Legislature(2021 - 2022)ADAMS 519

03/17/2021 01:30 PM FINANCE

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01:32:14 PM Start
01:33:23 PM Fy 22 Budget Overview: Department of Health and Social Services
02:39:49 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Overview: FY 21 & FY 22 Budget Overview & Update TELECONFERENCED
by Dept. of Health & Social Services
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 17, 2021                                                                                            
                         1:32 p.m.                                                                                              
1:32:14 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:32 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Kelly Merrick, Co-Chair                                                                                          
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Bryce Edgmon                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Bart LeBon                                                                                                       
Representative Sara Rasmussen                                                                                                   
Representative Steve Thompson                                                                                                   
Representative Adam Wool                                                                                                        
MEMBERS ABSENT                                                                                                                
Representative DeLena Johnson                                                                                                   
PRESENT VIA TELECONFERENCE                                                                                                    
Sylvan  Robb, Assistant  Commissioner, Department  of Health                                                                    
and  Social Services;  Clinton Lasley,  Deputy Commissioner,                                                                    
Department  of  Health  and Social  Services;  Albert  Wall,                                                                    
Deputy  Commissioner,   Department  of  Health   and  Social                                                                    
FY  22  BUDGET OVERVIEW:  DEPARTMENT  OF  HEALTH AND  SOCIAL                                                                    
Co-Chair Foster reviewed the meeting agenda.                                                                                    
^FY  22 BUDGET  OVERVIEW:  DEPARTMENT OF  HEALTH AND  SOCIAL                                                                  
1:33:23 PM                                                                                                                    
SYLVAN  ROBB, ASSISTANT  COMMISSIONER, DEPARTMENT  OF HEALTH                                                                    
AND  SOCIAL   SERVICES  (via  teleconference),   provided  a                                                                    
PowerPoint  presentation titled  "Department  of Health  and                                                                    
Social Services:  House Finance Committee  Budget Overview,"                                                                    
dated  March  17, 2021  (copy  on  file). She  informed  the                                                                    
committee that all of the  budget slides reflected the FY 21                                                                    
management plan and  the governor's FY 22  budget. She noted                                                                    
that divisions  with supplemental requests and  items in the                                                                    
governor's  amended  budget  that   were  not  part  of  the                                                                    
reorganization had been noted on the relevant slides.                                                                           
Ms. Robb  began with a  bar chart reflecting  the Department                                                                    
of Health  and Social Services (DHSS)  operating budget from                                                                    
FY 19  to FY 22.  She noted that [federal]  COVID-19 related                                                                    
funding  was  shown  as  a  separate  section  of  the  bars                                                                    
[reflected  in yellow]  to make  it easier  to see  what was                                                                    
happening with  the department's  regular budget  from year-                                                                    
to-year.  She directed  attention to  a table  in the  lower                                                                    
portion  of  the  slide  and   highlighted  the  row  titled                                                                    
"Subtotal   regular."   The   middle   column   showed   the                                                                    
department's  proposed  FY  22  budget  at  just  over  $3.4                                                                    
billion, including  $1.1 billion undesignated  general funds                                                                    
Ms. Robb  reported there  was a  reduction of  $40.5 million                                                                    
from  FY  21.  She  pointed  out that  $35  million  of  the                                                                    
reduction was  related to Medicaid. She  explained that DHSS                                                                    
had  proposed carryforward  language  in the  amount of  $35                                                                    
million for Medicaid, which would  be addressed in detail on                                                                    
subsequent  slides. She  stated that  the department's  true                                                                    
reduction was about $5.5 million  from FY 21. She pointed to                                                                    
the  top  row  of  the  table reflecting  UGF  and  noted  a                                                                    
reduction of  about $44  million, of  which $35  million was                                                                    
related to  Medicaid. She  planned to speak  to the  rest of                                                                    
the  reductions on  individual slides.  She noted  there was                                                                    
also a slide designated to  COVID-19 funding received by the                                                                    
1:36:00 PM                                                                                                                    
Ms. Robb  turned to slide  3 beginning with the  Division of                                                                    
Public Health. She communicated  that federal COVID-19 money                                                                    
had come into  DHSS through the division.  She remarked that                                                                    
the  division had  very busy  year  and had  been front  and                                                                    
center  in  the  state's  response   to  the  pandemic.  She                                                                    
highlighted   several  areas   in  the   division  including                                                                    
epidemiology, public  health nursing, and the  public health                                                                    
labs. The  slide showed a  bar chart where  COVID-19 funding                                                                    
had  been broken  out.  She  added that  the  slide did  not                                                                    
reflect the  full amount of  federal COVID  funding received                                                                    
because  the number  was constantly  changing  as new  bills                                                                    
were  passed   and  additional   resources  came   into  the                                                                    
Ms.  Robb  relayed that  to  date,  DHSS had  received  $586                                                                    
million  in  COVID   mitigation  funding  through  emergency                                                                    
programs  within   the  Division   of  Public   Health.  She                                                                    
addressed the  division's non-COVID  related portion  of the                                                                    
FY  22 budget,  which accounted  for $122  million including                                                                    
$43.3  million  UGF. She  noted  the  amount constituted  an                                                                    
increase  of  $3.7  million  relative  to  FY  21.  The  UGF                                                                    
increase  of $1.1  million  was primarily  the  result of  a                                                                    
nurse classification  study and the majority  of the federal                                                                    
increase  of $740,000  was also  related to  the study.  She                                                                    
reported  that the  other large  change was  a $1.6  million                                                                    
increase in "other" funds. She  elaborated that $900,000 was                                                                    
related to  the Ryan White  AIDS Drug Assistance  Program, -                                                                    
federal funding  that came into the  department as statutory                                                                    
designated  program receipts  because  it  was an  insurance                                                                    
reimbursement  type   of  funding.  The  remainder   of  the                                                                    
increase in  other funds  was the third  year of  funding on                                                                    
the  fiscal   note  for  the  SHARP-3   program  focused  on                                                                    
increasing healthcare providers.                                                                                                
Ms. Robb pointed to the dark  blue box on the right of slide                                                                    
3  and  explained  that the  budget  transferred  the  chief                                                                    
medical officer  position, currently held by  Dr. Anne Zink,                                                                    
from   the   Division  of   Public   Health   to  the   DHSS                                                                    
commissioner's office for better alignment.                                                                                     
1:38:47 PM                                                                                                                    
