was                                                                    
expected  in  the Alaska  Pioneer  Homes  and with  Medicaid                                                                    
services.  He stated  that the  Affordable Care  Act changed                                                                    
the  processes  of  health care  with  legislation.  Changes                                                                    
within the  state Medicaid  system would  also take  time to                                                                    
alter.  He pointed  out that  the greatest  need for  health                                                                    
care was in the last seven years of a person's life.                                                                            
                                                                                                                                
8:56:07 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman expressed  concern about  expected growth                                                                    
in the department's divisions.                                                                                                  
                                                                                                                                
Representative Wilson asked the  connection between DHSS and                                                                    
Department of  Education and  Early Development  (DEED). She                                                                    
noted  that the  interim  DEED task  force encountered  much                                                                    
talk  about social  issues encountered  by the  schools. She                                                                    
advocated for greater cross-over between departments.                                                                           
                                                                                                                                
Commissioner Streur  replied that  DHSS did  not collaborate                                                                    
enough  with  other  departments.   He  explained  that  OCS                                                                    
involvement in the school, with  teachers should be a normal                                                                    
activity. He noted that the  identification of children that                                                                    
might  encounter  the  juvenile   justice  system  was  also                                                                    
crucial.                                                                                                                        
                                                                                                                                
8:58:01 AM                                                                                                                    
                                                                                                                                
Representative Gara  thanked the chair and  commissioner for                                                                    
their significant  contributions to improving  these crucial                                                                    
state  systems.  He  asked   about  Medicaid  and  mentioned                                                                    
anecdotal stories  about use of  emergency medical  care for                                                                    
relatively  small   medical  issues.   He  asked   about  an                                                                    
alternative method  of addressing the use  of high-utilizers                                                                    
of  emergency  room  medical   care.  He  proposed  Medicaid                                                                    
adjustments enforcing  recipients to seek medical  care from                                                                    
an urgent care clinic in the name of cost-savings.                                                                              
                                                                                                                                
Commissioner  Streur agreed  that  some Medicaid  recipients                                                                    
used the emergency  room as their primary  care provider. He                                                                    
noted that a program  addressing these high-utilizers was in                                                                    
place.  He advocated  for  engaging  Medicaid recipients  in                                                                    
their  care. He  suggested  that health  care  was a  three-                                                                    
legged stool; payer, patient and provider.                                                                                      
                                                                                                                                
9:00:53 AM                                                                                                                    
                                                                                                                                
Representative  Costello thanked  the  commissioner for  his                                                                    
time. She  followed up  on Representative  Wilson's question                                                                    
and addressed  the needs of  school nurses who tended  up to                                                                    
70 children's  medical needs every  day. School  nurses were                                                                    
often the primary care providers  for children. She wondered                                                                    
if the cost of school nurses  could be taken by DHSS instead                                                                    
of DEED.                                                                                                                        
                                                                                                                                
Commissioner  Streur  replied  that neither  department  had                                                                    
developed  a method  of billing  Medicaid for  recipients in                                                                    
the school systems.                                                                                                             
                                                                                                                                
9:02:16 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur explained  slide  7:  "Total Budget  by                                                                    
Priority."  He pointed  out  that 53  percent  was spent  on                                                                    
priority number one; "Health  and Wellness Across Lifespan."                                                                    
He opined  that priorities  must shift.  A change  in health                                                                    
care delivery  required an adjustment toward  prevention. He                                                                    
hoped for  a shift toward  priority number three;  "Safe and                                                                    
Responsible Individuals, Families and Communities."                                                                             
                                                                                                                                
9:03:55 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur  discussed  slide 8:  "Primary  Service                                                                    
Population." The  graph depicted the age  distribution among                                                                    
focused  dollars. The  greatest spending  occurred in  early                                                                    
and late  periods of a  recipient's life. He  explained that                                                                    
the aging population utilized more services.                                                                                    
                                                                                                                                
