Legislature(2015 - 2016)HOUSE FINANCE 519

03/29/2016 01:30 PM FINANCE


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01:34:12 PM Start
01:35:12 PM SB74
04:27:58 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 74 MEDICAID REFORM;TELEMEDICINE;DRUG DATABAS TELECONFERENCED
Heard & Held
Fiscal Notes
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 29, 2016                                                                                            
                         1:34 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:34:12 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 1:34 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
John  Skidmore, Director,  Criminal Division,  Department of                                                                    
Law;  John  Boucher,   Deputy  Commissioner,  Department  of                                                                    
Administration;  Janey   Hovenden,  Director,   Division  of                                                                    
Corporations,    Business   and    Professional   Licensing,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Jon Sherwood, Deputy Commissioner,  Medicaid and Health Care                                                                    
Policy,  Department of  Health  and  Social Services;  Vicky                                                                    
Wilson, Director,  Division of Pioneer Homes,  Department of                                                                    
Health   and   Social   Services;  Karen   Forrest,   Deputy                                                                    
Commissioner,  Department  of  Health and  Social  Services;                                                                    
Jeff Jessee,  Chief Executive Officer, Alaska  Mental Health                                                                    
Trust  Authority;  Stacie  Kraly, Chief  Assistant  Attorney                                                                    
General,  Human Service,  Department  of  Law; Senator  Pete                                                                    
Kelly, Sponsor.                                                                                                                 
                                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 74(FIN) am                                                                                                                 
          MEDICAID REFORM;TELEMEDICINE;DRUG DATABASE                                                                            
                                                                                                                                
          CSSB 74(FIN) am was HEARD and HELD in committee                                                                       
          for further consideration.                                                                                            
                                                                                                                                
Co-Chair Thompson discussed the meeting agenda.                                                                                 
                                                                                                                                
CS FOR SENATE BILL NO. 74(FIN) am                                                                                             
                                                                                                                                
     "An   Act  relating   to   diagnosis,  treatment,   and                                                                    
     prescription  of drugs  without a  physical examination                                                                    
     by a  physician; relating to  the delivery  of services                                                                    
     by  a  licensed  professional counselor,  marriage  and                                                                    
     family    therapist,     psychologist,    psychological                                                                    
     associate, and  social worker by audio,  video, or data                                                                    
     communications;  relating to  the duties  of the  State                                                                    
     Medical  Board;  relating  to limitations  of  actions;                                                                    
     establishing the Alaska  Medical Assistance False Claim                                                                    
     and  Reporting  Act;  relating  to  medical  assistance                                                                    
     programs administered  by the Department of  Health and                                                                    
     Social Services;  relating to the  controlled substance                                                                    
     prescription database;  relating to  the duties  of the                                                                    
     Board  of  Pharmacy;  relating to  the  duties  of  the                                                                    
     Department   of  Commerce,   Community,  and   Economic                                                                    
     Development;   relating  to   accounting  for   program                                                                    
     receipts; relating  to public record status  of records                                                                    
     related to  the Alaska  Medical Assistance  False Claim                                                                    
     and   Reporting   Act;  establishing   a   telemedicine                                                                    
     business registry; relating  to competitive bidding for                                                                    
     medical assistance  products and services;  relating to                                                                    
     verification  of  eligibility   for  public  assistance                                                                    
     programs administered  by the Department of  Health and                                                                    
     Social  Services; relating  to annual  audits of  state                                                                    
     medical  assistance  providers; relating  to  reporting                                                                    
     overpayments    of    medical   assistance    payments;                                                                    
     establishing  authority to  assess civil  penalties for                                                                    
     violations of medical  assistance program requirements;                                                                    
     relating  to seizure  and  forfeiture  of property  for                                                                    
     medical  assistance fraud;  relating to  the duties  of                                                                    
     the   Department  of   Health   and  Social   Services;                                                                    
     establishing    medical     assistance    demonstration                                                                    
     projects;  relating  to   Alaska  Pioneers'  Homes  and                                                                    
     Alaska Veterans'  Homes; relating to the  duties of the                                                                    
     Department  of Administration;  relating to  the Alaska                                                                    
     Mental Health Trust  Authority; relating to feasibility                                                                    
     studies for the provision  of specified state services;                                                                    
     amending Rules  4, 5, 7,  12, 24,  26, 27, 41,  77, 79,                                                                    
     82, and 89,  Alaska Rules of Civil  Procedure, and Rule                                                                    
     37, Alaska  Rules of Criminal Procedure;  and providing                                                                    
     for an effective date."                                                                                                    
                                                                                                                                
1:35:12 PM                                                                                                                    
                                                                                                                                
JOHN  SKIDMORE, DIRECTOR,  CRIMINAL DIVISION,  DEPARTMENT OF                                                                    
LAW, spoke  to the  fiscal note from  the Department  of Law                                                                    
(DOL) for SB 74. He detailed  the bill asked for a couple of                                                                    
positions to be  placed into the Medicaid Fraud  Unit of the                                                                    
DOL   Criminal  Division.   The  department   had  initially                                                                    
contemplated  placing the  positions in  the Civil  Division                                                                    
because it  would be dealing  with civil work;  however, DOL                                                                    
had elected  to move the  positions into the  Medicaid Fraud                                                                    
Unit because  the unit had  75 percent federal match  for 25                                                                    
percent state funds. Therefore, the  work could be done at a                                                                    
lower cost  to the state.  He believed the note  had changed                                                                    
slightly since its last version  to indicate the fund source                                                                    
was  General Fund  (GF)  with federal  match  instead of  GF                                                                    
only.                                                                                                                           
                                                                                                                                
Co-Chair Thompson  noted that  the committee  was addressing                                                                    
fiscal note OMB Component Number 2203 dated 3/18/16.                                                                            
                                                                                                                                
1:37:37 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:38:26 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair   Thompson  reiterated   that  the   committee  was                                                                    
addressing the DOL fiscal note.                                                                                                 
                                                                                                                                
Vice-Chair  Saddler remarked  the  note included  a cost  of                                                                    
$365,000.  He  asked  if DOL  anticipated  any  recovery  of                                                                    
Medicaid fraud proceeds that would  help diminish the fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Mr.  Skidmore  in  the  affirmative.   He  detailed  it  was                                                                    
difficult to tell  what the recoveries would  be because the                                                                    
cases  had not  yet been  received. Based  on recoveries  in                                                                    
past years,  the department anticipated recoveries  from the                                                                    
False Claims  Act to  more than cover  the positions  and 25                                                                    
percent state cost listed in the fiscal note.                                                                                   
                                                                                                                                
Vice-Chair Saddler  asked for clarification. He  wondered if                                                                    
the  fiscal note  included  the  anticipated recoveries.  He                                                                    
asked  if  the  $365,000  per   year  was  after  or  before                                                                    
recoveries.                                                                                                                     
                                                                                                                                
Mr. Skidmore  answered that because  the $365,000  was based                                                                    
on General Funds and there  were not funds going directly to                                                                    
DOL,  he   did  not  know   if  the  note   reflected  DOL's                                                                    
anticipation  that recoveries  going into  the General  Fund                                                                    
would exceed the $365,000. The  change in revenues should be                                                                    
reflected in  the $500,000 figure  listed in the  "change in                                                                    
revenues"  row. The  $500,000 exceeded  the $365,000  in the                                                                    
fund source and operating expenditure.                                                                                          
                                                                                                                                
Vice-Chair  Saddler asked  for verification  DOL anticipated                                                                    
recovering $500,000,  while the fiscal note  showed $365,000                                                                    
in  expenditures.  He  surmised  there would  be  a  net  of                                                                    
$135,000.                                                                                                                       
                                                                                                                                
Mr. Skidmore answered in the affirmative.                                                                                       
                                                                                                                                
Representative  Wilson referred  to  the  last paragraph  on                                                                    
page 2  of the fiscal  note related to the  proposed Medical                                                                    
Assistance False  Claim and Reporting  Act and  provision on                                                                    
seizure and forfeiture of  real property require involvement                                                                    
of DOL. She  asked for verification the bill  would give the                                                                    
department authority it did not  currently have on the civil                                                                    
side.                                                                                                                           
                                                                                                                                
Mr. Skidmore  answered in the affirmative.  He explained the                                                                    
department  believed the  False Claims  Act would  allow the                                                                    
department to pursue  civil cases it was  not currently able                                                                    
to pursue;  it was  currently only  able to  pursue criminal                                                                    
cases.                                                                                                                          
                                                                                                                                
Representative  Wilson asked  if  the bill  added fines  and                                                                    
forfeiture.                                                                                                                     
                                                                                                                                
Mr. Skidmore answered that the  False Claims Act allowed the                                                                    
state  to  pursue  claims of  fraudulent  billing  into  the                                                                    
medical system  (i.e. restitution or forfeiture).  The state                                                                    
would have the ability to  collect the funds that should not                                                                    
have been collected in the first place.                                                                                         
                                                                                                                                
1:42:23 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg pointed  to  the  second to  last                                                                    
paragraph on  page 2 of the  DOL fiscal note related  to the                                                                    
barring  of  certain  actions  including  actions  based  on                                                                    
evidence known to the state.  He wondered if a situation was                                                                    
considered  known  to the  state  if  someone knew  about  a                                                                    
fraudulent action with  a provider and a  state employee was                                                                    
complicit in the act.                                                                                                           
                                                                                                                                
Mr. Skidmore  answered that  the term  "known to  the state"                                                                    
meant the  information was known  to the lawyers  that would                                                                    
be prosecuting the  case; the term did not refer  to a state                                                                    
employee who may be involved in the fraud.                                                                                      
                                                                                                                                
Representative Guttenberg  asked if  a whistle  blower would                                                                    
be  precluded  from being  party  to  the situation  if  the                                                                    
lawyers were aware of the  situation but had not yet brought                                                                    
the case. He asked for further clarification.                                                                                   
                                                                                                                                
Mr.   Skidmore   replied    that   the   section   addressed                                                                    
circumstances  in  which there  may  already  be a  criminal                                                                    
investigation  ongoing.  For  example,   if  a  person  came                                                                    
forward  with information  that  Doctor  A was  fraudulently                                                                    
billing   Medicaid   and    the   department   already   had                                                                    
investigators  working on  the  case,  the department  would                                                                    
inform the  person it  was already  pursuing the  issue. The                                                                    
person would be barred from pursing the issue.                                                                                  
                                                                                                                                
Representative Guttenberg  spoke to  the 75  percent federal                                                                    
funding. He  asked if  there was a  division of  the rewards                                                                    
when the department took action  and prevailed. Mr. Skidmore                                                                    
answered  that  the funds  were  divided  50/50 between  the                                                                    
state and the  federal government in terms  of the recovered                                                                    
funds.                                                                                                                          
                                                                                                                                
1:45:30 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  how fraudulent  funds were                                                                    
divided  when  returned. He  wondered  how  the formula  was                                                                    
different from the rewarding of the attorneys.                                                                                  
                                                                                                                                
Mr.  Skidmore spoke  to the  federal  Medicaid program  that                                                                    
provided funding to the state  for distribution. There was a                                                                    
Medicaid Fraud Unit that was  funded 75 percent with federal                                                                    
funds  and  25  percent  state funds.  When  fraud  occurred                                                                    
within  Medicaid  distributions  and   the  state  acted  to                                                                    
recover  the  funds, anything  recovered  by  the state  was                                                                    
split  50/50 with  the federal  government.  He referred  to                                                                    
page  1 of  the  fiscal  note and  explained  the intake  of                                                                    
$500,000 represented the state's portion.                                                                                       
                                                                                                                                
Representative Guttenberg explained  his assumption that not                                                                    
all  of the  money was  federal; there  was a  federal/state                                                                    
match. He relayed Mr. Skidmore had answered his question.                                                                       
                                                                                                                                
Co-Chair Thompson  noted Representative Gara had  joined the                                                                    
meeting.                                                                                                                        
                                                                                                                                
Representative Munoz asked about  the existing penalties for                                                                    
a   civil   fraud   violation.  Mr.   Skidmore   asked   for                                                                    
clarification.                                                                                                                  
                                                                                                                                
Representative  Munoz  asked  if  there  were  penalties  in                                                                    
current law for  Medicaid fraud. Mr. Skidmore  was not aware                                                                    
of any existing  penalties; however, he did  not handle most                                                                    
civil cases.  He did not  believe the state had  the ability                                                                    
to go  after individuals for  false claims the way  the bill                                                                    
would establish;  the provision established in  the bill was                                                                    
new.                                                                                                                            
                                                                                                                                
Representative  Munoz  asked  for  the  distinction  between                                                                    
criminal and  civil fraud cases. Mr.  Skidmore answered that                                                                    
a person  did not  receive a  criminal conviction  for which                                                                    
they could potentially  go to jail; because  the penalty did                                                                    
not occur there was also  a lower burden of proof associated                                                                    
with a  civil case,  which would be  a preponderance  of the                                                                    
evidence instead of beyond a reasonable doubt.                                                                                  
                                                                                                                                
Vice-Chair Saddler read from page  7, lines 17 through 20 of                                                                    
the legislation:                                                                                                                
                                                                                                                                
     A   beneficiary  of   an  intentional   or  inadvertent                                                                    
     submission  of a  false or  fraudulent claim  under the                                                                    
     medical  assistance  program  who later  discovers  the                                                                    
     claim is  false or fraudulent shall  disclose the false                                                                    
     or  fraudulent claim  to the  state not  later than  60                                                                    
     days after discovering the false claim.                                                                                    
                                                                                                                                
Vice-Chair Saddler  asked if  someone disclosing  within the                                                                    
60-day  time period  was still  subject to  any interest  or                                                                    
penalties for overpayment.                                                                                                      
                                                                                                                                
1:50:09 PM                                                                                                                    
                                                                                                                                
Mr. Skidmore was  happy to look into the  question and would                                                                    
follow up.                                                                                                                      
                                                                                                                                
Co-Chair Thompson  asked for the information  in writing. He                                                                    
noted  Representative  Gattis  had joined  the  meeting.  He                                                                    
asked the Department of Administration  (DOA) to address its                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
JOHN   BOUCHER,    DEPUTY   COMMISSIONER,    DEPARTMENT   OF                                                                    
ADMINISTRATION, relayed  that DOA's role in  the legislation                                                                    
appeared in  Section 40  of the  bill. The  section required                                                                    
DOA   in   collaboration   with  the   legislative   finance                                                                    
committees to  procure a study to  determine the feasibility                                                                    
of creating  a health  care authority that  could coordinate                                                                    
health care plans;  and consolidate purchasing effectiveness                                                                    
for  retired state  employees, teachers,  medical assistance                                                                    
recipients,  the University  of Alaska,  state corporations,                                                                    
and school  district employees. The study  must be completed                                                                    
before June  2017. The primary  reason for the study  was to                                                                    
determine  the feasibility  for the  authority to  study the                                                                    
needs  to  understand a  current  suite  of benefits,  cost-                                                                    
sharing,  and  payment  for all  employees  and  individuals                                                                    
whose  health   care  benefits   were  funded   directly  or                                                                    
indirectly by the  State of Alaska. The  study would require                                                                    
evaluation  of  a number  of  health  care benefit  delivery                                                                    
programs  funded directly  and indirectly  by the  state. He                                                                    
expounded  that when  the department  had  done research  on                                                                    
similar type studies (e.g. the  Hay study from several years                                                                    
ago with $350,000) it estimated  the cost of the study could                                                                    
be  up  to  $700,000  to  complete.  The  project  would  be                                                                    
ambitious  and would  require a  project  staff manager  for                                                                    
slightly  over one  year  including  the three-month  period                                                                    
following  June  2017  in  order   to  wrap  up  the  study,                                                                    
coordinate, review  the input and  output from  the proposed                                                                    
review and comment period, and  guide the agency on the next                                                                    
steps.                                                                                                                          
                                                                                                                                
Representative  Wilson  asked   for  the  financial  figures                                                                    
listed  on the  fiscal  note. The  note  also indicated  one                                                                    
person would be hired.                                                                                                          
                                                                                                                                
Mr. Boucher  replied that the  amount was $834,600 in  FY 17                                                                    
and  $33,600 in  FY  18.  The FY  17  cost represented  one-                                                                    
quarter of  the staff  cost (i.e.  funding for  the position                                                                    
for three months in FY 18).                                                                                                     
                                                                                                                                
Co-Chair Thompson  noted that  the committee  was addressing                                                                    
fiscal note OMB Component Number 45 dated 3/6/16.                                                                               
                                                                                                                                
Vice-Chair  Saddler  referred  to  Mr.  Boucher's  testimony                                                                    
about  studies that  had  been conducted.  He  asked if  the                                                                    
study  would be  ab  initio or  whether  the department  had                                                                    
developed  prior   information  that   would  be   a  useful                                                                    
foundation.                                                                                                                     
                                                                                                                                
Mr. Boucher  answered the  bill included  specific direction                                                                    
to  try  to  leverage  previous studies  including  the  Hay                                                                    
study.  The  provision  included   such  a  broad  group  of                                                                    
programs, the  department believed it would  still require a                                                                    
significant amount of data collection.                                                                                          
                                                                                                                                