Ms.  Robb  moved to  slide  4  and  reported that  DHSS  had                                                                    
received a  total $585,732,657 in  COVID funding.  The slide                                                                    
listed major funding sources in  addition to the Coronavirus                                                                    
Relief  Fund (CRF)  previously discussed  by  the Office  of                                                                    
Management  and  budget  a  couple  of  weeks  earlier.  The                                                                    
department  had received  money from  the Federal  Emergency                                                                    
Management   Agency  for   testing,  setting   up  temporary                                                                    
overflow sites like the Carlson  Center and Centennial Hall,                                                                    
purchasing personal  protective equipment (PPE),  and hiring                                                                    
nonpermanent  staff  to  help with  the  increased  workload                                                                    
caused by the pandemic.  The department had received funding                                                                    
from  the Centers  for Disease  Control  and Prevention  for                                                                    
contact  tracing,  vaccines,  and building  up  the  state's                                                                    
epidemiology  and laboratory  capacity  in  response to  the                                                                    
Ms.  Robb continued  reviewing major  federal COVID  funding                                                                    
sources  on slide  4. She  reported that  the Administration                                                                    
for Children and Families had  provided $6.5 million through                                                                    
the  Childcare  Development  Fund as  capacity  building  to                                                                    
reduce closures of  childcare facilities. The Administration                                                                    
for Community  Living provided an  additional $4  million in                                                                    
funding  for seniors  for support  services, meal  programs,                                                                    
caregiver  support, and  ombudsman programs.  The department                                                                    
had  also   received  emergency  grants  funding   from  the                                                                    
Substance  Abuse and  Mental Health  Services Administration                                                                    
to  address the  mental health  and substance  use disorders                                                                    
that had occurred due to COVID-19.                                                                                              
Ms. Robb relayed that the  total DHSS COVID funding on slide                                                                    
4 did not  include $94 million UGF  the previous legislature                                                                    
appropriated at  the end  of session  in 2020.  She reported                                                                    
that to  date, none of the  $94 million had been  spent. She                                                                    
elaborated that  DHSS had  not used  the funding  to replace                                                                    
any General  Fund (GF) expenses  within the  department with                                                                    
the  exception  of  Medicaid. She  explained  that  the  CRF                                                                    
guidelines  did  not allow  funding  to  be used  for  items                                                                    
already included  in the budget  with a few  exceptions. The                                                                    
funding had only  been used for COVID  mitigation efforts by                                                                    
the department  and by other entities  including other state                                                                    
agencies  and  community  partners such  as  nonprofits  and                                                                    
Ms.  Robb stated  that the  most significant  impact on  the                                                                    
department's FY  22 budget  from all  of the  incoming COVID                                                                    
funding was through the  enhanced Federal Medical Assistance                                                                    
Percentage (FMAP)  for Medicaid.  She expounded that  it had                                                                    
enabled the  department to have  the funds available  to ask                                                                    
for  the carryforward.  Other impacts  in the  FY 22  budget                                                                    
related  to  the COVID  relief  funds  was the  department's                                                                    
request  for carryforward  of the  UGF funding  in order  to                                                                    
have funding  available for  emergencies. She  remarked that                                                                    
it had become  evident over the past year  that things could                                                                    
change rapidly in unexpected ways.  She reiterated that DHSS                                                                    
had not spent  any of the UGF [allocated  by the legislature                                                                    
in 2020] and it did  not anticipate needing to; however, the                                                                    
department wanted  the ability  to act quickly  if something                                                                    
changed quickly.                                                                                                                
Ms.  Robb understood  there were  many  questions about  the                                                                    
American  Rescue Plan  Act  (ARPA) that  had  passed at  the                                                                    
federal level  the previous week.  She shared that  DHSS was                                                                    
still in the information gathering  stage on all elements of                                                                    
the  legislation.   She  explained  that  the   Centers  for                                                                    
Medicare and  Medicaid Services (CMS) had  not yet published                                                                    
any guidance  on the bill,  including what  requirements may                                                                    
be attached  to each  of the  flexibilities included  in the                                                                    
1:42:35 PM                                                                                                                    
Ms.  Robb explained  that the  state was  in the  process of                                                                    
doing  a  full  review  of ARPA  as  it  received  [federal]                                                                    
guidance,  which  would  enable   DHSS  to  determine  which                                                                    
options may be  in the state's best interest  to pursue. She                                                                    
reminded committee  members that after the  Coronavirus Aid,                                                                    
Relief, and Economic Security (CARES)  Act had passed it had                                                                    
taken over  a month  to receive  guidance from  the Treasury                                                                    
Department  on  the appropriate  uses.  She  added that  the                                                                    
Treasury had  continued to send  updated guidance up  to six                                                                    
months after  the bill  had passed.  She remarked  that DHSS                                                                    
shared  legislators'  excitement   about  learning  how  the                                                                    
additional resources may  help the state and  how they could                                                                    
be  used. The  department looked  forward to  being able  to                                                                    
share the information when it became available.                                                                                 
Representative  Josephson  referenced  the  American  Rescue                                                                    
Plan.  He saw  that the  plan would  give a  five-year state                                                                    
plan option  of health coverage  for women and  children for                                                                    
five years instead  of the customary 60  days. He referenced                                                                    
provision  for an  85  percent FMAP  for  mental health  and                                                                    
substance  use disorders.  He highlighted  another provision                                                                    
with a 5  percent temporary FMAP where a  state had expanded                                                                    
into  Medicaid  to  help  cover  mandatory  individuals.  He                                                                    
considered that there were numerous  options the state could                                                                    
select. He  asked if the  legislature should  broadly assume                                                                    
the  administration  wanted  every resource  the  state  was                                                                    
entitled  to. He  asked if  the  administration intended  to                                                                    
accept the generosity afforded to  it by Congress or whether                                                                    
it was being more selective.                                                                                                    
Ms.  Robb  asked  Representative  Josephson  to  repeat  the                                                                    
1:45:22 PM                                                                                                                    
Representative  Josephson stated  that  the legislature  was                                                                    
hearing there were numerous options  for enhanced FMAP under                                                                    