Vice-Chair Neuman  clarified that  a compilation  of figures                                                                    
showed  that some  Alaskans were  served multiple  times. He                                                                    
asked for an example of a service displayed in the graph.                                                                       
                                                                                                                                
Commissioner  Streur replied  that  services included  well-                                                                    
baby visits, immunizations and high-risk babies.                                                                                
                                                                                                                                
Vice-Chair  Neuman asked  which recipient  received multiple                                                                    
services most often.                                                                                                            
                                                                                                                                
Commissioner  Streur replied  that children  were seen  most                                                                    
frequently.                                                                                                                     
                                                                                                                                
9:06:26 AM                                                                                                                    
                                                                                                                                
Vice-Chair   Neuman  stressed   the  need   for  prevention,                                                                    
especially where children were concerned.                                                                                       
                                                                                                                                
Representative Holmes  asked about a  non-duplicated numbers                                                                    
of state recipient services.                                                                                                    
                                                                                                                                
Commissioner  Streur replied  that the  actual client  index                                                                    
was a work in progress. He  hoped to have the information to                                                                    
the committee in the near future.                                                                                               
                                                                                                                                
9:07:53 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur discussed  slide 9:  "Division Spending                                                                    
by  Priority  Including  Medicaid." The  slide  divided  the                                                                    
department's priorities by  division. Each division's report                                                                    
reflected  a  plan  to address  the  three  priorities.  The                                                                    
evolution  of the  practice would  provide  the outputs  and                                                                    
outcomes of the exercise.                                                                                                       
                                                                                                                                
Commissioner Streur  discussed slide  10: "Highlights  of FY                                                                    
15 Budget." He stated that  the FY 14 management plan budget                                                                    
was $2,665.9  million while the  FY 15 request  was $2,669.5                                                                    
million.  He pointed  out that  the totals  were very  close                                                                    
when  comparing the  management plan  versus the  Governor's                                                                    
request.                                                                                                                        
                                                                                                                                
Vice-Chair Neuman  noted that  a struggle  was ahead  due to                                                                    
competing needs  among state  departments. He  realized that                                                                    
budget cuts touched people's lives.                                                                                             
                                                                                                                                
9:10:33 AM                                                                                                                    
                                                                                                                                
Representative  Gara  recalled  the  governor  stating  that                                                                    
salary increases would be covered  within the new budget. He                                                                    
expressed  concerns that  increased salaries  would lead  to                                                                    
program cuts.                                                                                                                   
                                                                                                                                
Commissioner Streur replied that  he could not guarantee the                                                                    
protection  of any  program. He  stressed that  all programs                                                                    
were vulnerable.  He noted that  his priority  programs were                                                                    
the highlight of his solutions.                                                                                                 
                                                                                                                                
9:13:13 AM                                                                                                                    
                                                                                                                                
Representative   Wilson  asked   about   the  $8.4   million                                                                    
increase. She asked  if the increase was  due to backfilling                                                                    
or new programs.                                                                                                                
                                                                                                                                
Commissioner  Streur replied  that increased  Medicaid costs                                                                    
would require  increased contributions of $8.4  million. The                                                                    
state  must  contribute  approximately  40  percent  of  the                                                                    
offset  to the  federal contribution.  The issue  was not  a                                                                    
decrease  in  federal funding  but  the  increased costs  in                                                                    
Medicaid.                                                                                                                       
                                                                                                                                
Representative Wilson asked if there  was an increase in the                                                                    
number of  Medicaid recipients. She  wondered if  the entire                                                                    
system was growing because of costs.                                                                                            
                                                                                                                                
Commissioner Streur replied yes.  He noted that the Medicaid                                                                    
budget report showed an increase in recipients.                                                                                 
                                                                                                                                
Representative Guttenberg joined the meeting.                                                                                   
                                                                                                                                