1:54:30 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  if department  anticipated                                                                    
doing the study in-house or  contracting it out. Mr. Boucher                                                                    
replied that it would be a contract.                                                                                            
                                                                                                                                
Co-Chair Thompson  relayed the  committee would  address the                                                                    
fiscal notes from the Department  of Commerce, Community and                                                                    
Economic  Development   (DCCED)  [Note:   Co-Chair  Thompson                                                                    
originally  relayed  the  committee   would  hear  from  the                                                                    
Department of  Health and  Social Services  (DHSS); however,                                                                    
he corrected they would hear from DCCED first].                                                                                 
                                                                                                                                
JANEY   HOVENDEN,   DIRECTOR,  DIVISION   OF   CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  addressed                                                                    
fiscal  note OMB  Component Number  2360. The  bill impacted                                                                    
the   division  in   two  ways.   First,  it   expanded  the                                                                    
Prescription  Drug Monitoring  Program  (PDMP), which  would                                                                    
require pharmacists  or practitioners  dispensing controlled                                                                    
substances to submit to the  board for inclusion in the PDMP                                                                    
on a weekly basis;  pharmacists or practitioners prescribing                                                                    
or  dispensing controlled  substances would  be required  to                                                                    
register with the PDMP in  a format established by the Board                                                                    
of Pharmacy; required the notification  of other boards; and                                                                    
allowed the  practitioner or pharmacists to  delegate access                                                                    
to the PDMP  to employees on their behalf.  The expansion of                                                                    
the PDMP would  require a program coordinator at  a range 18                                                                    
(on  the state  pay scale)  to be  located in  Juneau, which                                                                    
would   include  the   expanded  registrations,   reporting,                                                                    
collaborations,  engagement with  the  state opioid  control                                                                    
program, grant  writing and reporting,  vendor solicitation,                                                                    
and  other.  Second,  the  bill  expanded  telemedicine  for                                                                    
medical   and  social   workers,  professional   counselors,                                                                    
psychologists, psychological associates,  marital and family                                                                    
therapists. She relayed that after  the limited expansion in                                                                    
2014,  the   department  understood  the   volume  expansion                                                                    
increased licensure;  therefore, DCCED anticipated  the need                                                                    
of  two  additional   occupational  licensing  examiners  to                                                                    
review   the   increases,   as  well   as   two   additional                                                                    
investigators. The  fiscal note  included $3,000  for travel                                                                    
for the new program coordinator  to attend Board of Pharmacy                                                                    
meetings; it  also included some regulation  and legal costs                                                                    
and  printing  and  postage   for  $12,000.  The  department                                                                    
anticipated there  would probably  be extra legal  costs and                                                                    
investigations  in future  years  due to  the increase.  She                                                                    
explained  that  it  was  a   bit  more  costly  to  conduct                                                                    
investigations across  state lines related  to telemedicine.                                                                    
The fiscal note included $560,000  in the first year [FY 17]                                                                    
for the two different sections  she had spoken about and the                                                                    
five additional employees.                                                                                                      
                                                                                                                                
1:59:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Neuman  observed DCCED  would accept  federal funds                                                                    
related  to  the  PDMP.  He   asked  if  any  other  federal                                                                    
regulations  came  with the  funds.  He  remarked there  was                                                                    
generally a "carrot stick" attached to federal funds.                                                                           
                                                                                                                                
Ms. Hovenden  did not believe  there were any  other carrots                                                                    
related to the PDMP. She did not know for certain.                                                                              
                                                                                                                                
Co-Chair Thompson noted they would follow up on the issue.                                                                      
                                                                                                                                
Representative Guttenberg  pointed to language in  the first                                                                    
paragraph on  page 2  of the fiscal  note: "the  bill allows                                                                    
licensed practitioners and  licensed pharmacists to delegate                                                                    
access to the  PDMP on their behalf to an  agent or employee                                                                    
of the  practitioner." He  observed a  licensed practitioner                                                                    
or  pharmacist   could  delegate  authority  to   an  office                                                                    
clerical worker with no experience.  He asked how far out it                                                                    
left  a  pharmacist  or   practitioner  in  their  licensing                                                                    
requirements.                                                                                                                   
                                                                                                                                
Ms. Hovenden  replied that the  licensee's license  would be                                                                    
held liable  for any  misuse or  misconduct by  the employee                                                                    
they delegated authority to.                                                                                                    
                                                                                                                                
Representative Guttenberg asked if  it was a common practice                                                                    
for pharmacists  and practitioners to delegate  authority to                                                                    
people without a license or certificate.                                                                                        
                                                                                                                                
Ms. Hovenden  answered that  employees regularly  had access                                                                    
to patient  files and  databases. She  explained it  was the                                                                    
licensee's license that would be in jeopardy for misuse.                                                                        
                                                                                                                                
2:02:38 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Saddler  asked   if   any  other   professional                                                                    
licensing boards  allowed delegation of authority  to access                                                                    
information about an individual  to others. He suspected the                                                                    
Board of Medicine did, but  he wondered about psychiatrists,                                                                    
social workers, physical therapists, or others.                                                                                 
                                                                                                                                
Ms. Hovenden was not aware of any, but she would follow up.                                                                     
                                                                                                                                
Vice-Chair Saddler  asked if the anticipated  expenditure of                                                                    
$607,400  would be  matched by  the revenues  generated from                                                                    
license   fees   charged   to  licensees.   He   asked   for                                                                    
verification the cost would be a  net zero to the state; the                                                                    
fees would be passed along to licenses.                                                                                         
                                                                                                                                
Ms.  Hovenden answered  in the  affirmative; the  funds came                                                                    
from receipt  supported services paid by  all licensees. The                                                                    
fiscal note would give the  division spending authority over                                                                    
the funds.                                                                                                                      
                                                                                                                                
Vice-Chair  Saddler  understood that  a  large  part of  the                                                                    
increase  was  expected to  be  the  cost of  licensing  and                                                                    
verifying the  qualifications for  telehealth practitioners.                                                                    
However, the  fiscal note only  included $3,000  for travel.                                                                    
He wondered  if the cost would  come out of the  services or                                                                    
travel  lines on  the fiscal  note if  it were  necessary to                                                                    
travel outside  of Alaska  to investigate  the fitness  of a                                                                    
telehealth provider.                                                                                                            
                                                                                                                                
Ms.  Hovenden did  not anticipate  that investigators  would                                                                    
need to travel  out of state to  conduct any investigations.                                                                    
There were  already licensees outside  of the state  and the                                                                    
division  had certain  tools it  could utilize  to cooperate                                                                    
with other  states. The  $3,000 was  merely for  the program                                                                    
coordinator to travel to the Board of Pharmacy [meetings].                                                                      
                                                                                                                                
2:05:06 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  asked   for  verification  that  the                                                                    
fiscal  note did  not contain  federal  funds. Ms.  Hovenden                                                                    
answered  that  the funding  was  not  guaranteed [into  the                                                                    
future], but currently the PDMP  was currently paid for with                                                                    
a federal  grant through  a reimbursable  services agreement                                                                    
(RSA) with DHSS.                                                                                                                
                                                                                                                                
Representative Wilson  asked if the database  would continue                                                                    
after  there  were  no  federal funds  in  the  future.  Ms.                                                                    
Hovenden replied  in the negative. She  elaborated there had                                                                    
been  discussion  about  creating a  registration  fee  that                                                                    
would help  sustain the PDMP  in the long-term, but  she did                                                                    
not believe it was in the current bill version.                                                                                 
                                                                                                                                
Representative Wilson  believed a corrected fiscal  note was                                                                    
needed  because   she  wanted  to  understand   current  and                                                                    
potential federal funds being  provided. She referred to the                                                                    
five  new  positions  and wondered  how  many  professionals                                                                    
would be required to register to access the database.                                                                           
                                                                                                                                
Ms. Hovenden asked for clarification.                                                                                           
                                                                                                                                
Representative   Wilson   explained   the   department   was                                                                    
proposing  to  hire five  additional  employees  due to  the                                                                    
database and  telehealth portions of the  bill. She referred                                                                    
to  Ms.  Hovenden's remark  about  considering  how much  to                                                                    
charge  for  registration once  the  federal  funds were  no                                                                    
longer available. She asked how  many individuals would have                                                                    
to register  in the  system. She  wondered if  only Medicaid                                                                    
providers  or   all  professionals   would  have   to  enter                                                                    
prescriptions.                                                                                                                  
                                                                                                                                
Ms. Hovenden answered that she  did not have the number. She                                                                    
referred  to   the  Board  of  Nursing,   optometrists,  and                                                                    
veterinarians  and believed  there were  approximately 8,000                                                                    
individuals with the licensed ability to prescribe.                                                                             
                                                                                                                                
Representative Wilson  requested an  updated fiscal  note if                                                                    
there was federal and other  funding that the state may have                                                                    
to  backfill. She  wanted  to know  how  many providers  the                                                                    
state may have to charge to maintain the system.                                                                                
                                                                                                                                
Co-Chair Thompson  replied his  office would follow  up with                                                                    
the information.                                                                                                                
                                                                                                                                
2:08:41 PM                                                                                                                    
                                                                                                                                
Co-Chair Neuman referred to the  second to last paragraph on                                                                    
page 3  of the  fiscal note  related to  the PDMP.  He noted                                                                    
there had been plenty  of discussions about federal Medicaid                                                                    
reform. He  detailed the cost  would be covered by  Board of                                                                    
Pharmacy licensees in absence of  federal funds. He asked if                                                                    
the Board  of Pharmacy or  pharmacists around the  state had                                                                    
been asked about the fact that  they may have to pay for the                                                                    
funds in the future.                                                                                                            
                                                                                                                                
Ms. Hovenden  replied that the  Board of Pharmacy  was aware                                                                    
of the  issue and it  made them nervous. She  explained that                                                                    
when the  PDMP had been put  under the Board of  Pharmacy it                                                                    
had been a concern; it  was the distinct intent the licensee                                                                    
of  the Board  of Pharmacy  would not  have to  pay for  the                                                                    
program. Thus  far, the licensees  had not  been responsible                                                                    
for  paying the  cost. The  fiscal note  reflected the  cost                                                                    
without  any federal  grant funding  to the  program because                                                                    
there was no guarantee for future federal grants.                                                                               
                                                                                                                                
Co-Chair  Neuman  noted  that   for  past  three  years  the                                                                    
legislature  had  been  chosen  not to  fund  the  PDMP.  He                                                                    
detailed  the department  had  chosen not  to  abide by  the                                                                    
request  of the  legislature and  had found  its independent                                                                    
funding for the  program. He stated the  department had been                                                                    
instructed  not  to  fund  the  program.  He  furthered  the                                                                    
legislature heard  all of the  "budget restraints and  a lot                                                                    
of  crying  and  screaming  from the  department  about  how                                                                    
you're cutting  and reducing our  budget, but they  can find                                                                    
other money for programs that  the legislature said we don't                                                                    
want funded."                                                                                                                   
                                                                                                                                
Representative Gattis  asked if  the state  had to  abide by                                                                    
federal  criteria  in order  to  receive  the federal  funds                                                                    
related to  the PDMP.  She wondered if  the state  would not                                                                    
receive the money if it did not follow the requirements.                                                                        
                                                                                                                                
Ms. Hovenden was not aware of any, but she would follow up.                                                                     
                                                                                                                                
Representative Gattis  stated in her experience  it had been                                                                    
necessary  to abide  by  requirements in  order  to get  the                                                                    
money.                                                                                                                          
                                                                                                                                
2:12:14 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson  asked if the pharmaceutical  tracking and                                                                    
information  gathered  [in the  PDMP]  was  shared with  the                                                                    
federal government.                                                                                                             
                                                                                                                                
Ms.  Hovenden  answered  she  would  follow  up  during  the                                                                    
meeting the  following day and  would be accompanied  by the                                                                    
PDMP manager.                                                                                                                   
                                                                                                                                
Representative  Gara  referred  to the  provision  requiring                                                                    
pharmacists  to  take part  in  the  PDMP.  He asked  if  it                                                                    
applied to all  physicians for all prescriptions  or only to                                                                    
Medicaid services.                                                                                                              
                                                                                                                                
Ms.  Hovenden   answered  the   provision  applied   to  all                                                                    
physicians.                                                                                                                     
                                                                                                                                
Vice-Chair Saddler looked  at page 3 of the  fiscal note and                                                                    
observed that  $108,600 for  legal costs  and appeals  was a                                                                    
precise  number. He  asked if  the number  was based  on the                                                                    
experience of other  boards or was specific to  the Board of                                                                    
Pharmacy.                                                                                                                       
                                                                                                                                
Ms. Hovenden  replied that  there was  a formula,  which was                                                                    
probably based  on past practice.  She would follow  up with                                                                    
her administrative  officer to determine how  the figure had                                                                    
been calculated.  She reminded  the committee  the provision                                                                    
impacted other  many other  boards apart  from the  Board of                                                                    
Pharmacy.  She believed  it represented  an accumulation  of                                                                    
past  investigations,   but  she  needed  to   confirm  that                                                                    
information.                                                                                                                    
                                                                                                                                
Vice-Chair Saddler  remarked it was  a new expansion  of the                                                                    
range   of  services   and  how   they   were  provided   by                                                                    
telemedicine.  He  did not  know  if  the existing  standard                                                                    
formulas would apply.                                                                                                           
                                                                                                                                
Representative Gara  asked if there  was a  separate hearing                                                                    
on the database.                                                                                                                
                                                                                                                                
Co-Chair  Thompson   replied  that   the  hearing   was  the                                                                    
following day.                                                                                                                  
                                                                                                                                
2:15:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Thompson  relayed   the  committee  would  address                                                                    
fiscal notes from DHSS.                                                                                                         
                                                                                                                                
JON SHERWOOD, DEPUTY COMMISSIONER,  MEDICAID AND HEALTH CARE                                                                    
POLICY, DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, addressed                                                                    
a summary  document from the department  titled "DHSS Fiscal                                                                    
Impacts  for CSSB074(FIN)am,  version  UA"  dated March  21,                                                                    
2016  (copy  on file).  He  detailed  there were  many  DHSS                                                                    
fiscal notes; some of the  provisions impacted more than one                                                                    
component  and  some  components  reflected  the  impact  of                                                                    
multiple provisions.  He relayed it  was difficult to  get a                                                                    
big picture  of the bill's  impact merely by looking  at the                                                                    
individual fiscal  notes. He pointed  to the first  table at                                                                    
the  top  of  the  document  showed  the  fund  sources.  He                                                                    
specified the bill would result in  a net reduction in GF in                                                                    
FY 17  of $31.6 million,  which would increase to  over $113                                                                    
million by FY  22. The bill would also result  in total fund                                                                    
reductions beginning  in FY  19 and  growing through  FY 22.                                                                    
The  second  table  showed   permanent  and  long-term  non-                                                                    
permanent  positions:  15  positions  were added  in  FY  17                                                                    
including  4 to  work  on enhanced  tribal  claiming; and  8                                                                    
three-year  non-permanent  positions  intended to  help  the                                                                    
Divisions   of  Health   Care   Services   and  Senior   and                                                                    
Disabilities Services  with the transitions involved  in the                                                                    
numerous  program  changes  -   the  state  portion  of  the                                                                    
positions  was  funded by  the  Alaska  Mental Health  Trust                                                                    
Authority (AMHTA).  Position reductions were  anticipated to                                                                    
begin in FY 19; the positions would  peak at 17 in FY 18 and                                                                    
would  gradually  be  reduced  to  5  as  efficiencies  were                                                                    
achieved as a result of reform.                                                                                                 
                                                                                                                                
Mr.  Sherwood  addressed  the third  table  showing  capital                                                                    
budget  costs,  which totaled  $10.4  million.  Most of  the                                                                    
costs  were around  making  Medicaid Management  Information                                                                    
System (MMIS) changes to  implement various program changes.                                                                    
Page  2 of  the document  included a  table showing  savings                                                                    
measures  and  associated  summaries.   The  table  did  not                                                                    
include  every  provision  in the  bill  that  impacted  the                                                                    
department; therefore,  it did not perfectly  match the fund                                                                    
source table on page 1.  The largest reduction came from the                                                                    
implementation  of the  federal tribal  claiming policy.  He                                                                    
pointed  out  that savings  were  also  included in  budgets                                                                    
currently before the two legislative houses.                                                                                    
                                                                                                                                
Co-Chair  Thompson acknowledged  the  bill sponsor,  Senator                                                                    
Pete   Kelly  in   the  committee   room.   He  noted   that                                                                    
Representative Pruitt had joined the meeting.                                                                                   
                                                                                                                                