ARPA. He highlighted  examples of FMAP for  mental health or                                                                    
substance  use  disorders  and young  mothers  with  newborn                                                                    
children. Additionally, there  was an FMAP of  5 percent for                                                                    
states  that had  expanded Medicaid.  Under the  scenario he                                                                    
presumed the percentage  may increase from 56.2  to 61.2. He                                                                    
stated there were many enhancements  of FMAP rates. He asked                                                                    
if  the legislature  should expect  that the  administration                                                                    
would accept the funds or use a "wait and see" approach.                                                                        
Ms.  Robb  replied that  the  department  was interested  in                                                                    
obtaining  the  support it  could  use  and  it was  in  the                                                                    
process  of  reviewing   the  enhancements.  The  department                                                                    
wanted to ensure it did  not obligate itself to something it                                                                    
may  not be  interested  in continuing  in  the future.  She                                                                    
highlighted that many of the  programs came with maintenance                                                                    
of effort  and other similar requirements.  She communicated                                                                    
that DHSS wanted to ensure it  had done its due diligence as                                                                    
it  took advantage  of the  available options.  She reported                                                                    
that  the  department  was interested  in  getting  as  many                                                                    
resources  as  possible  to  help  vulnerable  Alaskans  and                                                                    
people struggling with the pandemic.                                                                                            
Ms.  Robb  advanced to  slide  5  titled "Medicaid  Services                                                                    
Operating  Budget  Comparison  FY2019-FY2022."  She  relayed                                                                    
that  Medicaid  accounted for  the  largest  portion of  the                                                                    
department's budget.  She noted  that depending on  the year                                                                    
and the size of the  Permanent Fund Dividend (PFD), Medicaid                                                                    
could be  the largest item  in the entire state  budget. She                                                                    
discussed  that Medicaid  was an  open entitlement  program,                                                                    
meaning  anyone   who  met  the  eligibility   criteria  was                                                                    
entitled  to services.  The proposed  FY 22  Medicaid budget                                                                    
was $2.4 billion,  including $610 UGF. The  slide showed the                                                                    
governor's  proposed  reduction  of  $35  million  UGF.  She                                                                    
explained  that   the  budget  bill   included  carryforward                                                                    
language that  would allow  DHSS to  carryforward up  to $35                                                                    
million, which would result in a  flat budget for FY 22. She                                                                    
detailed that having  the grace year of  time before needing                                                                    
to  implement the  reduction would  give DHSS  time to  work                                                                    
with  CMS  and  partners  to  find  sustainable  changes  to                                                                    
implement for FY 23.                                                                                                            
Ms. Robb  discussed that  Medicaid was  paid for  jointly by                                                                    
the state  and federal  government; the  amount paid  by the                                                                    
federal  government was  determined  by the  FMAP rate.  She                                                                    
explained  that  the  state  had  a  number  of  FMAP  rates                                                                    
depending on  the population  being served  and the  type of                                                                    
services. She  elaborated that the  blended rate  across all                                                                    
program  recipients  tended  to  hover  between  72  and  73                                                                    
percent federal. The reason DHSS  had money to carry forward                                                                    
into FY  22 was due  to the enhanced  FMAP rate it  had been                                                                    
receiving during the pandemic  of an additional 6.2 percent.                                                                    
She relayed that  the rate would continue through  FY 21 and                                                                    
the department projected that after  the carryforward of $35                                                                    
million, the department  would be able to  lapse $65 million                                                                    
in  FY   22.  She  informed  the   committee  that  Medicaid                                                                    
currently  had about  262,000 enrollees.  Part of  the lapse                                                                    
the  department  was  projecting  was  due  to  decrease  in                                                                    
utilization,  which  was  currently   running  at  about  77                                                                    
1:49:19 PM                                                                                                                    
Ms.  Robb  advanced to  slide  6  pertaining to  the  Alaska                                                                    
Psychiatric Institute  (API). She  noted that  in FY  19 API                                                                    
had been  part of the  Division of Behavioral Health  and in                                                                    
FY  20  it  became  its own  appropriation.  The  governor's                                                                    
proposed API budget was $55.6  million including $15 million                                                                    
UGF. She reported  that the division's budget  was flat from                                                                    
FY 21  to FY 22. She  detailed that the largest  fund source                                                                    
change was a  fund source shift from  other funds, primarily                                                                    
comprised  of statutory  designated program  receipts (SDPR)                                                                    
and  interagency  receipts,  which  had  turned  out  to  be                                                                    
uncollectible for API. She  expounded that the uncollectible                                                                    
fund  sources were  shifted to  mental health  trust reserve                                                                    
funding.  She noted  that the  hollow receipt  authority was                                                                    
also  an  issue  for  API  in FY  21;  therefore,  DHSS  had                                                                    
requested a $6 million supplemental  for FY 21 (shown in the                                                                    
navy box on the right of the slide).                                                                                            
1:50:55 PM                                                                                                                    
Representative Wool  asked how many patients  were currently                                                                    
being served at API for $55 million per year.                                                                                   
Ms. Robb asked Representative Wool to repeat the question.                                                                      
Representative Wool  queried the current number  of patients                                                                    
at API.                                                                                                                         
Ms. Robb deferred the question to a colleague.                                                                                  
CLINTON  LASLEY, DEPUTY  COMMISSIONER, DEPARTMENT  OF HEALTH                                                                    
AND  SOCIAL SERVICES  (via  teleconference), responded  that                                                                    
API  had  a  current  bed   capacity  of  60.  The  facility                                                                    
currently had 56 patients.                                                                                                      
Representative Wool  asked if  $1 million  per bed  per year                                                                    
was a standard  or high cost for a  publicly run psychiatric                                                                    
Mr. Lasley  responded that  he did not  have the  numbers on                                                                    
hand  and  would  follow  up  in  writing.  He  shared  that                                                                    
typically the  facility had an  80 bed capacity and  API had                                                                    
been  working   toward  returning   to  full   capacity.  He                                                                    
explained that  COVID had forced  API to slow things  down a                                                                    
bit. His expectation  was to reach full capacity  by the end                                                                    
of the calendar year.                                                                                                           
Representative Wool  recalled there  had not been  many more                                                                    