9:14:55 AM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman discussed a  summary of contributions from                                                                    
the Office of Management and  Budget (OMB). The proposed 10-                                                                    
year  plan listed  the FY  15 state  portion of  the federal                                                                    
Medicaid program  as approximately $700 million.  The figure                                                                    
was projected  to increase  in an annual  rate of  over $7.2                                                                    
percent. By 2014,  the fund was projected to  require a $1.3                                                                    
billion  contribution  from  the state's  general  fund.  He                                                                    
asked  how general  fund spending  could be  capped at  $5.6                                                                    
billion and account for a $600 million projected increase.                                                                      
                                                                                                                                
Commissioner  Streur disagreed  with the  cited numbers.  He                                                                    
thought  that  the 7.2  percent  average  was excessive.  He                                                                    
wished for  an opportunity  to share his  department's five-                                                                    
year plan, which differed from  the projections delivered by                                                                    
OMB.  He  stated  that  the 7.2  percent  projected  by  OMB                                                                    
differed  from   the  approximately  4   percent  projection                                                                    
offered by DHSS.                                                                                                                
                                                                                                                                
9:17:25 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman  stressed   that  DHSS  operating  budget                                                                    
proposals were of great importance.  He explained his tactic                                                                    
of  reaching out  to the  Health Commission  and the  Mental                                                                    
Health Trust Authority to collaborate  toward a solution. He                                                                    
stated that  his goal was  to reduce the cost  of healthcare                                                                    
in Alaska  overall. He hoped to  assist industry, businesses                                                                    
and individuals in the state at the same time.                                                                                  
                                                                                                                                
9:20:02 AM                                                                                                                    
                                                                                                                                
Commissioner Streur  discussed slide  11: "Highlights  of FY                                                                    
15 Budget." He  explained that he had included  the slide to                                                                    
display  his  proposed  changes.  He pointed  out  that  the                                                                    
budget in FY  15 was similar to that of  FY 05. He suggested                                                                    
that  the  information   presented  "low-hanging  fruit"  to                                                                    
flatten the curve. He understood  that the state must find a                                                                    
way to  do more  with less.  He felt  that he  had submitted                                                                    
lean budgets during his time as commissioner.                                                                                   
                                                                                                                                
Representative  Costello asked  about  potential savings  if                                                                    
clients   eligible   for   Indian   Health   Service   (IHS)                                                                    
reimbursement of 100 percent were  served by IHS rather than                                                                    
by the state.                                                                                                                   
                                                                                                                                
Commissioner Streur  responded $200  billion in  savings was                                                                    
possible with the proposed change.                                                                                              
                                                                                                                                
Vice-Chair  Neuman stated  that $200  billion was  a lot  of                                                                    
money.                                                                                                                          
                                                                                                                                
Commissioner Streur stated that  approximately 40 percent of                                                                    
health  care  delivered  to  Alaska  Natives  was  delivered                                                                    
within the Native Health System.  He cited negotiations with                                                                    
Clinical Nurse Specialists (CNS)  for additional services at                                                                    
100 percent.  He discussed the  expense of  medevac services                                                                    
in Alaska and  his request for CNS coverage  at 100 percent.                                                                    
He noted that  most medevac services were from  the Bush and                                                                    
most  of  the  village  members  were  Native  Alaskans.  He                                                                    
pointed out that some complex  medical services would not be                                                                    
eligible for a move to IHS.                                                                                                     
                                                                                                                                
Vice-Chair  Neuman planned  to  discuss  the matter  further                                                                    
during  upcoming subcommittee  meetings. He  understood that                                                                    
the  commissioner  was working  with  the  Tanana Chiefs  to                                                                    
enable greater efficiency within their system.                                                                                  
                                                                                                                                
Representative Guttenberg asked  how DHSS increases compared                                                                    
to other department increases.                                                                                                  
                                                                                                                                
9:24:50 AM                                                                                                                    
                                                                                                                                
Commissioner Streur  responded that  his department  and the                                                                    
Department of Transportation  and Public Facilities (DOT/PF)                                                                    
were  similar because  of their  federal  funding. He  noted                                                                    
that DOT/PF had a larger  percentage of federal money, while                                                                    
DHSS was split evenly between state and federal funding.                                                                        
                                                                                                                                