Mr. Sherwood noted that bill  included provisions to develop                                                                    
a  more   effective  integrated  behavioral   health  system                                                                    
through  an 1115  demonstration waiver.  The department  did                                                                    
not  project direct  behavioral health  savings, but  it did                                                                    
expect substantial  savings and positive  impacts throughout                                                                    
state  and  local government  once  the  new system  was  in                                                                    
place. The biggest impacts would  be to the criminal justice                                                                    
system,  but  there  would  be  possible  savings  to  child                                                                    
protection  and  public  assistance  programs  as  well.  He                                                                    
underscored that  a specific savings for  those programs had                                                                    
not  yet  been identified.  He  relayed  that several  weeks                                                                    
earlier  AMHTA  had  met  and   committed  to  help  finance                                                                    
Medicaid  reform. The  department's  fiscal notes  reflected                                                                    
some of  the contributions and other  contributions would be                                                                    
provided as  direct support from  the trust.  The department                                                                    
deeply appreciated the support from AMHTA.                                                                                      
                                                                                                                                
Co-Chair  Thompson referred  to the  first fiscal  note from                                                                    
DHSS, OMB  Component Number 2671. Mr.  Sherwood confirmed it                                                                    
was the first note he would address.                                                                                            
                                                                                                                                
Vice-Chair Saddler referenced  the summary document provided                                                                    
by  DHSS and  noted he  was interested  in the  expenditures                                                                    
compared to  savings in the  table. He asked if  the capital                                                                    
budget  costs represented  a particular  year or  the entire                                                                    
six-year  period. He  wondered  if the  costs  tended to  be                                                                    
frontend-loaded if they reflected the six-year period.                                                                          
                                                                                                                                
Mr. Sherwood answered  the costs in the  chart were intended                                                                    
to  cover capital  costs  throughout the  six  years of  the                                                                    
project.  Most  of  the  costs  would  involve  expenditures                                                                    
beginning in year one or two of the program.                                                                                    
                                                                                                                                
Vice-Chair Saddler  asked if the  savings measure on  page 2                                                                    
incorporated into the  grand total chart at the  top of page                                                                    
1. Mr. Sherwood replied in the affirmative.                                                                                     
                                                                                                                                
Representative Gara  surmised that  it looked as  if roughly                                                                    
85 percent of the savings ($103  million) in FY 22 came from                                                                    
a combination of  the federal tribal policy  program and the                                                                    
1915  waivers.   He  remarked  that  many   legislators  had                                                                    
accidentally  referred to  the  federal tribal  policy as  a                                                                    
waiver; however, it  was the program that let  the state get                                                                    
full reimbursement  for certain  treatment of  Indian Health                                                                    
Service (IHS)  and Medicaid-eligible patients. He  asked for                                                                    
the accuracy of his statement.                                                                                                  
                                                                                                                                
2:22:51 PM                                                                                                                    
                                                                                                                                
Mr.  Sherwood  replied in  the  affirmative.  The change  in                                                                    
policy  did allow  certain services  provided by  non-tribal                                                                    
providers could receive 100 percent  federal funds through a                                                                    
tribal referral.                                                                                                                
                                                                                                                                
Representative Gara asked for  verification that the federal                                                                    
tribal policy was  a combination of travel  and treatment of                                                                    
IHS patients in  a non-IHS facility. He noted  the state had                                                                    
previously paid for the services.                                                                                               
                                                                                                                                
Mr. Sherwood  replied in the  affirmative. He  detailed that                                                                    
travel and  services received  by Medicaid  and IHS-eligible                                                                    
individuals  resulting  from  a  referral  to  a  non-tribal                                                                    
provider from a  tribal provider would be  covered under the                                                                    
new policy (provided certain conditions were met).                                                                              
                                                                                                                                
Representative  Gara  asked  for verification  the  coverage                                                                    
would be  100 percent  and had previously  been paid  by the                                                                    
state.                                                                                                                          
                                                                                                                                
Mr. Sherwood  replied in the  affirmative. He  specified the                                                                    
services  typically would  have been  matched at  50 percent                                                                    
federal.                                                                                                                        
                                                                                                                                
Representative  Gara  surmised   the  federal  coverage  had                                                                    
increased from  50 to 100  percent. Mr. Sherwood  replied in                                                                    
the affirmative.                                                                                                                
                                                                                                                                
Co-Chair  Neuman  pointed to  page  2  of the  DHSS  summary                                                                    
document. He  asked if the  text shown in red  represented a                                                                    
decrement  or savings  to the  state.  He asked  if the  $33                                                                    
million in FY 17 was a decrement or an expected savings.                                                                        
                                                                                                                                
Mr. Sherwood  answered that  the number  represented savings                                                                    
to  the state.  He detailed  the $33  million represented  a                                                                    
decrease in the department's budget.                                                                                            
                                                                                                                                
Co-Chair Thompson asked  if the savings went  to the state's                                                                    
Undesignated General  Fund (UGF).  Mr. Sherwood  answered in                                                                    
the affirmative.                                                                                                                
                                                                                                                                
Co-Chair  Neuman asked  for clarification  that the  numbers                                                                    
[shown  in  red] represented  expected  UGF  savings to  the                                                                    
state.  Mr. Sherwood  answered in  the affirmative.  The red                                                                    
numbers  shown in  parenthesis  represented  savings to  the                                                                    
state. He noted some of the  items in the early years had an                                                                    
initial startup cost.                                                                                                           
                                                                                                                                
2:25:40 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood addressed OMB Component  Number 2671 related to                                                                    
the Division of Alaska  Pioneer Homes dated 3/17/16. Section                                                                    
35  of the  legislation required  Pioneer Home  residents to                                                                    
provide  proof of  application to  Medicaid in  the decision                                                                    
letter  regarding their  Medicaid  application  in order  to                                                                    
receive  payment assistance.  With  the  proposed change  in                                                                    
law,  the  division  estimated it  would  increase  Medicaid                                                                    
revenues  shown  as  interagency receipts  and  decrease  GF                                                                    
expenditures  by  slightly over  $1  million  per year.  The                                                                    
switch showed as  a fund source change, but not  as a change                                                                    
in expenditures. He elaborated there  would be a switch from                                                                    
GF  to  interagency receipts  in  the  amount of  $1,066,700                                                                    
annually.                                                                                                                       
                                                                                                                                
Vice-Chair  Saddler for  verification that  level-3 [Pioneer                                                                    
Home]  residents  required the  lowest  level  of care.  Mr.                                                                    
Sherwood  responded that  level-3 was  the highest  and most                                                                    
intensive level of care.                                                                                                        
                                                                                                                                
Vice-Chair Saddler believed more  people were moving towards                                                                    
the  need for  level-3  care. He  observed  the fiscal  note                                                                    
showed the same dollar amount  over multiple years. He asked                                                                    
if there was  an expectation of more  Medicaid coverage over                                                                    
time as more people progressed to level-3.                                                                                      
                                                                                                                                
Mr. Sherwood deferred the question to a colleague.                                                                              
                                                                                                                                
VICKY   WILSON,  DIRECTOR,   DIVISION   OF  PIONEER   HOMES,                                                                    
DEPARTMENT OF  HEALTH AND SOCIAL SERVICES,  replied that the                                                                    
division expected  there would  be increases in  the level-3                                                                    
residents, but  the division did  not feel it could  make an                                                                    
accurate  calculation. She  detailed  the  numbers had  held                                                                    
pretty steady throughout the years,  although there had been                                                                    
increases  and  decreases  from year-to-year;  it  had  been                                                                    
difficult to make a projection.                                                                                                 
                                                                                                                                
2:28:49 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood addressed OMB Component  Number 2665 related to                                                                    
the Division of Behavioral  Health dated 3/17/16. He relayed                                                                    
that the  bill called  on DHSS to  coordinate with  AMHTA to                                                                    
manage  a  comprehensive  and integrated  behavioral  health                                                                    
system. The department would  plan and implement significant                                                                    
behavioral  health  reforms  and  would apply  for  an  1115                                                                    
waiver as  part of the process.  As a result of  the changes                                                                    
made  to the  behavioral health  systems, together  with the                                                                    
anticipated use  of an administrative  services organization                                                                    
to  perform many  of  the functions  required  for the  1115                                                                    
waiver, the  division expected  to be  able to  reduce staff                                                                    
beginning  in  FY  18.  He continued  that  staff  would  be                                                                    
reduced by two in FY 18  and four in subsequent years, which                                                                    
produced a  reduction of $226,700  in FY 18 and  $453,400 in                                                                    
FY 19 going forward (half of the reduction was in GF).                                                                          
                                                                                                                                
Representative  Wilson remarked  that page  2 of  the fiscal                                                                    
note  addressed  how  savings   would  be  realized  in  the                                                                    
Department  of  Corrections   (DOC),  Department  of  Public                                                                    
Safety (DPS),  the Alaska  Court System,  and the  Office of                                                                    
Children's Services (OCS). She asked for detail.                                                                                
                                                                                                                                
Mr. Sherwood thought the savings  being referred to were the                                                                    
benefits accrued to  the state as a result  of reforming the                                                                    
behavioral health system and the  implementation of the 1115                                                                    
demonstration  waiver  for  behavioral  health.  The  actual                                                                    
reductions  in   the  fiscal  note   only  related   to  the                                                                    
behavioral  health   administration.  He  referred   to  his                                                                    
earlier testimony  that DHSS did  not feel it  could predict                                                                    
or  specify savings  the state  would achieve  in the  other                                                                    
areas as a result of the improvements.                                                                                          
                                                                                                                                
2:30:56 PM                                                                                                                    
                                                                                                                                
Representative Wilson clarified  that her question pertained                                                                    
to how the  reductions would affect the  agencies the fiscal                                                                    
note language referred to. She  cited OCS as an example. She                                                                    
believed  most of  the  OCS families  were  in the  Medicaid                                                                    
system  and most  services received  were delegated  by OCS.                                                                    
She  surmised the  families were  directed where  to go  for                                                                    
service. She wondered how the  waiver changed the system and                                                                    
produced any savings.                                                                                                           
                                                                                                                                
KAREN  FORREST, DEPUTY  COMMISSIONER,  DEPARTMENT OF  HEALTH                                                                    
AND  SOCIAL  SERVICES,  answered  that  the  department  was                                                                    
looking  forward  to  expanding   access  to  mental  health                                                                    
counseling  and substance  abuse  treatment services  across                                                                    
the  state.  As  the  ability for  Alaskans  to  access  the                                                                    
services expanded, the department  anticipated it would have                                                                    
a  significant  impact  on  other  sectors  of  the  state's                                                                    
communities. For  example, particularly for  parents dealing                                                                    
with substance abuse  issues through OCS and  working to get                                                                    
into treatment to  meet requirements in order  to keep their                                                                    
children  at home.  The more  the state  was able  to expand                                                                    
access and have  a robust continuum of care  for Alaskans it                                                                    
would impact other service sectors across the state.                                                                            
                                                                                                                                
Representative Wilson asked for  data pertaining to how long                                                                    
parents were  waiting to access  services required  in order                                                                    
to get  their children back  from state custody.  She listed                                                                    
services such as counseling, drug treatment, and other.                                                                         
                                                                                                                                
Ms.  Forrest  thought  the  requested  data  would  be  very                                                                    
helpful and she  looked forward to working with  OCS and the                                                                    
Division  of  Behavioral  Health  in order  to  see  if  the                                                                    
information was something that could be gathered.                                                                               
                                                                                                                                
Co-Chair  Thompson asked  if Ms.  Forrest could  provide the                                                                    
data to  his office for  distribution to the  committee. Ms.                                                                    
Forrest answered in the affirmative.                                                                                            
                                                                                                                                
2:33:09 PM                                                                                                                    
                                                                                                                                
Co-Chair  Neuman referred  to  page 2  of  the fiscal  note,                                                                    
which  included  language  about   the  addition  of  a  new                                                                    
subsection  in   Section  30  of  the   bill  requiring  the                                                                    
department  to  seek  1115 demonstration  waivers  from  the                                                                    
federal  government,  Centers   for  Medicare  and  Medicaid                                                                    
Services (CMS).  He asked if  it required the  department to                                                                    
seek the waivers  or to obtain them. He  wondered what would                                                                    
happen if the waivers were or were not obtained.                                                                                
                                                                                                                                
Ms. Forrest  explained the  bill required  DHSS to  seek the                                                                    
waiver,  which was  a negotiation  with CMS.  The department                                                                    
would have  to meet  certain criteria in  order to  have its                                                                    
application approved  and DHSS was dedicated  and willing to                                                                    
do  the work  in order  to  reach some  agreement. She  felt                                                                    
strongly  based on  consultation DHSS  had received  that it                                                                    
would  put  forward  a strong  application.  The  department                                                                    
recognized the  behavioral health  system needed  reform and                                                                    
that doing  so through  the waiver with  legislative support                                                                    
was very important.                                                                                                             
                                                                                                                                
Co-Chair Neuman  asked about the  criteria that  Ms. Forrest                                                                    
mentioned. Ms.  Forrest answered  that one of  the important                                                                    
things  DHSS  had to  meet  was  budget neutrality.  As  the                                                                    
department  looked to  more innovative  ways of  serving the                                                                    
behavioral  health population,  the  federal government  did                                                                    
not  want the  department  to spend  more  than the  federal                                                                    
government  was  already   spending.  Additionally,  it  was                                                                    
necessary to  create an efficient and  effective health care                                                                    
system. For  example, DHSS would have  to demonstrate health                                                                    
outcomes.  There  was  a  whole  host  of  requirements  the                                                                    
department would have  to meet, but essentially  DHSS had to                                                                    
prove it  was increasing access, improving  the quality, and                                                                    
improving health outcomes.                                                                                                      
                                                                                                                                
2:35:28 PM                                                                                                                    
                                                                                                                                
Co-Chair  Neuman   understood  DHSS   had  to   meet  budget                                                                    
neutrality. He  did not  know if federal  funds had  to meet                                                                    
state  funds if  acquired or  if  DHSS had  to meet  certain                                                                    
budget goals  within a plan  established by  the department.                                                                    
He wondered if it was possible  that it would cost the state                                                                    
more money in the future if the goals were not met.                                                                             
                                                                                                                                
Ms.  Forrest  answered  in   the  negative.  Through  budget                                                                    
neutrality DHSS  had to  provide extensive  information five                                                                    
years back  and projections five years  forward, which would                                                                    
receive significant  analysis by DHSS  and CMS. In  terms of                                                                    
state  funding,  DHSS understood  its  budget  would not  be                                                                    
increasing  and that  the state  was moving  more towards  a                                                                    
Medicaid-based system versus a grant-based system.                                                                              
                                                                                                                                
Co-Chair  Neuman  wanted  to  learn  more  about  what  1115                                                                    
demonstration waivers  were. He  understood they  related to                                                                    
IHS  components,  but  did  not  know  what  they  were  for                                                                    
behavioral health and how much  they cover. He was uncertain                                                                    
about what the state was stepping into.                                                                                         
                                                                                                                                
Ms.  Forrest  answered that  some  of  the policy  decisions                                                                    
would  be made  through the  negotiations as  the department                                                                    
looked  at  the  costs  going  forward.  She  would  provide                                                                    
further  information  about  the  1115  waiver  to  Co-Chair                                                                    
Neuman's office.                                                                                                                
                                                                                                                                
Vice-Chair Saddler  referred to  $291,000 in  MHTAAR [Mental                                                                    
Health Trust  Authority Authorized Receipts] money  for each                                                                    
of  the  three  years.  He  referenced  a  budget  sheet  in                                                                    
committee packets  provided by  AMHTA titled  "Alaska Mental                                                                    
Health  Trust   Authority  Medicaid   Reform  Implementation                                                                    
Support"  dated  3/16/16 (copy  on  file)  and observed  the                                                                    
MHTAAR  funds  requested  were  $308,300  [for  health  care                                                                    
services staffing needs]. He asked about the difference.                                                                        
                                                                                                                                
Mr. Sherwood asked for clarification.                                                                                           
                                                                                                                                
Vice-Chair  Saddler pointed  to $291,000  under fund  source                                                                    
MHTAAR for FY  17 through FY 19. He realized  he was looking                                                                    
at a different fiscal note and withdrew his question.                                                                           
                                                                                                                                
Mr. Sherwood  moved on to  fiscal note OMB  Component Number                                                                    
242 for  the Division of  Health Care Services.  The medical                                                                    
assistance  administration  section  included  many  of  the                                                                    
administrative  and  support  components  for  the  Medicaid                                                                    
program. He  detailed many  parts of  the bill  impacted the                                                                    
section including  fraud and abuse prevention,  primary care                                                                    
case  management,  health  homes, emergency  room  reduction                                                                    
project,  and   the  coordinated  care   demonstration.  The                                                                    
largest  portion  of  the  fiscal   note  was  for  personal                                                                    
services and  two positions  would be added  to work  on the                                                                    
primary  care case  management in  managed care  sections of                                                                    
the  bill (i.e.  health  homes,  telemedicine sections,  the                                                                    
emergency  room demonstration  projects)  - those  positions                                                                    
would be  50 percent federally  funded. In FY 17  through FY                                                                    
19 the state  match would come from AMHTA and  for FY 20 and                                                                    
beyond  the match  would be  GF, it  would be  the point  at                                                                    
which the  programs would all be  demonstrating savings. The                                                                    
department   also  proposed   adding  four   long-term  non-                                                                    
permanent  positions for  FY  17 through  FY  19 with  state                                                                    
match provided  by AMHTA to  assist with the startup  of the                                                                    
behavioral  health related  system  changes to  the MMIS  to                                                                    
handle  the increased  workload related  to fraud  and abuse                                                                    
provisions  and  to  work on  the  hospital  emergency  room                                                                    
demonstration.                                                                                                                  
                                                                                                                                