than 50 patients  for years. He understood that  in the past                                                                    
the facility had  been limited in the number  of patients it                                                                    
could bring in  due to staffing limitations.  He wondered if                                                                    
$1 million  per bed per  year was standard. He  believed the                                                                    
cost seemed  high. He asked  about the $6 million  taken out                                                                    
of the  mental health  trust reserve  because the  money had                                                                    
been uncollectible from  the SDPR fund source.  He asked for                                                                    
more detail on why the funds had been uncollectible.                                                                            
Ms. Robb explained that SDPR  funds came into the state from                                                                    
nongovernment sources. She detailed  that several years back                                                                    
there  had been  an effort  to try  to use  SDPR funding  as                                                                    
there  had been  anticipation that  API patients  would have                                                                    
private insurance or other sources  the state could bill for                                                                    
treatment. She elaborated  that it had not turned  out to be                                                                    
the  case over  the years.  She relayed  that the  Office of                                                                    
Management  and Budget  (OMB) had  directed DHSS  toward the                                                                    
mental health trust reserve fund.                                                                                               
1:54:51 PM                                                                                                                    
Representative Rasmussen  stated it would be  interesting to                                                                    
receive a  comparison between  API and  some of  the private                                                                    
hospitals. She  shared that  when her  daughter had  been in                                                                    
the  NICU  [Newborn  Intensive   Care  Unit]  at  Providence                                                                    
Hospital for ten days the bill had been over $150,000.                                                                          
Ms. Robb addressed the Division  of Behavioral Health budget                                                                    
on slide  7. She reminded  the committee  that in FY  19 API                                                                    
had  been   part  of  the  Division   of  Behavioral  Health                                                                    
appropriation.  She explained  that API  had become  its own                                                                    
appropriation in FY  20, but the figures shown  on the chart                                                                    
for FY 19  did not include the cost for  API. The division's                                                                    
proposed  FY 22  budget  was $89.2  million including  $28.3                                                                    
million UGF.  She listed the  biggest change as  a reduction                                                                    
of  nearly $750,000  in other  funding. She  elaborated that                                                                    
the  increment  had  been one-time  funding  for  a  housing                                                                    
assertive   treatment   institutional   diversion   program.                                                                    
Additionally, there  was a  $208,000 reduction  in authority                                                                    
for  sobering  centers  as   they  transitioned  to  support                                                                    
through the 1115 Medicaid waiver.                                                                                               
Ms. Robb pointed to the dark  blue box on the right of slide                                                                    
7 indicating  a supplemental request resulting  from a court                                                                    
settlement  with the  Disability  Law  Center. She  reported                                                                    
that the  amount had not been  included in the FY  21 budget                                                                    
passed the  previous spring because  the settlement  had not                                                                    
been  finalized when  the budget  was signed  into law.  She                                                                    
briefly explained that the settlement  related to how mental                                                                    
health  patients   were  being   held  prior   to  receiving                                                                    
treatment from healthcare professionals.                                                                                        
1:57:19 PM                                                                                                                    
Representative  Josephson referenced  the behavioral  health                                                                    
grants  that  had  been  reduced. He  relayed  that  he  had                                                                    
learned in the DHSS  subcommittee that Medicaid was covering                                                                    
most  of  the  grants  through  the  1115  waiver  and  that                                                                    
individuals who were not familiar  with the specific billing                                                                    
system  had been  assisted. He  shared that  earlier in  the                                                                    
week he  had a Zoom  meeting with the  umbrella organization                                                                    
for  facilities housing  troubled  youth in  Alaska. He  had                                                                    
learned on  the call  there were  problems with  rule making                                                                    
and that  an extension or  help was needed with  rule making                                                                    
and coding. He  understood that the state  had assisted with                                                                    
obtaining  an   extension,  but  another  was   needed.  The                                                                    
organization  had  told  him there  were  behavioral  health                                                                    
recipients who  performed valuable  services that  could not                                                                    
be fit into the Medicaid  square. He asked the department to                                                                    
comment on the topic.                                                                                                           
Ms. Robb deferred the question to a colleague.                                                                                  
ALBERT WALL,  DEPUTY COMMISSIONER, DEPARTMENT OF  HEALTH AND                                                                    
SOCIAL SERVICES  (via teleconference),  replied that  he was                                                                    
having   difficulty  hearing   due  to   poor  weather.   He                                                                    
understood  the  question  pertained  to  behavioral  health                                                                    
recipients who  could not  bill for  services. He  asked for                                                                    
clarification on the question.                                                                                                  
Representative Josephson  complied. He  relayed that  he had                                                                    
learned in the DHSS  subcommittee that Medicaid was covering                                                                    
most of the grants through  the 1115 waiver; however, he was                                                                    
hearing it was  not always the case. He  shared that earlier                                                                    
in  the week  he  had  a remote  meeting  with the  umbrella                                                                    
organization  for  facilities   housing  troubled  youth  in                                                                    
Alaska  (e.g.,  the  Johnson   Youth  Services  facility  in                                                                    
Juneau).  He stated  that the  organization was  having real                                                                    
concerns about meeting its budgets.  He asked the department                                                                    
to comment on the topic.                                                                                                        
Mr. Wall replied that there  had been some conversation with                                                                    
the  Alaska Association  of Homes  for Children.  He relayed                                                                    
the  organization  had  expressed some  concerns  about  the                                                                    
rates under the  1115 waiver meeting its  costs and allowing                                                                    
the organization the flexibility to  be creative with how it                                                                    
was  providing  services. He  reported  that  DHSS had  just                                                                    
finished meeting  with the Alaska  Association of  Homes for                                                                    
Children  regarding the  issue  and DHSS  was  setting up  a                                                                    
series  of meetings  with the  organization to  walk through                                                                    
the process.  He believed the  1115 rates  were sustainable.                                                                    
He added  that if an  issue was discovered, DHSS  would have                                                                    
to consider what it would do with the rates.                                                                                    
2:01:21 PM                                                                                                                    
Ms.  Robb  reviewed the  Division  of  Health Care  Services                                                                    