Representative  Guttenberg asked  about internal  management                                                                    
of  the department.  He wondered  about efficiencies  within                                                                    
the departments.                                                                                                                
                                                                                                                                
Representative  Gara  understood  that IHS  was  allotted  a                                                                    
fixed amount of funding. An  exhaustible amount of money was                                                                    
not available for every qualified  patient. He asked how the                                                                    
shift could occur to IHS for 100 percent reimbursement.                                                                         
                                                                                                                                
Commissioner   Streur   replied   that   Medicaid   was   an                                                                    
entitlement  program, while  the money  from IHS  was funded                                                                    
with  approximately  $600  million  of  additional  Medicaid                                                                    
funding. He  stated that the  more Native  Alaskans enrolled                                                                    
in Medicaid, the more funding  was received by the state and                                                                    
state savings of general fund  dollars. He explained that if                                                                    
a tribal member received  services in a non-native facility,                                                                    
the state paid 50 percent  of the Medicaid bill. If services                                                                    
were received in  a tribal facility, the  state received 100                                                                    
percent reimbursement  from the  federal government  for the                                                                    
same service.                                                                                                                   
                                                                                                                                
Representative Gara asked if  the resources would eventually                                                                    
expire.                                                                                                                         
                                                                                                                                
Commissioner  Streur  replied  that the  funding  would  not                                                                    
expire.                                                                                                                         
                                                                                                                                
9:28:00 AM                                                                                                                    
                                                                                                                                
Representative Munoz thanked the  chair and commissioner for                                                                    
their work during  the interim. She asked  about the variety                                                                    
of  medical  service  costs  in   Alaska.  She  wondered  if                                                                    
Medicaid  had a  published  rate of  services  or were  they                                                                    
subject to  the wide  range of costs  within the  state. She                                                                    
asked if  the state would  benefit from a published  rate of                                                                    
services.                                                                                                                       
                                                                                                                                
Commissioner Streur replied that the  rate paid by the state                                                                    
for  physician  services  was  a  certain  percentage  above                                                                    
Medicare.  Alaska  utilized its  own  rate.  He stated  that                                                                    
payment  for  physician  services  was largely  based  on  a                                                                    
percentage  above Medicare.  He furthered  that the  average                                                                    
Medicaid reimbursement  across the nation  was approximately                                                                    
67 percent of Medicare,  while Alaska paid approximately 140                                                                    
percent.   Most  providers   participated  because   of  the                                                                    
desirable rate.                                                                                                                 
                                                                                                                                
Representative  Munoz  asked  if opportunities  for  savings                                                                    
existed in the area of provider payment and reimbursement.                                                                      
                                                                                                                                
Commissioner  Streur   replied  that  the  issue   would  be                                                                    
addressed  in future  years. He  mentioned other  areas with                                                                    
opportunities for savings including  a transition of patient                                                                    
care   to  primary   care  providers.   He  suggested   that                                                                    
prevention occurred  best in the  hands of the  primary care                                                                    
provider.                                                                                                                       
                                                                                                                                
SANA EFIRD,  ASSISTANT COMMISSIONER, FINANCE  AND MANAGEMENT                                                                    
SERVICES,   DEPARTMENT  OF   HEALTH  AND   SOCIAL  SERVICES,                                                                    
addressed  slides   13  and  14;  graphs   prepared  by  the                                                                    
Legislative  Finance Division  (LFD).  Slide  13 showed  the                                                                    
department's  total general  fund  growth over  the past  10                                                                    
years. She detailed  that growth decreased in  2009 and 2010                                                                    
due  to  enhanced   Federal  Medical  Assistance  Percentage                                                                    
(FMAP).  The  general  fund then  increased  when  the  FMAP                                                                    
rebalanced to 50 percent.                                                                                                       
                                                                                                                                
Vice-Chair Neuman  highlighted the department's total  FY 14                                                                    
general  fund budget  equated to  approximately $4  thousand                                                                    
per resident  worker. He stated  that nearly $7  billion was                                                                    
spent in  Alaska on healthcare  annually. He  mentioned that                                                                    
pharmaceuticals in Alaska cost $1 million per week.                                                                             
                                                                                                                                