Mr. Sherwood continued to address  fiscal note OMB Component                                                                    
Number 242. The services line  had been increased by $75,000                                                                    
per year to accommodate  the higher appeal volume associated                                                                    
with  the  fraud  and  abuse   provisions,  which  would  be                                                                    
included  in funds  going to  the  Office of  Administrative                                                                    
Hearings.  The  fiscal  note  totaled  $697,600  in  FY  17,                                                                    
$679,900 in FY  18 and FY 19, and $316,200  in FY 20 through                                                                    
FY 22. There was minimal GF cost  in FY 17 through FY 19 due                                                                    
to the  contribution from AMHTA;  the cost would  be $57,700                                                                    
the first year and $48,900 in  FY 18 and FY 19. Beginning in                                                                    
FY 20 the GF cost was 50 percent or $158,100 per year.                                                                          
                                                                                                                                
2:42:17 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler  pointed to  a reference  that provisions                                                                    
in  the bill  would authorize  DHSS to  assess interest  and                                                                    
penalties  on  overpayments  (page  2, paragraph  1  of  the                                                                    
fiscal  note).  He  asked  about  anticipated  revenue  from                                                                    
interest  and  penalties  on overpayments.  He  assumed  the                                                                    
language meant overpayments to a provider.                                                                                      
                                                                                                                                
Mr.  Sherwood  answered in  the  affirmative.  He asked  for                                                                    
verification  Vice-Chair  Saddler   was  interested  in  the                                                                    
amount that would be recovered.                                                                                                 
                                                                                                                                
Vice-Chair Saddler  explained he  did not  know if  it would                                                                    
cost the  state much  in foregone  penalties or  interest if                                                                    
the  bill included  some provision  to  give forgiveness  to                                                                    
providers  for disclosing  an overpayment  and repaying  the                                                                    
amount within 60 days.                                                                                                          
                                                                                                                                
Mr. Sherwood  answered he could  address the  information on                                                                    
recoveries  associated with  the  provisions  in the  health                                                                    
care Medicaid services fiscal note later in the meeting.                                                                        
                                                                                                                                
Representative Wilson  asked for verification that  the DHSS                                                                    
could seize property from medical assistance providers.                                                                         
                                                                                                                                
Mr. Sherwood  answered that under  the bill DHSS  would have                                                                    
the authority  to seize  assets of a  provider (in  order to                                                                    
protect the  state from the  provider dispersing  the assets                                                                    
prior to fully  adjudicating the case) after  going to court                                                                    
and establishing a credible case of fraud.                                                                                      
                                                                                                                                
Representative  Wilson  asked   for  verification  that  the                                                                    
authority pertained  to civil  cases. Mr.  Sherwood answered                                                                    
that he  would have to  review the statute. He  detailed the                                                                    
authority applied  to criminal  cases, but he  was uncertain                                                                    
it applied to civil cases.                                                                                                      
                                                                                                                                
Co-Chair Thompson  interjected he was getting  an indication                                                                    
from an attorney in the  audience that the authority did not                                                                    
apply to civil cases.                                                                                                           
                                                                                                                                
Mr. Sherwood  agreed that a  state attorney in the  room had                                                                    
confirmed the authority only applied to criminal cases.                                                                         
                                                                                                                                
Representative  Wilson thought  the language  on the  second                                                                    
page of  the fiscal note  "...impose civil fines,  and seize                                                                    
property of medical  assistance providers..." was confusing.                                                                    
She thought the information would  have been in a DOL fiscal                                                                    
note.  She  was  surprised  DHSS  would  be  the  department                                                                    
responsible for taking the cases to court.                                                                                      
                                                                                                                                
Mr.  Sherwood apologized  for  the  confusion. He  clarified                                                                    
that  the  lead-in  language   was  generally  covering  the                                                                    
provisions of  the bill addressing  fraud and abuse  and did                                                                    
not necessarily  mean to  imply there  would be  an explicit                                                                    
expense  in  the  current  fiscal note  for  each  of  those                                                                    
activities.                                                                                                                     
                                                                                                                                
2:45:59 PM                                                                                                                    
                                                                                                                                
Co-Chair  Neuman referred  back to  a presentation  from the                                                                    
Menges  Group  [heard in  the  3/29/16  morning meeting  and                                                                    
titled "Medicaid Reform Options"  dated March 29, 2016 (copy                                                                    
on file)]. He mentioned the  report was full of acronyms and                                                                    
noted  primary case  management was  not recommended  in the                                                                    
Menges Group  presentation. However, he pointed  to language                                                                    
on page 2 of the fiscal  note "Section 29, pp. 28-29, direct                                                                    
the   department  to   implement  the   Primary  Care   Case                                                                    
Management   system..."   He   thought  the   Menges   Group                                                                    
recommended against the Medicaid case management.                                                                               
                                                                                                                                
Mr.  Sherwood   replied  that  the  Menges   Group  was  not                                                                    
recommending  broad-based  implementation  of  primary  care                                                                    
case management  to the total Medicaid  population. The bill                                                                    
required  the  department   to  target  certain  individuals                                                                    
including  individuals  with higher  hospitalization,  which                                                                    
was  very  similar if  not  identical  to the  Menges  Group                                                                    
recommendation to  look at doing care  management for people                                                                    
with a high  volume of hospitalizations. He  believed it was                                                                    
a case of semantics -  primary care case management could be                                                                    
done  broadly  or in  a  more  targeted  way. The  bill  was                                                                    
possibly not  as targeted as  the Menges  Group recommended,                                                                    
but not as broad-based as what it had recommended against.                                                                      
                                                                                                                                
Co-Chair Neuman  replied that  was what  he thought,  but he                                                                    
did not believe it was  what the committee had been hearing.                                                                    
He remarked that  the Menges Group had  heard concerns about                                                                    
the  issue, but  the  fiscal note  specified the  department                                                                    
would go ahead with the  work. He wondered about the purpose                                                                    
of  hiring consultants  if  the  state did  not  do as  they                                                                    
recommended. He asked for the  difference between the Menges                                                                    
Group report recommendations compared  to the information in                                                                    
the  DHSS fiscal  note. He  requested the  specific location                                                                    
the issue was addressed in the Menges Group report.                                                                             
                                                                                                                                
Mr. Sherwood would follow up with the explanation.                                                                              
                                                                                                                                
2:49:00 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood spoke  to the fiscal note  OMB Component Number                                                                    
2696 related for the DHSS  Office of Rate Review. The Office                                                                    
of  Rate Review  was  responsible for  setting  most of  the                                                                    
Medicaid rates; Sections  28, 30, and 31  of the legislation                                                                    
all contain provisions that would  require payment reform or                                                                    
innovative payment methods. Under  Section 30 the department                                                                    
would  need  to  apply  for  an  1115  demonstration  waiver                                                                    
focused  on   innovative  payment  models.   The  department                                                                    
assumed it would  issue a one-time contract  for $500,000 in                                                                    
FY  17 to  analyze and  implement the  payment models  and a                                                                    
continuing  $100,000   contract  in  subsequent   years  for                                                                    
ongoing actuarial  work updating and maintaining  the rates.                                                                    
Section 31 of the bill  required an annual actuary report on                                                                    
the   coordinating   care    demonstration   projects.   The                                                                    
department had  increased the ongoing actuarial  contract by                                                                    
$100,000  to reflect  the  additional  work; therefore,  the                                                                    
combined  cost  of  ongoing   actuarial  services  would  be                                                                    
$200,000 per year from FY  18 going forward. The costs would                                                                    
be $500,000  in the  first year  and $200,000  in subsequent                                                                    
years,  which  would  be  made up  of  split  50/50  between                                                                    
federal funds and GF.                                                                                                           
                                                                                                                                
Vice-Chair Saddler referred to the  last paragraph on page 2                                                                    
of  the fiscal  note related  to contracting  with a  third-                                                                    
party  actuary  to  review the  demonstration  projects.  He                                                                    
asked  about  the  thought process  that  determined  mostly                                                                    
separate people  on the project review  committee and having                                                                    
the actuary  recommend the program description.  He wondered                                                                    
if there was any continuity between the two review bodies.                                                                      
                                                                                                                                
Mr. Sherwood believed  the purpose of the actuary  was to do                                                                    
the independent  evaluation. He detailed when  a change such                                                                    
as the one under discussion  was implemented it was compared                                                                    
to  a   baseline  to  determine  its   effectiveness,  which                                                                    
typically  involved an  actuarial assessment.  The idea  was                                                                    
the process would inform DHSS  and the legislature about how                                                                    
effective the demonstrations were.                                                                                              
                                                                                                                                
Vice-Chair Saddler  surmised the  policy work would  be done                                                                    
when  the  demonstration  projects  were  designed  and  the                                                                    
actuary  would  look at  the  numbers  to  see how  well  it                                                                    
worked. He believed the actuary  would be required to accept                                                                    
the policy assumptions that had  already been made and would                                                                    
make tweaks to  the finances. He asked if  his statement was                                                                    
accurate.                                                                                                                       
                                                                                                                                
Mr. Sherwood  replied that  he was  uncertain about  how the                                                                    
actuary would  approach the process.  He agreed  the actuary                                                                    
would not be expected to  speculate on an alternative design                                                                    
in terms  of evaluating  the project  as it  was implemented                                                                    
and as  the data  became available  to determine  whether it                                                                    
was achieving its intended outcomes.                                                                                            
                                                                                                                                
2:53:26 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood spoke  to the fiscal note  OMB Component Number                                                                    
237  related  to  fraud investigation  by  the  Division  of                                                                    
Public Assistance  pertaining to Sections  24 and 31  of the                                                                    
legislation.  Under Section  24 the  division would  need to                                                                    
contract  with  a  third-party  to  provide  a  computerized                                                                    
system of  income asset and  identity verification  to deter                                                                    
and avoid  fraud in Public  Assistance benefits.  The system                                                                    
would have to be cost-effective  and save more than it cost.                                                                    
There  was  a startup  cost  of  $650,000  in FY  17,  which                                                                    
included  $250,000 to  make changes  to the  ARIES [Alaska's                                                                    
Resource  for  Integrated  Eligibility Services]  system  to                                                                    
enable integration with  the new system in  the current work                                                                    
processes; and $400,000  for associated implementation costs                                                                    
such as  documentation, user acceptance,  testing, training,                                                                    
and  support.  The work  was  almost  all state  funded.  He                                                                    
furthered that savings  were expected beginning in  FY 18 as                                                                    
certain aspects duplicated,  somewhat different, but similar                                                                    
verification  systems already  built into  the ARIES  system                                                                    
and paid  for by the  federal government. He  elaborated the                                                                    
division estimated it  would have the ability  to reduce its                                                                    
fraud  investigation staff  by  one half  of  a position  by                                                                    
deterring and identifying fraud  upfront before there was an                                                                    
individual   receiving   benefits;  potentially   fraudulent                                                                    
applicants would  be screened out  - as a result  the number                                                                    
of investigations would  decline. The department anticipated                                                                    
a $46,000 reduction in personal  services beginning in FY 18                                                                    
composed of 50/50 federal funds and state GF.                                                                                   
                                                                                                                                
Mr. Sherwood  relayed that Section  31 of the  bill required                                                                    
DHSS to  refer Medicaid  recipients to  community resources,                                                                    
the Department  of Labor  and Workforce  Development (DLWD),                                                                    
and  universities for  education  and career  opportunities.                                                                    
The department  expected the requirement to  have a one-time                                                                    
expense of  $30,000 in  FY 17 to  create notices  within the                                                                    
eligibility system to support  the referrals, which would be                                                                    
funded 75  percent with federal  funds and 25  percent state                                                                    
GF.                                                                                                                             
                                                                                                                                
Representative Wilson asked if it  was the same program DHSS                                                                    
could  use  for  [emergency room  (ER)]  super-utilizers  to                                                                    
determine the number of times they visit the ER.                                                                                
                                                                                                                                
Mr. Sherwood replied  in the negative. He  explained that it                                                                    
was a different  system that looked at a  variety of private                                                                    
databases,  which  would   give  the  department  additional                                                                    
information about  whether a person was  residing in another                                                                    
state,  shielding assets,  or having  unidentifiable sources                                                                    
of  income,  when   making  eligibility  determinations  for                                                                    
Medicaid and other assistance programs.                                                                                         
                                                                                                                                
Representative  Wilson believed  the system  was capable  of                                                                    
providing   many  different   pieces  of   information.  She                                                                    
wondered  why the  program could  not keep  track of  super-                                                                    
utilizers and prescription  billing. She noted prescriptions                                                                    
were all billed to Medicaid.                                                                                                    
                                                                                                                                
Mr.  Sherwood answered  that he  was not  familiar with  the                                                                    
capabilities  of the  systems in  terms of  tracking medical                                                                    
expenses.  He   elaborated  it  was  not   the  department's                                                                    
understanding that  tracking medical  expenses was  the bill                                                                    
sponsor's  intent; therefore  DHSS had  not looked  into the                                                                    
issue.   The   department   could  search   for   additional                                                                    
information about  the ability to  do some of  those things;                                                                    
DHSS  had  other systems  that  integrated  its health  care                                                                    
spending  information and  it may  not be  cost-effective to                                                                    
try  to incorporate  health care  spending information  from                                                                    
another  system  into  the system  focused  on  individuals'                                                                    
financial eligibility.                                                                                                          
                                                                                                                                
Representative  Wilson recalled  when  the  system had  been                                                                    
introduced,  the legislature  had been  told how  amazing it                                                                    
would be and all of the  things it could do. She reasoned it                                                                    
made sense  to determine  whether the existing  system could                                                                    
do much  of the work  before considering spending  even more                                                                    
money. She thought it may save money versus costing more.                                                                       
                                                                                                                                
2:58:43 PM                                                                                                                    
                                                                                                                                
Representative  Gattis requested  a side-by-side  comparison                                                                    
of  the  systems  and  databases compiled  in  the  bill  to                                                                    
determine where there may cross over.                                                                                           
                                                                                                                                
Mr.  Sherwood addressed  fiscal  note  OMB Component  Number                                                                    
2663  related  to  the Division  of  Senior  and  Disability                                                                    
Services. Section 30 of the  bill required the department to                                                                    
apply for 1915(i) and 1915(k)  options, which would increase                                                                    
the federal  funds received to  provide home  and community-                                                                    
based  services. The  Division  of  Senior and  Disabilities                                                                    
Services anticipated implementing a  new assessment tool for                                                                    
use in its existing waivers  and for the 1915(i) and 1915(k)                                                                    
options.  The   department  anticipated  the  need   to  add                                                                    
positions to plan,  develop, and manage the  two options; it                                                                    
would add one permanent position in  FY 17 to begin the work                                                                    
and two additional positions in  FY 18 as the options began.                                                                    
The department believed  it was important to  get the design                                                                    
and  implementation   of  the  options  right;   while  they                                                                    
generate considerable  GF savings  it was paramount  for the                                                                    
department  to ensure  eligibility requirements  and service                                                                    
limits were well designed and  strictly enforced in order to                                                                    
achieve savings. Additionally, AMHTA  had agreed to fund the                                                                    
state's  share  of four  non-permanent  positions  in FY  17                                                                    
through   FY   19  to   assist   in   developing  the   data                                                                    
capabilities,  provider  certification,  quality  assurance,                                                                    
and  policy development  around  the  efforts. He  continued                                                                    
that in addition to the  position costs there would be costs                                                                    
associated with  modifying the automated services  plan (the                                                                    
division's management information system).                                                                                      
                                                                                                                                
Mr.  Sherwood relayed  the department  estimated  a cost  of                                                                    
$550,000 to be spread out  over the first three years, which                                                                    
would  be  90  percent  federal  funded  (reflected  in  the                                                                    
services line  of the fiscal note).  In FY 18 and  FY 19 the                                                                    
services   line  included   costs   totaling  $346,900   for                                                                    
assessing individuals for the  1915(i) option. He elaborated                                                                    
the individuals would  be coming from grant  programs to the                                                                    
new  Medicaid  option and  did  not  currently receive  that                                                                    
level of  assessment; the costs  were one-half GF.  The cost                                                                    
of implementing  a new assessment  tool would  be $2,575,000                                                                    
(50 percent would be paid  with federal funds and 50 percent                                                                    
would  be  paid  by  AMHTA).  The total  FY  17  costs  were                                                                    
$3,157,500, but  only $71,100  would be GF.  The FY  18 cost                                                                    
was   $1,034,900  with   about  $297,000   GF.  He   relayed                                                                    
expenditures  would  continue  to  fall -  costs  in  FY  20                                                                    
through FY 22 would be  $343,200 annually with about 171,600                                                                    
in GF.                                                                                                                          
                                                                                                                                