budget on slide  8. She explained that  the division managed                                                                    
healthcare coverage  for Alaskans  in need. The  proposed FY                                                                    
22 budget  was $20.2 million  including $7 million  UGF. The                                                                    
largest  difference between  FY  21  and FY  22  was a  fund                                                                    
source  change   from  UGF  to  DGF   related  to  licensing                                                                    
activities. She  detailed that the division  was responsible                                                                    
for   licensing   hospitals,    clinics,   and   residential                                                                    
facilities for  healthcare. She reported  that for  the past                                                                    
couple  of  years  the division  had  been  collecting  more                                                                    
licensing  fees  than  it  had the  authority  to  use.  She                                                                    
elaborated that  by increasing  the authority,  the division                                                                    
would be  able to use  all of the fees  and let the  UGF go.                                                                    
Additionally, the  other UGF savings  would result  from the                                                                    
reduction  of  some  of  the   division's  leased  space  in                                                                    
Anchorage. She  pointed to  the dark blue  box on  the right                                                                    
showing  funding   for  the  nurse   salary  study   in  the                                                                    
governor's amended budget.                                                                                                      
2:03:05 PM                                                                                                                    
Ms. Robb moved  to slide 9 and addressed the  budget for the                                                                    
Division of  Senior and Disabilities Services.  The division                                                                    
was responsible  for ensuring  seniors and  other vulnerable                                                                    
Alaskans  had   the  long-term   supports  needed   to  live                                                                    
independently  with   as  much   choice  as   possible.  The                                                                    
division's  proposed   FY  22   budget  was   $63.1  million                                                                    
including  $37   million  UGF.  She  noted   there  was  not                                                                    
significant change  in the division's  budget from FY  21 to                                                                    
FY 22.  She highlighted  a $334,000 increase.  She explained                                                                    
that  the  majority  of  the  UGF  decrease  was  due  to  a                                                                    
reduction in general relief assisted  living home support to                                                                    
match the  program usage. She  expounded that the  number of                                                                    
applicants using the program had decreased.                                                                                     
2:04:09 PM                                                                                                                    
Ms. Robb  looked at slide  10 pertaining to the  Division of                                                                    
Public  Assistance.  She  noted that  senior  benefits  were                                                                    
administered by the division and  was included in the budget                                                                    
as its  own appropriation. She elaborated  that the division                                                                    
administered about one dozen  other assistance programs that                                                                    
provided  support to  Alaskans.  Additionally, the  division                                                                    
determined Medicaid eligibility.  The division's proposed FY                                                                    
22  budget was  $287 million  including $125.2  million UGF.                                                                    
She added that $21 million of  the total and the UGF was for                                                                    
the  senior  benefits program,  which  was  100 percent  UGF                                                                    
funded. She highlighted that the  FY 22 budget was about $10                                                                    
million less than  the FY 21 budget, which  was evenly split                                                                    
between UGF and  federal; about $7 million  of the reduction                                                                    
was  related   to  the  reduction  of   121  positions.  She                                                                    
expounded that  20 of the  positions had been added  in 2018                                                                    
to allow the  division to catch up on  a processing backlog,                                                                    
which had been accomplished.  The remainder of the positions                                                                    
would possibly  be reduced through  efficiencies implemented                                                                    
by the division.  She explained that the  positions would be                                                                    
reduced through attrition over time.                                                                                            
Ms.  Robb  continued  to  review   the  Division  of  Public                                                                    
Assistance  budget on  slide 10.  She shared  that with  the                                                                    
pandemic,   the  division   had  instituted   an  electronic                                                                    
document management  system that  had been  very successful.                                                                    
She  detailed that  the system  moved  toward having  online                                                                    
certification  for people  receiving benefits  and to  allow                                                                    
beneficiaries to  provide updated information as  needed. In                                                                    
FY 20,  the division had  served more than  3,000 individual                                                                    
Alaskans  and approximately  4 million  pieces of  mail. She                                                                    
explained  that   transitioning  the  workload  to   a  more                                                                    
efficient  electronic  processing  method  had  offered  big                                                                    
gains for the division in  terms of personnel and savings in                                                                    
office supplies  such as postage  and paper. She  pointed to                                                                    
the dark blue  box on the right showing  FY 21 supplementals                                                                    
including  $1.2   million  UGF   to  support   adult  public                                                                    
assistance  benefit payments  and $13.5  million to  support                                                                    
the  governor's  proposal  to   pay  the  remainder  of  the                                                                    
statutory  PFD in  FY 21.  The box  also included  an FY  22                                                                    
amended  item   of  $2  million  to   support  adult  public                                                                    
2:08:08 PM                                                                                                                    
Ms.  Robb advanced  to the  Alaska Pioneer  Homes budget  on                                                                    
slide  11. The  proposed  FY 22  budget  was $104.8  million                                                                    
including  $40.9  million  UGF.  She  highlighted  that  the                                                                    
budget  was relatively  flat from  FY 21  to FY  22 with  an                                                                    
increase of $305,000. She reminded  the committee that in FY                                                                    
20, the levels of care had increased from three to five.                                                                        
Ms. Robb turned  to the Office of  Children's Services (OCS)                                                                    
budget  on slide  12. The  proposed  FY 22  budget was  $177                                                                    
million including $93 million  UGF. She highlighted a budget                                                                    
increase  of $1.8  million  from  FY 21.  She  pointed to  a                                                                    
reduction of  $963,000 UGF,  of which,  $528,000 was  from a                                                                    
reduction  in the  Circles of  Support grant.  She explained                                                                    
that grantees  had not been  utilizing the grant as  much as                                                                    
the division  had hoped. She reported  that nearly one-third                                                                    
of the  funding had  not been  utilized; therefore,  OCS was                                                                    
seeking to  provide the services through  other avenues. The                                                                    
division had also switched to  a laptop focus when computers                                                                    
were refreshed,  which had resulted  in savings  in computer                                                                    
purchases of $186,000 UGF.                                                                                                      
Ms. Robb  continued to  review the OCS  budget on  slide 12.                                                                    
She  highlighted   a  federal  increase  of   $2.8  million,                                                                    