Representative  Guttenberg  asked  how the  graph  would  be                                                                    
altered with the inclusion of seasonal workers in Alaska.                                                                       
                                                                                                                                
Ms.  Efird deferred  the question  to LFD.  She moved  on to                                                                    
slide 14: "Highlights of FY 15  Budget. The top color in the                                                                    
bar  graph  represented  federal  funds.  The  next  portion                                                                    
represented  other  funds,   designated  general  funds  and                                                                    
unrestricted general funds.                                                                                                     
                                                                                                                                
Commissioner   Streur    turned   to   slide    15   titled:                                                                    
"Departmental Updates."                                                                                                         
                                                                                                                                
   · MMIS System Upgrade                                                                                                        
   · ARIES EIS System Upgrade                                                                                                   
   · Sequestration                                                                                                              
   · Affordable Care Act                                                                                                        
                                                                                                                                
Commissioner Streur  planned to  have a  representative from                                                                    
Xerox  explain the  Medicaid  Management Information  System                                                                    
(MMIS) system upgrade, but the  weather delayed the proposed                                                                    
testifier in  Ketchikan. He stated  that much of  the system                                                                    
representative's  testimony  would  prove  relevant  to  the                                                                    
topic.                                                                                                                          
                                                                                                                                
Commissioner  Streur  assumed  full responsibility  for  the                                                                    
difficulties  with the  MMIS  system  upgrade. He  explained                                                                    
that  he signed  an original  contract in  2007 with  Alaska                                                                    
Communication System  (ACS), and  then Xerox  purchased ACS.                                                                    
He  acknowledged  that the  system  had  challenges and  the                                                                    
department  was doing  everything possible  to mitigate  the                                                                    
damage.  Many  advances to  providers  were  honored by  the                                                                    
state  to  offset  cash  flow  issues.  Certain  groups  and                                                                    
residential  facilities have  been hit  harder than  others.                                                                    
Dental  providers  had  experienced the  greatest  financial                                                                    
loss during  the transition. He  stated that Oregon  made no                                                                    
payments  for  approximately  7  months.  Idaho  suffered  a                                                                    
similar fate  and Maine  was delayed  in their  payments for                                                                    
nearly one year.                                                                                                                
                                                                                                                                
9:37:15 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur continued  to discuss  the department's                                                                    
efforts  to  mitigate  problems with  the  MMIS  system.  He                                                                    
stated  that utilizing  preferred providers  would ease  the                                                                    
challenges. Some providers  were at 50 percent  of what they                                                                    
had billed. He  noted that providers were  reluctant to take                                                                    
advances with  worries about tracking claims.  He understood                                                                    
the sentiment and would have  avoided taking an advance when                                                                    
working in the private sector.                                                                                                  
                                                                                                                                
REPRESENTATIVE PETE  HIGGINS, stated  the Health  and Social                                                                    
Services (HSS)  committee would  meet with  the commissioner                                                                    
and Xerox in another  open hearing with providers testifying                                                                    
on the subject. He trusted  the commissioner that all issues                                                                    
would   be   resolved   in    the   future.   He   expressed                                                                    
disappointment  in  the  upgrade, and  understood  that  the                                                                    
commissioner  was doing  all  that he  could  to remedy  the                                                                    
situation.  He opined  that transparency  was of  the upmost                                                                    
importance.                                                                                                                     
                                                                                                                                
Vice-Chair  Neuman asked  how health  care providers  should                                                                    
respond to the delays. He  noted that provider payments were                                                                    
increasing.                                                                                                                     
                                                                                                                                
Commissioner Streur  replied that providers  should continue                                                                    
billing for services. The  department would inform providers                                                                    
about all  changes. Prior  to the  system change,  the state                                                                    
generated a weekly payment of  approximately $27 million per                                                                    
week. He  cited the average  payment in October  2013, after                                                                    
the  system upgrade  of $14  million per  week; nearly  a 50                                                                    
percent  decrease.  The  amount  continued to  rise  to  the                                                                    
current $33  million. He stated that  hospital payments were                                                                    
simpler,  as  a hospital  could  better  absorb the  payment                                                                    
delays.                                                                                                                         
                                                                                                                                