Co-Chair Neuman  asked for the  OMB Component Number  of the                                                                    
fiscal note under discussion. Mr.  Sherwood answered that he                                                                    
was referring to OMB component 2663.                                                                                            
                                                                                                                                
3:03:29 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler  looked at the $146,800  MHTAAR funds for                                                                    
FY  19 compared  to $213,000  at the  top of  page 3  on the                                                                    
document provided by the AMHTA  ["Alaska Mental Health Trust                                                                    
Authority  Medicaid  Reform  Implementation  Support"  dated                                                                    
March  16,  2016  (copy  on   file)].  He  asked  about  the                                                                    
discrepancy between the numbers.                                                                                                
                                                                                                                                
JEFF JESSEE,  CHIEF EXECUTIVE OFFICER, ALASKA  MENTAL HEALTH                                                                    
TRUST  AUTHORITY,  answered he  would  have  to confirm  the                                                                    
information  with  the  department.   He  relayed  when  the                                                                    
overall package  had been negotiated  they had  been working                                                                    
with estimates for some of the  costs, which was the data he                                                                    
had taken to  the AMHTA board on the 19th  [of March]. There                                                                    
had not been  ample time for DHSS to fine  tune the numbers;                                                                    
therefore, the actual numbers were  coming in slightly under                                                                    
those  approved  by the  trust.  He  relayed the  additional                                                                    
funds  would  be  restricted and  deposited  back  into  the                                                                    
trust.                                                                                                                          
                                                                                                                                
Representative  Gara  referred  to the  three  annual  AMHTA                                                                    
contributions  of $2.15  million  in the  first year,  which                                                                    
increased to approximately $3 million  in the third year. He                                                                    
did  not want  to see  money  shuffled around  to serve  one                                                                    
group  of   people  but  not   another.  He  asked   if  the                                                                    
contributions would  displace services  for any  other trust                                                                    
beneficiaries.  He reasoned  there  was a  finite amount  of                                                                    
money coming out of the trust.                                                                                                  
                                                                                                                                
Mr. Jessee requested  to defer the question  until after the                                                                    
completion of  the fiscal  notes. He  planned to  provide an                                                                    
overall  vision  of  the trust's  philosophy  later  in  the                                                                    
meeting.                                                                                                                        
                                                                                                                                
3:06:32 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood spoke to OMB  component 2875 related to general                                                                    
relief/temporary assisted  living. The  fiscal note  was the                                                                    
first of  three consecutive  notes reflecting  the reduction                                                                    
of 100 percent GF  funding home and community-based services                                                                    
as a result  of the implementation of the  1915(i) option in                                                                    
Section  30 of  the legislation.  The expenditures  would be                                                                    
offset in  a later  Medicaid fiscal  note where  the expense                                                                    
would be 50  percent GF and 50 percent  federal. The current                                                                    
note  was  for   general  relief/temporary  assisted  living                                                                    
program,  which  paid  for   assisted  living  homecare  for                                                                    
vulnerable adults who did not  qualify for Medicaid home and                                                                    
community-based waivered  services. With  the implementation                                                                    
of  the  1915(i),  Medicaid  would  be able  to  pay  for  a                                                                    
substantial  amount  of  the   services  covered  under  the                                                                    
program. Beginning in FY 19  the program would be reduced by                                                                    
almost $4.7 million GF annually.                                                                                                
                                                                                                                                
Co-Chair Neuman  observed some of  the fiscal notes  did not                                                                    
include money  for travel (e.g.  OMB Component  Numbers 2875                                                                    
and 2663). He  read from the last sentence on  page 2 of the                                                                    
current  fiscal   note  "changes  to  the   State  Plan  and                                                                    
regulations  are required  to implement  the new  option and                                                                    
would  involve   extensive  public  comment."   He  remarked                                                                    
generally  when things  involved significant  public comment                                                                    
it cost the state money. He wondered about the cost.                                                                            
                                                                                                                                
Mr. Jessee replied that when  he addressed the AMHTA package                                                                    
later in the  meeting it would show the trust  had agreed in                                                                    
a number of  instances to fund the public  process; it would                                                                    
be more  efficient and  cost-effective for  the trust  to do                                                                    
off budget.                                                                                                                     
                                                                                                                                
Mr. Sherwood addressed OMB Component  Number 2787 for senior                                                                    
community based  grants, the second  of three  similar notes                                                                    
showing reductions to  a 100 percent GF program  as a result                                                                    
of adding the  1915(i) option under Section 30  of the bill.                                                                    
The senior grants paid for  adult daycare, in-home services,                                                                    
and other, which could be  covered by the 1915(i) option for                                                                    
Medicaid  eligible  individuals.  Beginning  in  FY  19  the                                                                    
grants would be  reduced by $735,200 GF per  year to reflect                                                                    
a certain  number of individuals would  receive the services                                                                    
through the 1915(i) option.                                                                                                     
                                                                                                                                
3:10:09 PM                                                                                                                    
                                                                                                                                
Co-Chair  Neuman   referred  to   language  in   the  second                                                                    
paragraph on page  2 of the fiscal note: "Section  28, p. 25                                                                    
lines 27-29  charge the Department  with 'reducing  the cost                                                                    
of...senior   and   disabilities    services   provided   to                                                                    
recipients of medical assistance  under the state's home and                                                                    
community-based  services  waiver.'"  He  asked  what  would                                                                    
happen  if  the other  waivers  were  not received  and  the                                                                    
department  was still  directed  to reduce  costs. He  asked                                                                    
about  the   backup  plan   if  things   did  not   work  as                                                                    
anticipated.                                                                                                                    
                                                                                                                                
Mr.  Sherwood answered  that the  department did  not see  a                                                                    
substantial barrier to getting  the 1915(i) option approved;                                                                    
however, if  a barrier was encountered  the department would                                                                    
have  to  look  at  different ways  to  control  utilization                                                                    
within the  program. In  absence of the  ability to  use the                                                                    
tools in the  bill, the natural way to reduce  cost would be                                                                    
to look  at controlling utilization  as much as  possible to                                                                    
get  the optimal  benefit  for the  services  the state  was                                                                    
paying  for. He  noted the  division director  was available                                                                    
for further detail.                                                                                                             
                                                                                                                                
Co-Chair  Neuman  expressed   consternation  that  the  bill                                                                    
required cost reductions in  senior disability services, but                                                                    
the department did not know  which services would be reduced                                                                    
or by how much.                                                                                                                 
                                                                                                                                
Mr. Sherwood  addressed OMB Component Number  309 related to                                                                    
community  developmental disabilities  grants,  the last  of                                                                    
three similar notes  showing reductions to a  100 percent GF                                                                    
program  as a  result  of adding  the  1915(i) option  under                                                                    
Section  30  of  the  bill. The  grants  provided  home  and                                                                    
community-based   services  to   support  individuals   with                                                                    
developmental  disabilities.  The  department  projected  it                                                                    
would  begin  the  1915(i)  option  for  the  group  mid-way                                                                    
through  FY   18  and  would   reduce  grants   annually  by                                                                    
$11,635,800 GF in  FY 19 through FY 22;  the reduction would                                                                    
be  $5,817,900  GF in  FY  18.  The community  developmental                                                                    
disabilities  grants were  the  largest  grant program  that                                                                    
would be  refinanced by the  1915(i) option. He  detailed in                                                                    
terms of  priority, due  to the  large size,  the department                                                                    
had been  advised to  not do  all of the  work at  one time.                                                                    
They  had  selected services  that  would  provide the  most                                                                    
savings to start on January 1 of FY 18.                                                                                         
                                                                                                                                
3:14:10 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Saddler  recalled   the  legislature's   budget                                                                    
included a 5  percent reduction to the grant  line. He asked                                                                    
for verification  the funding assumed  FY 17 as  a baseline;                                                                    
it would be  a replacement of state money  with waiver money                                                                    
at the same level of service.                                                                                                   
                                                                                                                                
Mr. Sherwood believed so. He  detailed the funds would be to                                                                    
replace the GF in the grant  line with the federal and GF in                                                                    
the Medicaid option.                                                                                                            
                                                                                                                                
Representative Wilson  noted in reference to  the last three                                                                    
fiscal notes,  the waivers  were temporary  for a  period of                                                                    
five  years  with  the  possibility   of  renewal.  She  for                                                                    
verification  that  after  the five-year  period  the  issue                                                                    
would come before the legislature for approval of GF.                                                                           
                                                                                                                                
Mr.  Sherwood  replied  that  the options  did  not  have  a                                                                    
specific  time  limit. He  detailed  that  with the  1915(i)                                                                    
option  if  benefits were  targeted  to  specific groups  it                                                                    
required re-approval  of the targeting every  five years. As                                                                    
optional  services  they were  not  subject  to the  routine                                                                    
renewal the way a waiver would be.                                                                                              
                                                                                                                                
Representative  Munoz asked  if the  change would  result in                                                                    
the same  level or expanded  services for the  specific user                                                                    
population.                                                                                                                     
                                                                                                                                
Mr. Sherwood  replied that it  was the department's  goal to                                                                    
provide the  same level of  service to the  same individuals                                                                    
currently  receiving   service,  but  through   a  different                                                                    
mechanism.                                                                                                                      
                                                                                                                                
3:16:23 PM                                                                                                                    
                                                                                                                                
Mr.  Sherwood addressed  OMB Component  Number  317 for  the                                                                    
Commissioner's  Office.   Section  40  of   the  legislation                                                                    
directed DHSS to conduct  feasibility studies on privatizing                                                                    
the  Alaska  Pioneer  Homes, certain  Division  of  Juvenile                                                                    
Justice  facilities, and  the  Alaska Psychiatric  Institute                                                                    
(API).  To   conduct  the  three  studies,   the  department                                                                    
estimated  a  cost of  $735,000  GF  in  FY 17.  Section  38                                                                    
required the department to implement  the new federal policy                                                                    
on tribal  Medicaid reimbursement. The fiscal  note included                                                                    
the  creation of  a new  tribal federal  liaison section  to                                                                    
aggressively move  forward to implement the  policy in order                                                                    
to  maximize the  enhanced federal  claiming in  the minimum                                                                    
amount  of  time.  The  section  would  be  responsible  for                                                                    
working   with  CMS,   tribal   providers,  and   non-tribal                                                                    
providers   on   the   development  of   implementation   of                                                                    
referrals, care  plans, and  claiming for  services provided                                                                    
to   tribal   members    by   non-tribal   providers.   Once                                                                    
implemented,  the section  would also  provide oversight  to                                                                    
the  processes to  ensure the  department continued  to meet                                                                    
the requirements  for claiming the enhanced  funds. The work                                                                    
included four  positions at an  annual cost of  $579,400 (50                                                                    
percent  federal funds  and  50 percent  GF).  He noted  the                                                                    
positions  were  also  included  in  the  House  and  Senate                                                                    
budgets.                                                                                                                        
                                                                                                                                
Vice-Chair Saddler  believed the cost of  the positions were                                                                    
accounted for  in the operating  budget and in the  bill. He                                                                    
asked if there was double dipping.                                                                                              
                                                                                                                                
Mr. Sherwood  answered that the  addition had  been included                                                                    
as  a   result  of  discussions  with   the  Senate  Finance                                                                    
Committee.  The amount  was not  included in  the governor's                                                                    
budget; therefore, it had not  seemed appropriate to include                                                                    
the amount  in the  "included in governor's  FY2017 request"                                                                    
column  on  the  fiscal  note.  The  department  wanted  the                                                                    
expenditure  to be  recognized as  part of  the package.  He                                                                    
elaborated  the  department  appreciated and  had  tried  to                                                                    
identify   there  was   potential  duplication,   which  was                                                                    
something  that needed  to be  watched in  the final  budget                                                                    
process  to ensure  there  was no  double  dipping and  that                                                                    
reductions  were not  taken twice  in  the service  category                                                                    
(those savings were shown in both locations as well).                                                                           
                                                                                                                                
Vice-Chair Saddler pointed to the  first paragraph on page 2                                                                    
of the fiscal note related  to Section 40 of the legislation                                                                    
asking DHSS  to conduct a study  analyzing select facilities                                                                    
of the  Division of Juvenile  Justice for  privatization. He                                                                    
wondered  if the  language was  referring to  any particular                                                                    
facilities.                                                                                                                     
                                                                                                                                
Mr. Sherwood  answered the  department understood  the issue                                                                    
to be its call. He  believed there were some logical choices                                                                    
to look at in terms  of utilization and support. He deferred                                                                    
the question to Ms. Forrest for further detail.                                                                                 
                                                                                                                                
Ms. Forrest echoed Mr. Sherwood's  response. She stated that                                                                    
the  language  left the  issue  to  DHSS  to decide  how  to                                                                    
procure  for   the  feasibility  study.  There   were  eight                                                                    
juvenile  facilities:  four   were  combined  treatment  and                                                                    
detention  facilities and  the remaining  four were  smaller                                                                    
and  located  in  rural  areas. She  detailed  it  would  be                                                                    
necessary to look  at balancing the needs  between rural and                                                                    
urban as well as at the utilization numbers.                                                                                    
                                                                                                                                
3:21:08 PM                                                                                                                    
                                                                                                                                
Representative  Munoz thought  the department  had solicited                                                                    
for letters  of interest regarding  privatization management                                                                    
of the Alaska Pioneer Homes. She asked for detail.                                                                              
                                                                                                                                
Mr. Sherwood replied  that DHSS had initiated  a request for                                                                    
letters of interest  regarding assumption of some  or all of                                                                    
the  responsibilities of  operating the  Pioneers Homes  and                                                                    
had received four responses. One  of the responders had been                                                                    
looking  at  very  limited management,  one  was  interested                                                                    
primarily in one  of the homes and  potentially other homes,                                                                    
and two  were entities from out-of-state  operating assisted                                                                    
living facilities in  other places. He detailed  none of the                                                                    
responders  was  willing  to   take  on  the  responsibility                                                                    
without substantial continued support  from the state. There                                                                    
was some  interest, but he  believed there was  probably not                                                                    
interest in  assuming as much responsibility  as some people                                                                    
may envision  or the interest had  not been seen as  of yet.                                                                    
He  continued the  homes operated  with a  substantial state                                                                    
subsidy  and included  provisions ensuring  people's ability                                                                    
to  pay did  not keep  them from  receiving services  in the                                                                    
home. As of yet,  no one was willing to step  up to offer to                                                                    
take over that responsibility.                                                                                                  
                                                                                                                                
Representative Gara  spoke to  Section 40  of the  bill that                                                                    
requiring studies  on many state  facilities. He  provided a                                                                    
scenario   where  the   state   wanted   to  privatize   the                                                                    
facilities.  In that  scenario,  he wondered  why the  state                                                                    
would spend money  on a study. He asked why  the state would                                                                    
not   merely   invite   prospective  entities   to   provide                                                                    
information on what they were willing to do.                                                                                    
                                                                                                                                
Mr. Sherwood  answered that  conducting a  feasibility study                                                                    
was  a requirement  in the  department's current  bargaining                                                                    
agreements.                                                                                                                     
                                                                                                                                
Representative Gara asked why  the department would not just                                                                    
wait to see if an  entity was interested prior to conducting                                                                    
a study.  He wondered why  the state should spend  the money                                                                    
on a study before knowing whether it was needed.                                                                                
                                                                                                                                
Mr.  Sherwood answered  that one  of  the challenges,  which                                                                    
DHSS had experienced with the  letters of interest, in order                                                                    
to get  down to the  detail required it meant  asking people                                                                    
to invest significant  money upfront to do  the analysis and                                                                    
prepare  a proposal  of  what  it would  look  like for  the                                                                    
entity  to take  over. He  specified  if the  state was  not                                                                    
certain it  would pass the  feasibility test, there  may not                                                                    
be the  interest from people  and the willingness  to invest                                                                    
if the feasibility study had not yet been conducted.                                                                            
                                                                                                                                
3:25:17 PM                                                                                                                    
                                                                                                                                
Representative  Gara remarked  that  privatization had  been                                                                    
discussed numerous times and recalled  that the former Palin                                                                    
Administration  had considered  the issue.  He asked  if the                                                                    
state had spent money  on feasibility studies on privatizing                                                                    
the Pioneer Home in the past.                                                                                                   
                                                                                                                                
Mr. Sherwood answered  that he was not aware  of an instance                                                                    
where  the state  had  spent  money on  a  study related  to                                                                    
privatization in the past.                                                                                                      
                                                                                                                                
Representative  Gara asked  what  efforts had  been made  to                                                                    
look at  privatizing the  Pioneer Homes  when the  issue had                                                                    
arisen under the Palin Administration.                                                                                          
                                                                                                                                
Mr.  Sherwood  replied  in  the  negative.  He  relayed  the                                                                    
department would follow up on the question.                                                                                     
                                                                                                                                