primarily comprised  of $2.4 million increase  in subsidized                                                                    
adoptions  and guardianships.  She reported  that cases  had                                                                    
increased by 20 percent since  FY 15 to FY 20. Additionally,                                                                    
the cases  were more complex.  She pointed to the  dark blue                                                                    
box to the  right showing a $3  million supplemental request                                                                    
of   federal  and   GF  match   related   to  adoption   and                                                                    
guardianship. The  blue box  also showed  a $415,000  UGF to                                                                    
ensure   the  department   met  a   maintenance  of   effort                                                                    
requirement related to the adoption and guardianship money.                                                                     
2:11:29 PM                                                                                                                    
Representative Wool  asked if the  number of foster  kids in                                                                    
OCS had continued to increase  or leveled off. He understood                                                                    
there had been a sharp increase for a while.                                                                                    
Ms. Robb deferred the question to Mr. Lasley.                                                                                   
Mr. Lasley answered  there had been a  slight increase year-                                                                    
over-year with children in  out-of-home placement and foster                                                                    
care.  He stated  the pandemic  had been  some of  the cause                                                                    
during  the past  year, partially  because the  court system                                                                    
had not always  been open. He explained that  youth had come                                                                    
in and were  not exiting on the other end  to permanency. He                                                                    
would follow up with the precise numbers in writing.                                                                            
Ms. Robb turned to slide 13  and reviewed the budget for the                                                                    
Division of Juvenile Justice. The  proposed FY 22 budget was                                                                    
$58.5  million including  $55.7  million  UGF. She  reported                                                                    
that overall,  the division's budget was  down $717,000 from                                                                    
FY 21  to FY 22, nearly  all of which was  UGF. She detailed                                                                    
that  the reduction  was achieved  through the  reduction of                                                                    
eight  positions  (five  probation  services  positions  and                                                                    
three  positions   related  to   the  Step  Up   program  in                                                                    
2:13:47 PM                                                                                                                    
Ms. Robb  reviewed the Departmental Support  Services budget                                                                    
on  slide  14.  She  noted that  the  slide  included  three                                                                    
separate  appropriations,   one  for   Departmental  Support                                                                    
Services, one for Human  Services Community matching grants,                                                                    
and  one for  Human Services  Community initiative  matching                                                                    
grants   (both  of   the   Human   Services  programs   were                                                                    
administered   by   Departmental  Support   Services).   She                                                                    
detailed  that the  two grant  programs  accounted for  $2.5                                                                    
million.  The  three appropriations  had  a  proposed FY  22                                                                    
budget  of $48.5  million including  $16.5 million  UGF. She                                                                    
elaborated  that the  budget was  essentially  flat with  an                                                                    
$83,000  increase from  FY 21  to FY  22. She  highlighted a                                                                    
fund source  shift from UGF to  interagency receipts related                                                                    
to  the internal  information technology  chargebacks within                                                                    
the  department. The  blue box  on the  right reflected  the                                                                    
incoming transfer  of the chief medical  officer position to                                                                    
the  commissioner's  office  from  the  Division  of  Public                                                                    
2:15:45 PM                                                                                                                    
Vice-Chair  Ortiz  looked  at  slide 11  and  asked  for  an                                                                    
explanation of the significant increase  from FY 19 to FY 20                                                                    
and beyond in the "other" funding category.                                                                                     
Ms.   Robb  replied   that  the   other  category   included                                                                    
interagency  receipts.   She  explained  that   the  funding                                                                    
category  included  incoming  money to  Pioneer  Homes  from                                                                    
Medicare  and Medicaid.  She detailed  that  a Pioneer  Home                                                                    
payment assistance  component had been  created in FY  20 to                                                                    
make it  easier to see all  of the support going  to Pioneer                                                                    
Home residents.  All of the  incoming Medicaid  and Medicare                                                                    
funds had  been put into  the component. She  expounded that                                                                    
some of the  increase on slide 11  reflected the duplication                                                                    
of funds.  She explained  that because  the funds  needed to                                                                    
move from one component to  another, the budget showed where                                                                    
they  originated in  addition to  where they  were received.                                                                    
She used the transfer of  the chief medical officer position                                                                    
from one division to another as an example.                                                                                     
Vice-Chair Ortiz  asked where the budget  reflected the fees                                                                    
paid by residents.                                                                                                              
Ms. Robb replied that the fees showed up as other funds.                                                                        
2:18:01 PM                                                                                                                    
Representative LeBon  looked at  the $6 million  DGF request                                                                    
in  mental  health trust  authority  funds  to achieve  full                                                                    
capacity at  API (on  slide 6). He  asked how  confident the                                                                    
department  was  that  the   increment  would  achieve  full                                                                    
capacity. He  asked if the  administration would  still fund                                                                    
an additional $6  million from some source  if the increment                                                                    
did not materialize in the budget.                                                                                              
Ms. Robb  deferred the question  about when API  expected to                                                                    
achieve full  capacity to Mr.  Lasley. She would  answer the                                                                    
question on funding after Mr. Lasley's reply.                                                                                   
Mr. Lasley responded that API  had to request a supplemental                                                                    
in  the past  two  years  to cover  the  budget deficit.  He                                                                    
explained  the  $6 million  request  was  to right-size  the                                                                    
facility.  He   discussed  that  there  had   been  hope  of                                                                    
realizing  additional revenue  through  other sources  [SDPR                                                                    
and interagency  receipts], but it had  not materialized. He                                                                    
noted  that the  department was  continuing to  look at  the                                                                    
options. He reported  that the previous spring  API had been                                                                    
at a 50-bed capacity with  full intention of increasing near                                                                    
full capacity. He  detailed that about 14  rooms were double                                                                    
occupancy (28 beds), but patients  had been separated during                                                                    
COVID. Additionally, it had been  necessary to isolate newly                                                                    
admitted patients  for a  given time  period to  ensure they                                                                    
were  COVID-negative. All  of the  things attributed  to not                                                                    
reaching full capacity [in the past year].                                                                                      