Representative Gara  stated that  a physician  contacted him                                                                    
about the  delayed Medicaid reimbursements.  He asked  if he                                                                    
should work directly with the department on the issue.                                                                          
                                                                                                                                
Commissioner Streur  replied that  contact with he  or other                                                                    
members of the department was  the proper process. He stated                                                                    
that  Deputy Commissioner  Christensen  and Director  Brodie                                                                    
were  good department  contacts. He  stressed that  advances                                                                    
were  available and  no clinic  or provider  should question                                                                    
their business viability.                                                                                                       
                                                                                                                                
9:43:51 AM                                                                                                                    
                                                                                                                                
Representative Higgins  asked about claim filing  delays. He                                                                    
suggested refiling  outstanding claims, but the  advice from                                                                    
the department was to abstain from refiling claims.                                                                             
                                                                                                                                
Commissioner Streur  did not believe that  reposting a claim                                                                    
was a good solution. He  stated that timely filing would not                                                                    
be an issue with regards to the Medicaid claiming process.                                                                      
                                                                                                                                
Vice-Chair  Neuman  thought  that the  department  made  the                                                                    
required updates  for needed efficiency.  The implementation                                                                    
of the  system was faulty,  but Xerox was the  real culprit.                                                                    
He stated that the director  of the division was responsible                                                                    
for  provider related  questions, while  the fault  was with                                                                    
Xerox. He  opined that the  division's director ought  to be                                                                    
available to  her staff rather  than addressing  health care                                                                    
providers.                                                                                                                      
                                                                                                                                
9:47:30 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur took  responsibility  for the  system's                                                                    
problems. He stated that even  with delays, the Soft Service                                                                    
Portal was operational. He noted  that the public assistance                                                                    
programs  were  listed  in  the  new  system.  The  Medicaid                                                                    
Management  Information System  was  new,  but other  states                                                                    
were using it successfully.                                                                                                     
                                                                                                                                
9:49:45 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur  stated  that  sequestration  would  be                                                                    
addressed  further  in  future  meetings.  He  detailed  the                                                                    
various expenses  including Meals  on Wheels, which  cut 364                                                                    
meals per week.                                                                                                                 
                                                                                                                                
Representative  Guttenberg asked  if a  comparable shift  of                                                                    
costs  was seen  through  the Meals  on  Wheels program.  He                                                                    
asked if the issue was traceable.                                                                                               
                                                                                                                                
Commissioner   Streur  replied   that   his  examples   were                                                                    
anecdotal. He  provided an example  where a Meals  on Wheels                                                                    
driver  found an  elderly woman  who had  fallen and  was in                                                                    
great distress.                                                                                                                 
                                                                                                                                
9:53:01 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman  noted  that  combined  Meals  on  Wheels                                                                    
programs  increased  efficiency. Kitchen  improvements  with                                                                    
capital  budget  funding  also  added  to  the  process  and                                                                    
program.                                                                                                                        
                                                                                                                                
Commissioner  Streur  noted  that  sequestration  cuts  were                                                                    
active, and  approximately 80 percent of  the cuts delivered                                                                    
under sequestration were eliminated in the budget cycle.                                                                        
                                                                                                                                
9:54:34 AM                                                                                                                    
                                                                                                                                
Commissioner Streur  discussed the  Affordable Care  Act. He                                                                    
pointed out that Alaska declined  the expansion of Medicaid.                                                                    
He stated that  3000 people selected Market  Place plans and                                                                    
83 percent of  those qualify for federal  subsidy. He stated                                                                    
that the high percentage would require further discussion.                                                                      
                                                                                                                                