Representative  Gara  remarked   that  Representative  Munoz                                                                    
spent time at the Juneau  Pioneer Home and other legislators                                                                    
with  homes  in  their  districts also  spent  time  in  the                                                                    
facilities.  He stressed  the idea  of privatization  caused                                                                    
significant  angst  for  the  residents  in  the  homes.  He                                                                    
believed it  caused substantial  nervousness every  time the                                                                    
issue arose, which was frequent.  He was concerned about the                                                                    
provision.                                                                                                                      
                                                                                                                                
Co-Chair  Thompson commented  that  the  overall budget  had                                                                    
caused consternation  across the entire state  in areas such                                                                    
as  Department  of  Transportation  and  Public  Facilities,                                                                    
University,  and  the  Department  of  Education  and  Early                                                                    
Development. He understood Representative Gara's comments.                                                                      
                                                                                                                                
Mr.  Sherwood addressed  fiscal  note  OMB Component  Number                                                                    
2660. The  fiscal note  was the  first of  three consecutive                                                                    
notes  related  to  Medicaid   services.  The  current  note                                                                    
applied  to behavioral  health and  reflected two  different                                                                    
parts of the  legislation. First, it applied  to Sections 28                                                                    
and  30  to  manage a  comprehensive  integrated  behavioral                                                                    
health  program and  to do  an  1115 demonstration  project.                                                                    
Second,  the provision  in  Section 38  of  the bill,  which                                                                    
would  implement  the  new federal  policy  on  100  percent                                                                    
federal  claiming on  tribal  services.  There were  several                                                                    
different  types  of  expenses  related  to  the  behavioral                                                                    
health  redesign and  1115 waivers.  He detailed  there were                                                                    
increases to  the grants  and benefits  line to  reflect the                                                                    
increase  in Medicaid  expenditures related  to filling  the                                                                    
gaps in the state's  behavioral health system and eventually                                                                    
covering larger  substance abuse treatment  facilities under                                                                    
the 1115  waivers. The  note included  a blended  match rate                                                                    
for different Medicaid populations  whose federal match rate                                                                    
varied between  50 and 100  percent. The waiver  would begin                                                                    
in FY  18 and grow  over time.  There were increases  to the                                                                    
service  line in  FY 18  to reflect  the cost  of paying  an                                                                    
administrative services  organization to develop  and manage                                                                    
a   network  of   providers;  manage   utilization;  monitor                                                                    
outcomes;  and  audit  for  fraud,  waste,  and  abuse.  The                                                                    
state's  share  was  paid  by   the  AMHTA  through  FY  19;                                                                    
subsequent to  FY 19  the cost would  be 50  percent federal                                                                    
and 50 percent state GF. There  was a two-year cost in FY 17                                                                    
and FY 18 for consulting  contracts in the services line, to                                                                    
assist  DHSS  in  designing  and  implementing  the  managed                                                                    
behavioral health  care system  and developing  the waivers.                                                                    
There was also  a contract in FY  17 and FY 18  to develop a                                                                    
prospective   payment   system   for   certified   community                                                                    
behavioral health centers - the  state's share would be paid                                                                    
by AMHTA.                                                                                                                       
                                                                                                                                
Mr. Sherwood  pointed out the  expenses were  all summarized                                                                    
in a table on page 3  of the fiscal note. The note reflected                                                                    
a capital need  of $2,348,000 for one-time  MMIS changes (90                                                                    
percent  federal/10 percent  AMHTA).  The  fiscal note  also                                                                    
reflected the  change in federal policy  around claiming 100                                                                    
percent  federal  funds  for  services  provided  to  tribal                                                                    
beneficiaries.  The department  estimated  shifting some  of                                                                    
the  behavioral  health services,  particularly  residential                                                                    
psychiatric treatment services to  100 percent claiming from                                                                    
50  percent federal  claiming. While  the particular  change                                                                    
did not impact total  expenditures, it impacted fund sources                                                                    
for behavioral  health Medicaid, reducing GF  and increasing                                                                    
federal funds.  The table  at the  bottom of  page 3  of the                                                                    
fiscal note  showed the department's projections  related to                                                                    
the shift  for behavioral health  services. The total  FY 17                                                                    
appropriation  request was  $850,000  with no  GF. The  note                                                                    
showed the  FY 17 tribal  claiming fund shift in  the column                                                                    
for the governor's  request as the portion  had already been                                                                    
included   in  the   governor's   budget.  In   FY  18   the                                                                    
administrative  services organizations  and the  1115 waiver                                                                    
services expenditures  would begin  showing up  in operating                                                                    
expenditures at  almost $5  million; the  expenditures would                                                                    
be almost  $10 million in  FY 19, slightly over  $14 million                                                                    
in FY 20, and just over $19 million in FY 21 and FY 22.                                                                         
                                                                                                                                
Mr. Sherwood relayed  the fund sources for FY  18 and beyond                                                                    
showed the savings  in the tribal claiming  more than offset                                                                    
the  increase  in  GF  expenditures until  FY  20,  when  GF                                                                    
expenditures would increase by  $396,000; the GF increase in                                                                    
FY  21 and  FY  22 was  about $1.2  million.  However, as  a                                                                    
result of the 1115 waiver,  DHSS expected benefits to accrue                                                                    
to  other  divisions  within the  department,  the  criminal                                                                    
justice system,  the courts,  DPS, and  DOC. He  noted those                                                                    
benefits were not quantifiable at present.                                                                                      
                                                                                                                                
3:31:45 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler  pointed to  the first paragraph  on page                                                                    
2. He  discussed previous presentations by  the Menges Group                                                                    
and Health Management Associates  regarding the inability of                                                                    
other  states  to  require   Medicaid  recipients  to  avail                                                                    
themselves  of  employment  assistance  as  a  condition  of                                                                    
receiving Medicaid  services. He referenced language  in the                                                                    
fiscal  note related  to managing  an integrated  behavioral                                                                    
health program  including housing, employment,  and criminal                                                                    
justice.  He asked  if it  was appropriate  for the  bill to                                                                    
include  the guidance  for the  behavioral services  plan to                                                                    
address employment.                                                                                                             
                                                                                                                                
Mr. Sherwood  answered that the particular  reference in the                                                                    
fiscal  note  [OMB Component  Number  2660]  was related  to                                                                    
supportive services  that could help people  with behavioral                                                                    
health  issues to  either obtain  or sustain  a program.  As                                                                    
opposed  to a  requirement for  a person  to be  employed to                                                                    
receive   services,  the   language  referred   to  supports                                                                    
provided  to  people   addressing  their  behavioral  health                                                                    
issues  in  order to  help  them  attain or  maintain  their                                                                    
employment.                                                                                                                     
                                                                                                                                
Mr. Sherwood addressed OMB Component  Number 2077 related to                                                                    
health care Medicaid services. He  explained that it was the                                                                    
most complex of the fiscal  notes. The note included impacts                                                                    
from  the numerous  fraud and  abuse provisions;  the reform                                                                    
provisions   including    primary   care,    health   homes,                                                                    
telehealth,  health  information  infrastructure,  emergency                                                                    
room  project,  coordinated  care  demonstrations;  and  the                                                                    
transportation  component  of  the tribal  claiming  policy.                                                                    
Several sections  of the bill  contained the  provider fraud                                                                    
and  abuse provisions  including the  False Claims  Act, the                                                                    
ability to  assess interest  on audit  recoveries, providers                                                                    
self-review  to  identify  overpayments,  the  authority  to                                                                    
issue  civil   fines,  and  the  ability   to  invoke  civil                                                                    
forfeiture  against  fraudulent  providers.  The  provisions                                                                    
resulted  in enhanced  recoveries  and  abatements and  were                                                                    
summarized on pages 2 and 3 of the fiscal note.                                                                                 
                                                                                                                                
Mr. Sherwood  relayed Section  28 of  the bill  provided for                                                                    
electronic distribution of an  explanation of benefits (EOB)                                                                    
to Medicaid  recipients. The department intended  to use the                                                                    
My  Alaska  portal  for   the  electronic  distribution.  He                                                                    
detailed there was  an initial setup cost of  $707,500 in FY                                                                    
17  and  ongoing  costs  of $93,500  for  user  license  and                                                                    
maintenance  fees (50  percent GF  and 50  percent federal).                                                                    
The section  also directed DHSS  to provide  for stakeholder                                                                    
involvement in setting annual targets  for quality and cost-                                                                    
effectiveness. The  department estimated  an annual  cost of                                                                    
$5,000 for  consultant services  to facilitate  meetings and                                                                    
compile a report; the cost would  be funded by AMHTA from FY                                                                    
17 through  FY 19. Section  29 directed DHSS to  implement a                                                                    
primary  care  case  management system.  He  specified  DHSS                                                                    
would contract with  an administrative services organization                                                                    
(ASO) for  a monthly per-member, per-month  fee beginning in                                                                    
the second quarter of FY 18.                                                                                                    
                                                                                                                                
Mr. Sherwood  communicated DHSS projected primary  care case                                                                    
management  would reduce  many services  but would  increase                                                                    
physician services  as well  as incur fees  to the  ASO. The                                                                    
net impact  would be  a $596,400 reduction  in FY  17, which                                                                    
would increase to  a reduction exceeding $9.5  million in FY                                                                    
22.  Section 30  directed  the department  to implement  the                                                                    
Health  Homes  two years  later,  which  would bring  a  net                                                                    
savings  of $3,430,000.  He  detailed  the program  provided                                                                    
more intensive care management  for individuals with chronic                                                                    
conditions. There would  also be startup costs  for MMIS and                                                                    
ongoing operations.  The startup  capital costs would  be $1                                                                    
million  for the  primary care  case  management and  Health                                                                    
Homes  projects (90  percent federal  funds  and 10  percent                                                                    
GF). The ongoing operation cost would be $65,000 for each.                                                                      
                                                                                                                                
Mr. Sherwood  relayed Section 30 directed  the department to                                                                    
provide  incentives  for   telehealth  including  increasing                                                                    
capabilities  for  and   reimbursement  of  telehealth.  The                                                                    
department had  included a $5,000  contract in  the services                                                                    
line  in FY  17  to  convene a  workgroup  and identify  the                                                                    
barriers and  potential, which would  be paid for  by AMHTA.                                                                    
The department projected savings  in telehealth beginning in                                                                    
FY 18 starting at $1.3  million and growing to $13.3 million                                                                    
in  FY 22.  Section 31  authorized DHSS  to support  private                                                                    
initiatives to reduce ER usage.  The department's role would                                                                    
include  data  sharing support  for  the  PDMP, support  for                                                                    
electronic  health  record  sharing, and  development  of  a                                                                    
shared   savings  model.   He  furthered   DHSS  anticipated                                                                    
implementing the  shared savings  model beginning in  FY 19.                                                                    
For the  purposes of estimating  cost DHSS had  assumed one-                                                                    
time expenses  to interface the PDMP  and connect pharmacies                                                                    
with the health  information exchange at a  cost of $765,000                                                                    
in FY  17 (90 percent federal  funds and 10 percent  GF); it                                                                    
had  also assumed  $20,000 in  annual  operating costs.  The                                                                    
department  anticipated a  one-time cost  of $1  million for                                                                    
MMIS changes  (90 percent federal  funds and 10  percent GF)                                                                    
and $65,000 in annual operating costs.                                                                                          
                                                                                                                                
3:38:25 PM                                                                                                                    
                                                                                                                                
Mr.  Sherwood  continued  to address  the  fiscal  note  OMB                                                                    
Component Number  2077. The department expected  net savings                                                                    
to  the  state  (after  shared savings  with  providers)  of                                                                    
$2,240,000 annually. Section 31  authorized DHSS to contract                                                                    
with  one  or  more  coordinated  care  projects.  The  note                                                                    
reflected   DHSS's   assumption   the  projects   would   be                                                                    
implemented in  FY 19 and  the expectation of an  annual net                                                                    
savings of  $1.5 million  GF. There  would be  startup costs                                                                    
for technical development and  consulting with $3,885,000 in                                                                    
capital costs (90  percent federal funds and  10 percent GF)                                                                    
and ongoing maintenance costs reflected  in the service line                                                                    
of $318,000  for provider outreach  and support  (50 percent                                                                    
federal funds and  50 percent GF). Section  38 directed DHSS                                                                    
to  implement   the  federal   policy  on   Medicaid  tribal                                                                    
reimbursement.  The  department  estimated the  health  care                                                                    
Medicaid services  component would  see a  shift from  GF to                                                                    
federal funds  for travel and ambulance  services; it merely                                                                    
a  change  in  fund  source   and  not  a  change  in  total                                                                    
expenditures.   With   aggressive   startup   efforts   DHSS                                                                    
estimated it  would begin with  a $26.7 million shift  in FY                                                                    
17, which  would eventually grow  to $44.2 million in  FY 21                                                                    
and FY  22 (illustrated in a  table on page 6  of the fiscal                                                                    
note).                                                                                                                          
                                                                                                                                
Mr. Sherwood  relayed Section 39 directed  DHSS to implement                                                                    
a   health  information   infrastructure  plan   to  support                                                                    
transformation  of the  health  care system  in Alaska.  The                                                                    
department estimated  a one-time services cost  of $5,000 in                                                                    
FY 17 for a consultant  to facilitate meetings and compile a                                                                    
report of  recommendations to  be funded  by AMHTA;  it also                                                                    
estimated  capital costs  of  $775,000  (90 percent  federal                                                                    
funds  and  10  percent  GF)  to  fund  requirements  for  a                                                                    
development  road  map  and  gap  analysis  and  design  and                                                                    
engineering implementation plan  with phases and achievement                                                                    
goals.  The combined  impact of  all of  the changes  in the                                                                    
fiscal note  was an  increase in expenditures  in the  FY 17                                                                    
appropriation  request  of  $337,200 with  a  $20.2  million                                                                    
reduction in the  GF match. The fiscal note  also showed the                                                                    
FY  17  impacts of  the  tribal  policy change,  which  were                                                                    
already included  in the  governor's proposed  budget. There                                                                    
was a decrease of almost  $3.8 million in total expenditures                                                                    
in FY 18 and a reduction  in GF match exceeding $35 million.                                                                    
In  FY 19,  when most  of the  projects would  have started,                                                                    
there  was a  net reduction  of  over $16  million in  total                                                                    
operating  expenditures and  a $45  million reduction  in GF                                                                    
match;  the reduction  continued to  grow until  it exceeded                                                                    
over  $60 million  in GF  match by  FY 22.  Combined capital                                                                    
costs for  all of the  projects included in the  fiscal note                                                                    
were $6.9 million  (90 percent federal funds  and 10 percent                                                                    
GF).                                                                                                                            
                                                                                                                                
3:41:52 PM                                                                                                                    
                                                                                                                                
Representative   Wilson   referred   to   civil   forfeiture                                                                    
recoveries on  page 3 of  the fiscal note. She  remarked the                                                                    
department   had  repeatedly   stated  it   was  not   civil                                                                    
forfeiture. However, she observed  the note showed an annual                                                                    
recovery  from civil  forfeiture of  $282,500. She  wondered                                                                    
where the  money would come  from. She noted DHSS  could not                                                                    
currently "do it now."                                                                                                          
                                                                                                                                
Mr.  Sherwood  answered   that  the  forfeiture  essentially                                                                    
allowed  the  department to  protect  assets  of a  provider                                                                    
while it pursued criminal cases  against them. Currently the                                                                    
state  may receive  judgements  against providers;  however,                                                                    
they had no assets left  by the time the criminal conviction                                                                    
occurred.  The  provision  would enable  the  department  to                                                                    
"seize and  freeze" or restrict  providers' access  to their                                                                    
assets while the  case was underway; if  the state prevailed                                                                    
it   would  recover   against  any   assets.  The   $282,500                                                                    
represented  increased recovery  by preserving  the provider                                                                    
assets.                                                                                                                         
                                                                                                                                
Representative  Wilson  asked   how  the  specific  $282,500                                                                    
figure had been derived.                                                                                                        
                                                                                                                                
3:44:15 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood  replied the calculation  was described  in the                                                                    
fiscal note  based on historic overpayments  and restitution                                                                    
amounts  due from  providers  who may  be  subject to  civil                                                                    
forfeiture.    The    department   estimated    there    was                                                                    
approximately $2.8  million annually  that would  be subject                                                                    
to the provision,  but DHSS estimated only  about 10 percent                                                                    
of the total would be recoverable through civil forfeiture.                                                                     
                                                                                                                                
Representative  Wilson  asked  for verification  that  in  a                                                                    
criminal case there was no  way through the criminal process                                                                    
to freeze any  assets whatsoever and that it had  to be done                                                                    
in the civil process.                                                                                                           
                                                                                                                                
Mr. Sherwood replied the question  would be best directed to                                                                    
an attorney  in terms  of what  aspects fell  under criminal                                                                    
versus  civil law.  He detailed  the  provision allowed  the                                                                    
state   to  preserve   the  assets   prior  to   a  criminal                                                                    
conviction. The process was referred  to as civil forfeiture                                                                    
because  it came  before the  criminal  conviction had  been                                                                    
obtained.                                                                                                                       
                                                                                                                                