Mr. Lasley  reported that API  was currently  working toward                                                                    
opening its  youth unit  open in the  second quarter  of the                                                                    
year (before July  1). He elaborated that  full staffing was                                                                    
in place and  training was underway. He  cautioned that once                                                                    
the 10-bed  unit was open,  youths would be moved  in slowly                                                                    
over several months  in order to ensure  everything was done                                                                    
right. He  relayed that with  the opening of the  youth unit                                                                    
capacity would increase  to 70. He shared  that the hospital                                                                    
was confident  API would  be able to  reach the  full 80-bed                                                                    
capacity  (back  to  the  2018  level) by  the  end  of  the                                                                    
calendar year.                                                                                                                  
Representative  LeBon referenced  the governor's  $6 million                                                                    
request  from  the  Alaska  Mental  Health  Trust  Authority                                                                    
(AMHTA)  for  API.  He   asked  whether  the  administration                                                                    
believed there  was shared clientele  between API  and AMHTA                                                                    
and whether  the $6  million was anticipated  to be  part of                                                                    
API's budget moving forward.                                                                                                    
Ms.  Robb replied  that the  funds were  required by  API to                                                                    
operate on  an ongoing basis.  She stated that DHSS  did not                                                                    
have  a  position  on  whether  the  AMHTA  funds  were  the                                                                    
appropriate source.  She explained  that DHSS  had requested                                                                    
additional  support  from  OMB,  and  it  had  directed  the                                                                    
department to the AMHTA fund source.                                                                                            
2:23:26 PM                                                                                                                    
Representative  Josephson remarked  that on  April 7,  2020,                                                                    
the governor had vetoed $31  million in Medicaid funds and a                                                                    
good portion  had been federal.  He stated that in  2019 the                                                                    
governor  had  wanted  to  spend  hundreds  of  millions  of                                                                    
dollars  less on  Medicaid and  had eventually  vetoed about                                                                    
$150   million   in  FY   20.   He   highlighted  that   the                                                                    
administration  had not  been able  to  implement the  state                                                                    
plan amendment in  the timeframe it wanted.  He had concerns                                                                    
with  Medicaid  funding  and wanted  to  take  advantage  of                                                                    
federal  match. He  asked  if he  should  be comforted  that                                                                    
enough  Coronavirus  Aid,   Relief,  and  Economic  Security                                                                    
(CARES) Act  funding had  come to the  state to  assuage any                                                                    
anxiety he had about the cuts.                                                                                                  
Ms. Robb  answered that in  FY 20 the department  had lapsed                                                                    
$59 million from  Medicaid and was projecting  to lapse $100                                                                    
million  in the  current  year. She  reminded the  committee                                                                    
that  DHSS hoped  to carryforward  $35 million  of the  $100                                                                    
2:25:14 PM                                                                                                                    
Representative Josephson  modified the prior figures  he had                                                                    
provided  with more  precise information.  He detailed  that                                                                    
the FY  21 veto had  been $31 million including  $17 million                                                                    
in federal funds. He noted  that the fact the administration                                                                    
had elected to not fund  $14 million to achieve the matching                                                                    
federal funds gave  him pause. He stated it  sounded like so                                                                    
much additional funding had come  into the state system that                                                                    
places  like   Alaska  State   Hospital  and   Nursing  Home                                                                    
Association   (ASHNHA)  should   be   comforted  there   was                                                                    
sufficient revenue to pay claims and take care of patients.                                                                     
Ms. Robb responded that she could  not speak to who would be                                                                    
comforted  by what.  She reiterated  her previous  statement                                                                    
that DHSS  had more support  for Medicaid than it  could use                                                                    
as a result of the enhanced FMAP.                                                                                               
Representative  Josephson  stated   that  while  ASHNHA  was                                                                    
pleased there was $35 million  in federal backfill to give a                                                                    
status quo budget, the association  had grave concerns there                                                                    
would be  a $35 million  cliff in  FY 24. He  explained that                                                                    
there was  an expectation  the enhanced FMAP  would continue                                                                    
through  the  end of  the  current  year. He  remarked  that                                                                    
ASHNHA  remained  confused  about  long-term  planning  when                                                                    
fiscal cliffs  existed on the  horizon. He noted  there were                                                                    
unconventional funding  sources used  in other parts  of the                                                                    
budget as  well that were  not sustainable. He asked  if the                                                                    
department had a comment about the concern.                                                                                     
Ms. Robb deferred the question to Mr. Wall.                                                                                     
Mr.   Wall   responded   that  the   department   had   been                                                                    
consistently  working  on  the   question  with  ASHNHA.  He                                                                    
reported  that  DHSS  had faced  larger  Medicaid  cuts  and                                                                    
cliffs in  the past.  He explained  that the  department was                                                                    
attempting to  contain costs while  continuing to  provide a                                                                    
superior bandwidth  of service. He elaborated  that projects                                                                    
the department  had discussed were centered  around changing                                                                    
the  way it  provided reimbursement.  For example,  changing                                                                    
bundled  payments through  DRGs [diagnosis-related  groups].                                                                    
He confirmed  there was a cut  coming in the future  and the                                                                    
current  budget would  give DHSS  a  year to  work with  its                                                                    
partners  on  how to  address  the  coming  cut and  how  to                                                                    
continue to provide services at less acuity.                                                                                    
2:28:34 PM                                                                                                                    
Representative Wool  asked about  the $6 million  request to                                                                    
bring API up  to full capacity. He asked if  it had been the                                                                    
limiting  factor  over  the  past  several  years  when  the                                                                    
facility had  been at  50 beds. He  wondered whether  the $6                                                                    
million  was  for  extra  staffing  to bring  in  up  to  80                                                                    
Ms. Robb deferred the question to Mr. Lasley.                                                                                   
Mr. Lasley replied  that due to high turnover,  API had been                                                                    
spending the money  on overtime or locum tenens  in order to                                                                    
have qualified staff.  He reported that over  the past year,                                                                    
the  team at  API  had done  amazing work  and  many of  the                                                                    
critical  positions  had  been filled.  He  elaborated  that                                                                    
staff had been brought in early  for training in order to be                                                                    