Vice-Chair  Neuman  planned to  delve  into  the topic  with                                                                    
further future  discussion. He noted  that a new  advisor on                                                                    
health policy  was hired by  the governor. He hoped  to hear                                                                    
from  the  administration  and   their  advisors  about  the                                                                    
subject.                                                                                                                        
                                                                                                                                
Representative  Holmes asked  about new  Medicaid enrollment                                                                    
resulting from the Affordable Care Act.                                                                                         
                                                                                                                                
Commissioner Streur  replied that  the 1100  new enrollments                                                                    
were routed  in a flat  file from the Federal  Exchange. The                                                                    
Medicaid portion  of the Federal  Exchange had not  yet been                                                                    
automated and some data was missing as a result.                                                                                
                                                                                                                                
9:57:30 AM                                                                                                                    
                                                                                                                                
Representative Gara  agreed that  the state  contribution to                                                                    
the  Affordable  Care  Act was  debatable.  He  stated  that                                                                    
Alaskans  without   Medicaid  or  private   subsidies  would                                                                    
suffer. He asked the cost  savings for families entering the                                                                    
Federal Exchange rather than Medicaid.                                                                                          
                                                                                                                                
Vice-Chair   Neuman  asked   if   questions  regarding   the                                                                    
Affordable Care Act could be tabled to a later date.                                                                            
                                                                                                                                
9:59:44 AM                                                                                                                    
                                                                                                                                
Commissioner  Streur pointed  out that  between 100  and 133                                                                    
percent of the  poverty level were eligible  for the Federal                                                                    
Exchange. The people between 133  and 175 percent of poverty                                                                    
level would not be eligible for Medicaid.                                                                                       
                                                                                                                                
Vice-Chair  Neuman concluded  that the  subcommittee allowed                                                                    
the department  to transfer funds  within the  department to                                                                    
cover  unanticipated shortfalls.  Deficit and  sequestration                                                                    
effects were unknown.                                                                                                           
                                                                                                                                
Representative  Wilson asked  about  the connection  between                                                                    
the  different departments  and  their  budgets. She  opined                                                                    
that  a cut  in  one department  could  affect another.  She                                                                    
advocated  for greater  communication  among departments  to                                                                    
allow for increased efficiency.                                                                                                 
                                                                                                                                
Commissioner  Streur  agreed  that other  departments  could                                                                    
collaborate, but he stated that he was unable to do more.                                                                       
                                                                                                                                
Representative Wilson understood the  dilemma. She hoped for                                                                    
alignment  of   budgets;  for   a  solution   of  department                                                                    
integration.                                                                                                                    
                                                                                                                                
10:05:25 AM                                                                                                                   
                                                                                                                                
Vice-Chair Neuman  suggested that an expansion  of broadband                                                                    
would benefit all  agencies and their budgets.  He asked the                                                                    
Alaska  Mental  Health  Trust   to  research  the  necessary                                                                    
broadband capacity for Alaskans in  both the private and the                                                                    
public  sector. He  wondered if  private  industry might  be                                                                    
interested in  investing money for  the installation  of the                                                                    
necessary   broadband   and   an   amortization   of   their                                                                    
investment.                                                                                                                     
                                                                                                                                
10:08:38 AM                                                                                                                   
                                                                                                                                
Representative   Wilson  wondered   why  services   such  as                                                                    
broadband  were  not  shared among  state  departments.  She                                                                    
wondered what  the savings of such  collaboration might lead                                                                    
to.                                                                                                                             
                                                                                                                                
Vice-Chair Neuman  shared a story about  foster children and                                                                    
the  administrative needs  of  the  department. He  stressed                                                                    
that  the inefficiencies  of employee  turn-over within  the                                                                    
department was another important issue.                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:11:00 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:11 a.m.                                                                                         

Document Name Date/Time Subjects
2014 DHSS Lead-in Presentation.pdf HFIN 1/22/2014 8:30:00 AM
DHSS Overview HFIN
1-21-14 DHSS 10-Year Plan Graphs.pdf HFIN 1/22/2014 8:30:00 AM
HFIN DHSS Overview