3:46:05 PM                                                                                                                    
                                                                                                                                
STACIE  KRALY,  CHIEF   ASSISTANT  ATTORNEY  GENERAL,  HUMAN                                                                    
SERVICE,  DEPARTMENT  OF  LAW,  addressed  the  question  by                                                                    
Representative  Wilson.  She   agreed  with  Mr.  Sherwood's                                                                    
response.  There   was  currently  no  mechanism   to  seize                                                                    
property  through  a  criminal prosecution;  therefore,  the                                                                    
Department of Law  (DOL) had asked for the bill  to create a                                                                    
separate  process,  which  would  be done  through  a  civil                                                                    
forfeiture. The  provision would  enable the  state petition                                                                    
the court  and show probable  cause that criminal  fraud had                                                                    
occurred; if  the court agreed  it would grant  authority to                                                                    
place liens  or to  seize certain  assets identified  by the                                                                    
state. At  the end of  the proceeding, should  an individual                                                                    
be  convicted of  the  fraud, the  state  would provide  the                                                                    
court  with  the  amount  owed   to  the  state  to  request                                                                    
permission  to have  the assets  forfeited to  the state  to                                                                    
offset the criminal fraud.                                                                                                      
                                                                                                                                
3:47:57 PM                                                                                                                    
                                                                                                                                
Representative Wilson asked  for verification that currently                                                                    
the state's  criminal attorneys could not  freeze the assets                                                                    
of individuals. She found it hard to believe.                                                                                   
                                                                                                                                
Ms.   Kraly  replied   there  were   very  limited   seizure                                                                    
provisions  under  existing  state  statute.  She  was  most                                                                    
familiar  with  the  statute  enabling  the  state  to  seek                                                                    
seizure and forfeiture  of fishing gear in  response to fish                                                                    
and game  violations. There was broad  federal authority for                                                                    
seizure and  forfeiture of assets related  to the commission                                                                    
of  a crime  for things  such as  drug arrests;  the similar                                                                    
authority  did not  exist in  state  statute. The  provision                                                                    
provided  a very  limited capture  of assets  for forfeiture                                                                    
for individuals  convicted of Medicaid fraud.  She explained                                                                    
that a  Mr. Peterson had  convicted a number  of individuals                                                                    
for  Medicaid  fraud, some  of  which  were corporations  or                                                                    
businesses. She detailed that when  the department had moved                                                                    
to  recover the  hundreds  of thousands  of  dollars it  had                                                                    
identified  in fraudulent  payments, all  of the  assets had                                                                    
been  dissipated -  there  were no  assets  remaining to  go                                                                    
after. She continued the  offenders had transferred interest                                                                    
in their homes,  cashed out their bank  accounts, sold boats                                                                    
and  RV's and  other.  The previous  DHSS commissioner  Bill                                                                    
Streur had been interested in  determining a way to make the                                                                    
state whole. One of the ways  to make the state whole was to                                                                    
seek  seizure and  forfeiture  in  the narrow  circumstances                                                                    
where criminal Medicaid fraud had been established.                                                                             
                                                                                                                                
Representative  Wilson corrected  that  the individuals  had                                                                    
not yet been convicted. She  stated the provision applied to                                                                    
cases  where individuals  had not  yet  been convicted.  She                                                                    
clarified she did  not want anyone to commit  fraud, but she                                                                    
believed freezing  a person's assets  while they  waited for                                                                    
the case  to be decided  could ruin that person's  life. She                                                                    
referred to fish and game  cases where people had been found                                                                    
not guilty but  had not been able to get  their things back.                                                                    
She   stated  that   the  provision   could  have   negative                                                                    
consequences  on providers  because the  [legal] system  was                                                                    
not as fast  as it should be related to  criminal cases. She                                                                    
was  nervous about  taking  the situation  down  to a  lower                                                                    
threshold. She was unconvinced there  was not another way of                                                                    
recouping the state's cost.                                                                                                     
                                                                                                                                
3:50:58 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler  asked  about   interest  charged  to  a                                                                    
Medicaid provider  who may find  out they  had inadvertently                                                                    
overpaid and  repaid the amount  within 60 days (as  per the                                                                    
bill). He asked if someone  under the scenario was likely to                                                                    
be subject to interest and penalties.                                                                                           
                                                                                                                                
Mr.  Sherwood   answered  in  the  negative.   He  explained                                                                    
intention was to start the  clock on interest when the state                                                                    
had come to the conclusion  of an audit process (either when                                                                    
the final  audit was issued  and not disputed or  the appeal                                                                    
of an audit  had come to conclusion). The  provision was not                                                                    
intended to  address self-reporting  of overpayments  when a                                                                    
timely repayment  was made  or a  repayment plan  was worked                                                                    
out.                                                                                                                            
                                                                                                                                
Vice-Chair  Saddler asked  for verification  someone in  the                                                                    
scenario was not subject to interest. Mr. Sherwood agreed.                                                                      
                                                                                                                                
Vice-Chair Saddler  asked where he would  find documentation                                                                    
that interest  would only begin at  the end of an  audit. He                                                                    
noted he was starting on page 7, line 17 of the bill.                                                                           
                                                                                                                                
Mr. Sherwood referred  to page 23, lines 2 through  7 of the                                                                    
bill.  He relayed  that the  interest was  referring to  the                                                                    
state's audit  statute AS  47.05.020. The  section addressed                                                                    
the  date interest  would start.  He read  from the  section                                                                    
which  governed when  the audit  would begin:  "the date  of                                                                    
issuance of  the final agency  decision is the later  of the                                                                    
department's written  notification of  the decision  and the                                                                    
provider's  appeal  rights  or  if timely  appealed  by  the                                                                    
provider the final agency decision."  Provisions on lines 21                                                                    
and 22  made clear  that the interest  in penalties  did not                                                                    
apply    to    the   section    regarding    self-identified                                                                    
overpayments.                                                                                                                   
                                                                                                                                
3:54:25 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood spoke  to OMB Component Number  2662 related to                                                                    
the impact on the  senior and disabilities Medicaid services                                                                    
component  for  the  addition of  the  1915(i)  and  1915(k)                                                                    
Medicaid  options  and the  impact  of  the tribal  claiming                                                                    
policy  change. Section  30  of the  bill  directed DHSS  to                                                                    
apply for  the 1915(i)  option for home  and community-based                                                                    
services  and  shifted  coverage   of  services  from  other                                                                    
programs  with  100  percent  GF  to  Medicaid  (50  percent                                                                    
federal  funds).  The  shifts   had  been  outlined  in  the                                                                    
previous fiscal notes he had  discussed. The actual Medicaid                                                                    
expenditures  appeared  in  the   current  fiscal  note  (50                                                                    
percent  federal and  50 percent  GF); the  GF increase  had                                                                    
been offset in other fiscal  notes. Section 30 also directed                                                                    
the department to implement the  1915(k) option for home and                                                                    
community-based  services, which  would cover  personal care                                                                    
services  currently  provided  to  Medicaid  1915(c)  waiver                                                                    
recipients;  however,  the  1915(k) services  came  with  an                                                                    
additional 6 percent federal match.  He detailed the federal                                                                    
match for  the services  had changed from  50 percent  to 56                                                                    
percent.  The department  expected  the shift  to reduce  GF                                                                    
match by slightly  over $2.5 million per year in  FY 18. The                                                                    
implementation of  the two options  would require  a capital                                                                    
cost  of  $1.2 million  to  make  changes  to the  MMIS  (90                                                                    
percent federal and 10 percent GF).                                                                                             
                                                                                                                                
Mr. Sherwood  relayed Section 38  of the bill  directed DHSS                                                                    
to  implement the  new federal  policy  on tribal  claiming,                                                                    
which would shift some nursing  home and home and community-                                                                    
based  services  presently  claimed at  50  percent  federal                                                                    
funds  to 100  percent federal  funds. Implementation  would                                                                    
begin with nursing  homes in FY 17 and would  expand to home                                                                    
and community-based  waiver services in FY  19. He explained                                                                    
the  delay was  to  give  a chance  for  some  of the  other                                                                    
federal changes occurring with  the home and community-based                                                                    
services providers.  The shift would grow  from $2.9 million                                                                    
in FY 17  to over $42 million in FY  22. The combined impact                                                                    
of the  provisions for  FY 17  was a  zero dollar  change in                                                                    
operating costs  with a  $2.9 million shift  in GF  match to                                                                    
federal  funds in  the governor's  request. The  fund source                                                                    
shifts continued in  FY 18 with the addition  of the 1915(k)                                                                    
option; increased  spending would begin associated  with the                                                                    
1915(i)  option halfway  through the  year. The  expenditure                                                                    
increase in  FY 18 was  slightly over $5.6 million,  but the                                                                    
net reduction  in GF was almost  $4.8 million. In FY  19 and                                                                    
beyond, when the 1915(i) had  been fully implemented, annual                                                                    
expenditures would  increase to  about $17 million,  but due                                                                    
to growth  in tribal  claiming for long-term  care services,                                                                    
the GF match continued to  reduce for the remaining years of                                                                    
the fiscal note for a  net reduction of almost $17.2 million                                                                    
in FY 19, growing to almost $36.6 million in FY 22.                                                                             
                                                                                                                                
3:58:35 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Saddler   referred   to  a   one-time   capital                                                                    
expenditure of  $1.2 million for  MMIS changes on page  3 of                                                                    
the fiscal  note. He  asked if  the MMIS  would be  ready to                                                                    
handle benefits of the reform in the bill.                                                                                      
                                                                                                                                
Mr.  Sherwood replied  in the  affirmative. He  detailed the                                                                    
changes were not  easy and it would be necessary  to do them                                                                    
in stages.                                                                                                                      
                                                                                                                                
Co-Chair   Thompson  asked   if  the   MMIS  was   federally                                                                    
certified. Mr.  Sherwood replied in the  negative. He stated                                                                    
that the department was scheduled  to have its certification                                                                    
review in June 2016.                                                                                                            
                                                                                                                                
Mr.  Jessee addressed  the  document  titled "Alaska  Mental                                                                    
Health  Trust   Authority  Medicaid   Reform  Implementation                                                                    
Support"  (copy  on  file).  He  discussed  that  the  AMHTA                                                                    
trustees had  testified early on  in the SB 74  process that                                                                    
they believed  Medicaid reform was the  most important thing                                                                    
that had happened  to the beneficiaries and  the trust since                                                                    
its  creation  in 1995.  He  detailed  the current  Medicaid                                                                    
program was unsustainable and  the state's behavioral health                                                                    
system did  not provide  comprehensive care in  an efficient                                                                    
and   effective  manner,   which  left   many  beneficiaries                                                                    
unserved.  The trustees  had signaled  early in  the process                                                                    
they  intended to  step forward  and provide  some financial                                                                    
assistance  to the  state as  the  trust had  on many  other                                                                    
initiatives  over the  years (i.e.  the  trustees had  spent                                                                    
nearly $16 million  in trust funds over  a seven-year period                                                                    
on the Bring the Kids Home  initiative in order to allow the                                                                    
legislature to  repurpose well over  $30 million in  GF from                                                                    
out-of-state programs into in-state services).                                                                                  
                                                                                                                                
Mr. Jessee continued  that when the trust had  begun to look                                                                    
at the development  of the bill, much of the  focus had been                                                                    
on substantive  provisions. At the  point when  fiscal notes                                                                    
started  to be  discussed it  was clear  there were  certain                                                                    
areas  that  were  more difficult  for  the  Senate  Finance                                                                    
Committee  and presumably  the  House  Finance Committee  to                                                                    
fund,  given  the  state's  fiscal  gap  and  the  different                                                                    
directives to try  to be efficient and  effective with state                                                                    
resources.  For example,  one of  the things  that came  out                                                                    
early on  were all of the  new positions required to  do the                                                                    
work - the non-permanent positions  necessary to do the work                                                                    
or backfill the  jobs of people currently  at the department                                                                    
so  they can  use  their specialized  expertise  to get  the                                                                    
things underway.  The trust understood  why it had  been the                                                                    
case  -  adding state  employees  at  state expense  in  the                                                                    
current  environment was  certainly  problematic. The  trust                                                                    
had then  asked the department how  it was going to  get the                                                                    
work done because failure was  not an option. The answer had                                                                    
been the department would work  longer, harder, smarter, and                                                                    
faster.  He  stated that  the  trust  believed DHSS  already                                                                    
worked fast,  smart, hard, and  long; therefore, it  had not                                                                    
seemed  like an  efficacious strategy.  The document  showed                                                                    
areas where  the trust had stepped  forward acknowledging it                                                                    
was necessary to have people to get the job done.                                                                               
                                                                                                                                
Mr. Jessee  relayed the  trust had  stepped forward  to help                                                                    
with travel expenses.  He remarked the state was  a long way                                                                    
from the places that  had already accomplished a significant                                                                    
number  of the  results it  was looking  for. The  trust had                                                                    
learned over the years with  programs like Housing First and                                                                    
Bring  the  Kids Home  that  doing  site visits  and  taking                                                                    
groups of  individuals to places that  had successfully done                                                                    
the types  of things  the state  was trying  to do  was very                                                                    
valuable.  Not   only  because  seeing  was   believing  and                                                                    
connecting with  peers with a  similar perspective  could be                                                                    
helpful,  but also  because teams  would  have several  days                                                                    
together  to start  to gain  a common  understanding of  the                                                                    
goal.  Currently  additional  state funds  for  out-of-state                                                                    
travel  was  not looked  upon  very  favorably, but  it  was                                                                    
something the trustees were willing to provide.                                                                                 
                                                                                                                                
Mr. Jessee relayed there were  a number of one-time expenses                                                                    
the  trust would  fund that  it felt  were essential  to get                                                                    
done  on time.  He pointed  out the  process of  getting the                                                                    
substantive  elements  in  the  bill was  what  created  the                                                                    
necessary questions  including what the state  was trying to                                                                    
accomplish and how fast it  needed to work to accomplish the                                                                    
goals. When  the fiscal notes  had initially  been submitted                                                                    
they had not  anticipated all of the steps  required to meet                                                                    
each of  the substantive  requirements in the  timeline. The                                                                    
trust  had   sat  down   with  Charlie   Currie's  associate                                                                    
Stephanie Colston [Medicaid  consultants] and the department                                                                    
to  determine exactly  what  was necessary  in  each of  the                                                                    
steps in  order to get the  work done on time  and where the                                                                    
resources would come from.                                                                                                      
                                                                                                                                
4:05:33 PM                                                                                                                    
                                                                                                                                
Mr.  Jessee  began on  page  1  of  the AMHTA  document.  He                                                                    
relayed items 1 through 4  were built around the 1115 waiver                                                                    
process.  Item  1  related to  the  Division  of  Behavioral                                                                    
Health capacity  assessment and development.  The department                                                                    
had discussed  that the division's  role would change  in FY                                                                    
17 and FY 18 with  an administrative services organization -                                                                    
eventually there  may be  fewer people  at the  division. He                                                                    
furthered  there   needed  to   be  an  assessment   of  the                                                                    
knowledge, skills,  and abilities of current  staff compared                                                                    
to what  the division's job would  have to be in  the future                                                                    
and how to get from here to there.                                                                                              
                                                                                                                                
Representative  Gara  noted it  was  up  to other  committee                                                                    
members, but  he felt the  fiscal notes and  MHTAAR portions                                                                    
had been covered  already. He was interested  in the overall                                                                    
question  about  the AMHTA  approach,  but  he believed  the                                                                    
committee understood the individual fiscal notes.                                                                               
                                                                                                                                
Mr.  Jessee explained  that the  trust investments  were not                                                                    
included in  the fiscal notes. The  expenditures represented                                                                    
additional resources  AMHTA was making available  outside of                                                                    
the state  budget. He  moved to item  2 related  to provider                                                                    
capacity, what they  needed to do in the future,  and how to                                                                    
provide  technical assistance  to providers  to ensure  they                                                                    
were ready  to implement the  new system. Item 3  related to                                                                    
the  waiver and  was  represented in  the  fiscal notes.  He                                                                    
relayed  the actuarial  analysis  was funded  in the  fiscal                                                                    
notes.                                                                                                                          
                                                                                                                                
Vice-Chair Saddler  looked at  item 2  and asked  what "CCG"                                                                    
stood for. Mr.  Jessee replied that it was  referring to the                                                                    
Charlie Currie Group.                                                                                                           
                                                                                                                                