prepared to take  on patients. He believed  the facility had                                                                    
the  needed staffing  currently and  turnover had  gone down                                                                    
substantially. He  explained that  instead of having  to ask                                                                    
for  a   supplemental  year  after  year,   the  $6  million                                                                    
increment  would mean  API would  not have  to request  a $6                                                                    
million   supplemental.   He   stated  that   staffing   was                                                                    
sufficient to  allow the  opening of  the 10-bed  youth unit                                                                    
and the additional 10 beds  [in the broader facility] during                                                                    
the current year.                                                                                                               
2:31:06 PM                                                                                                                    
Representative  Wool  asked  for verification  that  the  $6                                                                    
million was  to prevent  the department  from having  to ask                                                                    
for  another  $6  million  in   the  future.  He  noted  the                                                                    
committee had  heard earlier  in the  day about  $94 million                                                                    
leftover  from  the previous  year  that  had not  yet  been                                                                    
tapped.  He relayed  that AMHTA  had informed  the committee                                                                    
that  a  $6 million  draw  from  its reserves  exceeded  the                                                                    
sustainable draw  of 4.25  or 4.75  percent. He  stated that                                                                    
AMHTA did not really want the  draw - which was in violation                                                                    
of its  fund rules -  to take place.  He asked if  API could                                                                    
take the  funds from the $94  million if it did  not receive                                                                    
the $6 million from AMHTA.                                                                                                      
Ms. Robb answered  that DHSS tried very hard  to respect the                                                                    
legislature's  appropriation authority.  She explained  that                                                                    
the $94 million  the department had not  tapped was directed                                                                    
for COVID  response whereas the  $6 million for API  was for                                                                    
ongoing  operations.  She  elaborated that  getting  the  $6                                                                    
million in  the budget was  part of truth in  budgeting. She                                                                    
detailed that  the department had  scrambled to  cover API's                                                                    
budget  for the  past couple  of years  and had  transferred                                                                    
money to  help keep  the institute  afloat. She  stated that                                                                    
the  increment would  help be  more upfront  about the  true                                                                    
cost of running API.                                                                                                            
Representative Wool noted  there was $35 million  due to the                                                                    
Medicaid  [FMAP]  increase  from  50  to  56.2  percent.  He                                                                    
imagined that  many patients at API  were Medicaid patients.                                                                    
He referenced  the department's testimony that  the capacity                                                                    
at API  had been reduced due  to COVID. He pointed  out that                                                                    
AMHTA  had expressed  concern about  taking $6  million from                                                                    
its  reserves. He  wondered whether  there was  a workaround                                                                    
toward  the  goal,  especially  if the  $6  million  was  to                                                                    
preempt a supplemental request that may not happen.                                                                             
Representative  Carpenter looked  at  $415,000  GF match  on                                                                    
slide  12  [for  post   adoption  and  guardianship  savings                                                                    
maintenance  of effort].  He asked  what  the federal  match                                                                    
Ms. Robb  responded that the federal  government had started                                                                    
to cover  more children through the  subsidized adoption and                                                                    
guardianship  program. She  explained  that as  more of  the                                                                    
children  had  been  funded  through  federal  dollars,  the                                                                    
federal government  still required  DHSS to use  the dollars                                                                    
it would have  spent on subsidized adoptions,  in support of                                                                    
the  children. The  $415,000 would  allow DHSS  to meet  the                                                                    
maintenance of effort.                                                                                                          
2:35:25 PM                                                                                                                    
Representative  Carpenter  surmised   it  sounded  like  the                                                                    
department did not know the federal dollar amount.                                                                              
Ms. Robb answered  that the federal funding was  not a match                                                                    
in the  same way  that Medicaid was  matched at  50 percent.                                                                    
She  explained there  was  a requirement  for  the state  to                                                                    
spend  a certain  percentage of  the money  on the  children                                                                    
receiving  subsidized adoptions  and guardianships  who were                                                                    
covered through  the expanded  federal program.  She offered                                                                    
to follow up with the precise number.                                                                                           
Representative Carpenter  requested the number.  He remarked                                                                    
that if the state funds  were matching funds there needed to                                                                    
be a corresponding federal match.  He stated that otherwise,                                                                    
the funding was UGF.                                                                                                            
Representative  LeBon referenced  the $13.5  million request                                                                    
to fully  fund the PFD from  FY 21 (on slide  10). He stated                                                                    
that Alaska was set to receive  over $1 billion in the near-                                                                    
term and many Alaskans were  receiving a federal stimulus of                                                                    
$1,400. He asked  if the department would look  at the $13.5                                                                    
million  as available  funds  to offset  the  AMHTA draw  to                                                                    
support API  if an  additional PFD was  not approved  by the                                                                    
legislature in FY 21.                                                                                                           
Ms.  Robb responded  that if  the legislature  opted not  to                                                                    
approve  the   second  dividend   payment  in  FY   21,  the                                                                    
department would not require the  $13.5 million for the hold                                                                    
harmless  program.   She  stated   that  it  would   not  be                                                                    
appropriate for the department to use the funds for API.                                                                        
Representative  LeBon   asked  if  it  would   help  if  the                                                                    
legislature included  intent language  allowing DHSS  to use                                                                    
the funds for API.                                                                                                              
Ms.  Robb  responded  it would  be  subject  to  legislative                                                                    
Representative LeBon asked for  verification that the action                                                                    
would turn  the funding source  to UGF [as opposed  to AMHTA                                                                    
Ms. Robb replied affirmatively.                                                                                                 
Co-Chair Foster thanked the presenters. He reviewed the                                                                         
schedule for the following day.                                                                                                 
2:39:49 PM                                                                                                                    
The meeting was adjourned at 2:39 p.m.                                                                                          

Document Name Date/Time Subjects
AK CRF Allocations and Expenditures as of 2.26.2021.pdf HFIN 3/17/2021 1:30:00 PM
DHSS - House Finance Committee 3.17.21.pdf HFIN 3/17/2021 1:30:00 PM
Fed COVID-19 Funding to Alaska 2.5.2021.pdf HFIN 3/17/2021 1:30:00 PM
DHSS Overview Response Q HFIN 032921.pdf HFIN 3/17/2021 1:30:00 PM