Mr. Jessee addressed item 4:  the ASO. The trust had stepped                                                                    
forward  to  fund travel  costs.  He  referred to  the  note                                                                    
addressing  travel for  three DHSS  staff, one  AMHTA staff,                                                                    
and one  consultant and remarked  the item was  flexible and                                                                    
may not be  the precise makeup of the team.  The funding for                                                                    
travel acknowledged  the need  to see some  of the  ASOs and                                                                    
how they  operate. Additionally, the trustees  had agreed to                                                                    
pick up the cost of the ASO state  match for FY 18 and FY 19                                                                    
that directly  supplanted GF in  the fiscal notes.  He moved                                                                    
to item 5 on page 2  of the document related to primary care                                                                    
integration. One  of the things  needed for a waiver  was to                                                                    
demonstrate  the   state  was   implementing  evidence-based                                                                    
practices which would  increase the program's effectiveness.                                                                    
The  item  would  support pilot  programs  to  screen  brief                                                                    
intervention referral and treatment  in two hospital ERs. He                                                                    
detailed many  ER visits  were a  result of  substance abuse                                                                    
(e.g. from  driving while  intoxicated or  other accidents).                                                                    
He  furthered  that  evidence  showed  screening  and  brief                                                                    
intervention in  the ER for  the substance abuse  issues was                                                                    
an effective  strategy to reduce drinking  and subsequent ER                                                                    
visits.  Additionally,  AMHTA   would  fund  a  standardized                                                                    
screening  and  assessment  instrument  in  three  federally                                                                    
qualified health  centers and behavioral health  centers. He                                                                    
spoke  to   the  need  to  begin   standardizing  assessment                                                                    
instruments, which the trust would fund off budget.                                                                             
                                                                                                                                
4:09:51 PM                                                                                                                    
                                                                                                                                
Mr.  Jessee  addressed  item  6   related  to  funds  for  a                                                                    
prospective  payment  pilot  with  a substance  abuse  or  a                                                                    
substance abuse  and mental health provider.  Item 7 related                                                                    
to  funding  for  data.  He   discussed  the  need  to  hook                                                                    
providers up to the  health information exchange. Initially,                                                                    
the thought  had been  rather than  ask for  the money  in a                                                                    
fiscal note, the  cost would be left to the  providers as an                                                                    
unfunded mandate. He  noted it was not  a substantial amount                                                                    
of money, but he reasoned  the state was asking providers to                                                                    
do a  significant amount in  terms of changing  their entire                                                                    
system and how  they operate in many ways.  The trustees had                                                                    
agreed to cover  the cost of the connectivity.  Item 7 would                                                                    
enhance  AKAIMS [Alaska's  Automated Information  Management                                                                    
System]  to full  capacity. Currently  the  provider had  to                                                                    
enter all of  their information into AKAIMS and  then had to                                                                    
reenter all of the data  in the health information exchange.                                                                    
He  reasoned that  process was  ridiculous and  was part  of                                                                    
what drove  up administrative  costs. The trust  was willing                                                                    
to fund  work that  would enable  the data  to automatically                                                                    
populate the  health information exchange when  entered into                                                                    
AKAIMS,    which    should    significantly    reduce    the                                                                    
administrative burdens on nonprofits.                                                                                           
                                                                                                                                
Vice-Chair  Saddler  remarked  on "the  principle  that  you                                                                    
don't  put bald  tires  on a  new car"  in  relation to  the                                                                    
proposal  to enhance  the  health  information exchange.  He                                                                    
asked  about the  assessment of  the program.  He asked  for                                                                    
detail on  the program's age,  how it operated,  and whether                                                                    
it   was  an   appropriate  vehicle   to  add   utility  to.                                                                    
Alternatively, he wondered if it should be replaced.                                                                            
                                                                                                                                
Mr. Sherwood  replied that  the health  information exchange                                                                    
had been  created as a  nonprofit through  legislation about                                                                    
six years earlier; it was  up and running and was continuing                                                                    
to bring additional  providers on board. He  relayed that it                                                                    
did  not   yet  have  the  ideal   level  of  participation;                                                                    
therefore, some of the funds  in the fiscal notes were meant                                                                    
to  encourage participation.  He  detailed  the program  did                                                                    
have   the  capabilities   to  allow   providers  to   share                                                                    
information  as  appropriate.  The  program  was  funded  by                                                                    
provider  assessment  and  DHSS.  The  department  had  also                                                                    
accessed  some federal  funds to  maintain the  program over                                                                    
the years.                                                                                                                      
                                                                                                                                
4:12:59 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler  asked  if   the  program  was  managed,                                                                    
operated, and owned by DHSS  or owned by a private nonprofit                                                                    
organization.                                                                                                                   
                                                                                                                                
Mr. Sherwood answered the health  information exchange was a                                                                    
nonprofit with  an independent board,  which was  a decision                                                                    
made  by  the  legislature   when  it  had  established  the                                                                    
program.  The  department  had frequent  meetings  with  the                                                                    
organization related to planning and budgeting.                                                                                 
                                                                                                                                
Vice-Chair  Saddler remarked  that  he  would have  numerous                                                                    
technical  questions  related to  the  PDMP  and the  health                                                                    
information exchange regarding  control and privacy measures                                                                    
when the items were discussed more in depth.                                                                                    
                                                                                                                                
Mr.  Jessee addressed  item 8  on page  2, which  included a                                                                    
relatively small  allocation to  assist DHSS with  running a                                                                    
couple of  workgroups. He moved  to page  3 (item 9)  of the                                                                    
document  and  remarked  that trust  beneficiaries  included                                                                    
more   than   just   behavioral  health.   In   senior   and                                                                    
disabilities services  the 1915(i) and 1915(k)  options were                                                                    
also critical  to beneficiaries.  He referred  to Vice-Chair                                                                    
Saddler's statement  about not putting  bald tires on  a new                                                                    
car and stated the assessment  tool listed was "that type of                                                                    
an initiative."  He elaborated  the current  assessment tool                                                                    
was  inadequate in  several important  respects. First,  the                                                                    
tool  was primarily  a deficit-based  model -  it looked  at                                                                    
people's  deficits and  not their  assets. He  reasoned that                                                                    
costs  could be  reduced when  helping people  maximize what                                                                    
they could do instead of focusing  on what they could not do                                                                    
and  throwing  money  at trying  to  solve  their  problems.                                                                    
Second, the  tool had very  poor interrater  reliability. He                                                                    
detailed if  two people used  the same tool to  evaluate the                                                                    
same person they  may come to very  different answers. There                                                                    
were  now more  advanced  tools that  solved  most of  those                                                                    
problems.  He  communicated  the  department  had  found  it                                                                    
difficult  to fit  a  new assessment  tool  into its  fiscal                                                                    
notes due  to the  current fiscal climate  and effort  to be                                                                    
frugal  with  resources.   The  trustees  understood that  a                                                                    
state of  the art assessment  tool was needed if  the system                                                                    
was going to  be built around the state  plan amendments and                                                                    
waivers and had therefore agreed to pay for it.                                                                                 
                                                                                                                                
Mr. Jessee  relayed item  9 also  included funding  for four                                                                    
long-term  non-permanent positions,  expansion of  the Aging                                                                    
and Disability  Resources Centers  to four  additional sites                                                                    
(one of the core way  services would be delivered), national                                                                    
best practice  site visits, and  outreach for  consumers and                                                                    
provider engagement. Community  involvement in the processes                                                                    
was  critical  to  the  trust.   He  referenced  an  earlier                                                                    
presentation  [from the  morning meeting]  from Agnew::Beck,                                                                    
which  showed over  500 citizens  had been  involved in  the                                                                    
process funded by the trust  in order to ensure the broadest                                                                    
possible  input. Item  10 related  to  health care  services                                                                    
staffing needs was  also included in the fiscal  notes - the                                                                    
trust  had  committed  funds  to   pay  for  two  new  staff                                                                    
positions.                                                                                                                      
                                                                                                                                
4:16:38 PM                                                                                                                    
                                                                                                                                
Mr. Jessee addressed  item 11 on page 3,  which included two                                                                    
items  not directly  related to  Medicaid  reform, but  were                                                                    
included in  AMHTA's funding  package. First,  funding would                                                                    
be appropriated  for the [federal]  ABLE Act,  which allowed                                                                    
people  with  disabilities  to create  what  amounted  to  a                                                                    
health  savings  account that  would  not  be considered  an                                                                    
asset for  purposes of public  benefit -  he noted it  was a                                                                    
tremendous piece  of legislation.  Second, funding  would be                                                                    
appropriated  for   a  technical  assistance   contract  for                                                                    
providers.  He stated  that many  of  the state's  providers                                                                    
were not as proficient at billing Medicaid as needed.                                                                           
                                                                                                                                
Mr. Jessee spoke  to how the trust would pay  for all of the                                                                    
items  totaling  almost $10  million  over  three years.  He                                                                    
discussed  that  when  Medicaid  expansion  had  been  going                                                                    
through, because  of the timing  exigency, the  trustees had                                                                    
gone into the  trust's budget reserve in order  to fund part                                                                    
of  the   initiative.  He  characterized  the   move  as  an                                                                    
extraordinary step on  the part of the trustees  and not one                                                                    
they  intended  to  make  a common  practice.  In  order  to                                                                    
determine how the  trust would come up with  the $10 million                                                                    
it had  reviewed all of  its prior allocations.  He detailed                                                                    
trust authority  allocations were  good four 4  years; every                                                                    
year one of  the allocations lapsed and  rolled forward into                                                                    
future years.  The money was  typically left "out  there" to                                                                    
account for  unexpected events  that may  require additional                                                                    
resources  in  the  specific  areas.   He  referred  to  the                                                                    
exercise  as  sweeping  "under  the  seat  cushions,"  which                                                                    
included almost all of the  prior year allocations from 2013                                                                    
to 2015.                                                                                                                        
                                                                                                                                
Mr. Jessee  relayed the action  would have  two consequences                                                                    
for the  trust: 1) it  would reduce the  trust's flexibility                                                                    
as  it  moved  forward  because   the  funds  would  not  be                                                                    
available   if   unforeseen   issues  arose   with   current                                                                    
strategies; and  2) the trustees  would have  somewhat lower                                                                    
revenue to  spend in  future years  because the  funds would                                                                    
not  be lapsing  in future  years. The  trust would  have to                                                                    
tighten  its belt  moving forward.  Additionally, the  trust                                                                    
had  looked  at   current  FY  16  to   determine  what  was                                                                    
classified  as   essential  work  to  meet   its  two  major                                                                    
priorities  including Medicaid  reform and  criminal justice                                                                    
reform.  The trust  had determined  areas where  funding had                                                                    
not  already been  committed  for  FY 16  or  if there  were                                                                    
programs where  it could claw  back some money prior  to the                                                                    
year-end. The trust  had also gone through all  of its focus                                                                    
areas for FY  17 to identify places it could  shift funds to                                                                    
forward the effort under SB  74, particularly in areas where                                                                    
something  was   not  already  planned.  For   example,  the                                                                    
substance abuse  prevention and  treatment focus  area still                                                                    
had a  considerable amount of  unallocated money for  FY 17.                                                                    
He reasoned what  better place to utilize some  of the funds                                                                    
than  in reforming  the state's  Medicaid system.  The trust                                                                    
would look a little different  going forward but it had been                                                                    
faced  with prioritizing  and rethinking  its strategies  in                                                                    
order to  commit nearly $10  million over 3 years  to assist                                                                    
with Medicaid reform.                                                                                                           
                                                                                                                                
4:20:46 PM                                                                                                                    
                                                                                                                                
Representative Wilson  spoke to an earlier  question related                                                                    
to OCS. She remarked Mr.  Jessee had relayed the trust would                                                                    
talk  to  providers. She  stated  sadly  enough many  people                                                                    
involved in  OCS probably did  not even know  they qualified                                                                    
for Medicaid.  She asked if  AMHTA would have a  better idea                                                                    
about  which  services  were missing  that  may  be  causing                                                                    
children to be  out of the home longer  because parents were                                                                    
on waitlists trying to get services.                                                                                            
                                                                                                                                
Mr. Jessee replied  in the affirmative. He  it was something                                                                    
the  state's  behavioral  health system  should  be  working                                                                    
hand-in-glove with  OCS to ensure that  every parent running                                                                    
into trouble due to a  behavioral health problem was getting                                                                    
treatment  or  support  for  recovery   as  quickly  and  as                                                                    
comprehensively  as possible.  He continued  it would  drive                                                                    
down   foster   home   placements  and   adverse   childhood                                                                    
experiences.                                                                                                                    
                                                                                                                                
Representative  Wilson would  greatly appreciate  if one  of                                                                    
the trust's focus groups could  reach out to parents to help                                                                    
them better understand the options  available. She noted she                                                                    
would participate in the work as much as she was permitted.                                                                     
                                                                                                                                
Mr.   Jessee   thanked   Representative   Wilson   for   the                                                                    
suggestion.                                                                                                                     
                                                                                                                                
Vice-Chair   Saddler   thanked   AMHTA  for   allocating   a                                                                    
significant amount of money for  the projects. He understood                                                                    
the trust  had reworked  its finances to  dedicate resources                                                                    
to the  effort, which gave  him increased confidence  in the                                                                    
worthwhile nature of work.                                                                                                      
                                                                                                                                
Representative  Gara  remarked  sometimes AMHTA  would  fund                                                                    
things so  the state did not  have to pay for  them and when                                                                    
AMHTA was no longer able to  fund the items the state picked                                                                    
up the expenses.  He spoke to the importance of  some of the                                                                    
efforts.  He   asked  if   the  trust's   contributions  (of                                                                    
approximately $10 million) to  the fiscal notes would reduce                                                                    
AMHTA's contributions to other  state services and grants in                                                                    
the budget.                                                                                                                     
                                                                                                                                
Mr. Jessee  did not believe  any MHTAAR had  been negatively                                                                    
impacted  in  FY  16.  The  trust  had  already  made  those                                                                    
commitments  to  the  state  and would  not  renege  on  the                                                                    
contribution.  The belt  tightening  had  been in  authority                                                                    
grants  AMHTA administered  itself and  not in  what it  had                                                                    
already committed to the state.                                                                                                 
                                                                                                                                
4:24:09 PM                                                                                                                    
                                                                                                                                
Representative   Gara   noted   that   administrative   belt                                                                    
tightening was  fine. He  asked if  there were  services the                                                                    
trust could  not give  to its beneficiaries  as a  result of                                                                    
its contribution to the cost of SB 74.                                                                                          
                                                                                                                                
Mr.  Jessee answered  with an  example related  to substance                                                                    
abuse prevention and  treatment in FY 17.  The specific area                                                                    
had  several   hundred  thousand  dollars   for  undeveloped                                                                    
strategies  to reduce  the substance  abuse problems  in the                                                                    
state. A project that had  not yet been developed would lose                                                                    
funding; however,  the trust had considered  the highest and                                                                    
best  use for  the  funds  and had  determined  it would  be                                                                    
better  to  contribute  to the  bill's  effort  of  Medicaid                                                                    
reform,  which  was  critical and  would  provide  far  more                                                                    
services to the same beneficiaries for generations to come.                                                                     
                                                                                                                                
Representative  Gara asked  how  much on  average the  trust                                                                    
spun off in  the past few years in terms  of assets spent on                                                                    
beneficiaries through  the budget.  Mr. Jessee  replied that                                                                    
the trustees had about $24  million to $25 million per year,                                                                    
which  funded the  trust  administrative  budget, the  Trust                                                                    
Land  Office  under  the Department  of  Natural  Resources,                                                                    
funds  that went  through state  government  as MHTAAR,  and                                                                    
authority grants administered by the trust.                                                                                     
                                                                                                                                
Representative   Gara   asked    if   the   trust's   MHTAAR                                                                    
contribution to  the budget  would decrease  as a  result of                                                                    
providing funds for  items in the bill.  Mr. Jessee answered                                                                    
that  a sizeable  amount of  the funding  was in  the fiscal                                                                    
notes and would  go through the state. He  believed it would                                                                    
have  been allocated  between  MHTAAR  and authority  grants                                                                    
about the  same way if funds  were not directed at  the bill                                                                    
package. He  added MHTAAR  and authority  grant expenditures                                                                    
were generally pretty evenly balanced.                                                                                          
                                                                                                                                
Representative  Gara  remarked  he  had  a  feeling  he  was                                                                    
chasing something he would not get on the record.                                                                               
                                                                                                                                
CSSB 74(FIN) am was HEARD  and HELD in committee for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Thompson  addressed the schedule for  the following                                                                    
meeting.                                                                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
4:27:58 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 4:27 p.m.                                                                                          

Document Name Date/Time Subjects
SB 74 Trust Participation in Medicaid Reform Fiscal Notes 20160316.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS BH 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS Medicaid HCMS 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS Medicaid SDMS 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS PA 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS PH 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS Rate Review 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS SDS CBG 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS SDS CDDG 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN DHSS SDS GR 031716.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 NEW FN LAW Criminal Div 031816.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB074CS(FIN)am-DHSS-SDSA-3-17-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB074CS(FIN)am-DHSS-MAA-3-18-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB074CS(FIN)am-DHSS-CO-3-17-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB074CS(FIN)am-DHSS-BHMS-3-17-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 Committee Followup 3-30-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 Responses -Waivers HFIN 3-29-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74
SB 74 Responses HFIN 3-29-16.pdf HFIN 3/29/2016 1:30:00 PM
SB 74