Legislature(2007 - 2008)HOUSE FINANCE 519
02/06/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Medicaid Program Review | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
February 6, 2007
1:36 p.m.
CALL TO ORDER
Co-Chair Meyer called the joint meeting of the House Finance
Committee, the House Health and Social Services Committee,
and the House Ways and Means Committee to order at 1:36:30
PM.
MEMBERS PRESENT
House Finance Committee
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Richard Foster
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas, Jr.
House Health and Social Services Committee
Representative Peggy Wilson, Chair
Representative Bob Roses, Vice-Chair
Representative Anna Fairclough
Representative Mark Neuman
Representative Paul Seaton
Representative Sharon Cissna
Representative Berta Gardner
House Ways and Means Committee
Representative Mike Hawker, Chair
Representative Anna Fairclough, Vice-Chair
Representative Peggy Wilson
Representative Paul Seaton
Representative Max Gruenberg
Representative Sharon Cissna
Representative Bob Roses
MEMBERS ABSENT
None
ALSO PRESENT
Andy Cohen, Director, The Pacific Health Policy Group; Scott
Wittman, Director, The Pacific Health Policy Group; Senate
President Lyda Green
PRESENT VIA TELECONFERENCE
None
SUMMARY
^Medicaid Program Review
1:36:34 PM
Co-Chair Meyer introduced members of the three committees.
1:37:45 PM
SENATE PRESIDENT LYDA GREEN explained that last year the
Senate Finance Committee released an RFP for a program
review consultant to help the committee understand Medicaid
and to make suggestions on how to improve Alaska's program.
A contract was awarded to the Pacific Health Policy Group
RFP for a program review for the study of the Medicaid
Program. Senator Green recalled a high percent of calls
from Medicaid clients who are frustrated with their health
care, and from health care providers who are frustrated with
the growing paperwork requirements and varied reimbursement
rates. She pointed out that department staff are working
diligently to run the Medicaid program as efficiently as
possible and are equally frustrated with juggling an
overwhelming amount of details that impact every client,
provider, the agency's internal organization, and the
legislature.
Senator Green sympathized with how complex the Medicaid
program is for clients, health care providers, and program
managers, as well as for the budget staff. She noted the
difficulty of finding a remedy through statute if all
legislators do not fully understand the implications of
their actions.
Senator Green related that the first step to better
understanding of Medicaid came from the Department of Health
and Social Services' fiscal forecast prepared by the Lewin
Group and ECONorthwest. The key findings of this report
were:
1. The Medicaid program will change fundamentally over the
next 20 years from one focused on children to a program
geared to caring for Alaska's growing senior and Alaska
Native populations.
2. State matching funds will increase from approximately
$500 million per year to more than $2 billion for a
total program cost of more than $5 billion.
Senator Green reported that ECONorthwest developed a
computer program by which the department can continue to
update data to develop more accurate program criteria and
generate funding forecasts. The establishment of baseline
data and developing the forecasting model is step-one in
implementing program change.
Senator Green explained step two to better understanding of
Medicaid. After recovering from sticker shock of the
projected costs for Medicaid, the Senate Finance Committee
released an RFP for a program review consultant to help
understand Medicaid and make suggestions to improve Alaska's
program. In April 2006, a contract was awarded to the
Pacific Health Policy Group based out of Irvine, California.
Their charge was to help establish the programmatic baseline
so that the legislature and the administration could make
program changes to improve Alaska's Medicaid program.
Senator Green said she has heard many opinions regarding the
services provided and the eligibility criteria of Medicaid,
but it is very difficult to fully understand the
implications of change because the program is so
complicated.
Senator Green asked several questions:
We are asked to make changes to Medicaid statutes, but
how do we, as legislators, make sound recommendations
when we may not fully understand the implications to
the client, health care providers, agency staff, or the
budget? What program changes can be made to better
serve Alaska's needy population? How can we make the
changes based on sound research rather than assumptions
or emotions?
She explained that The Pacific Health Policy Group evaluated
Medicaid eligibility and service coverage policies and
provided an overview that defines the populations that
Alaska is required to serve and the services it is required
to cover under federal law.
1:41:33 PM
Senator Green related that legislators frequently want to
know how Alaskan programs compare to those of other states.
To help make this comparison, The Pacific Health Policy
Group reviewed Alaska's service coverage policies and
eligibility criteria and ranked Alaska with the other 49
states and Washington, DC. These rankings can be found
under Appendix A in "Report to the State of Alaska Senate
Finance Committee - Medicaid Program Review" (copy on file.)
Senator Green pointed out that Alaska's Medicaid State Plan
was approved in 1974. Since that time, all changes have
been made by amendment and create a difficult sequence of
rules to follow. She questioned:
If the Medicaid director or key staff positions turn
over, how much knowledge is lost during the transition
and, therefore, how much is dropped through the cracks?
How can the legislature and agency program staff create a
tool to better understand the relationship of the State
Plan, statutes, and regulations?
Senator Green reported that The Pacific Health Policy Group
completed a crosswalk of Alaska's State Plan, statutes, and
regulations to help identify where, if any, pieces did not
relate well with its counterparts. This information is
provided in Appendix B of the final report.
Senator Green addressed the issue of when there were
optional services mandated to constrain the Medicaid program
to spend within a limited budget, the restriction could not
hold up to unanticipated growth in program costs and client
needs. She recalled frustration to see very large
supplemental requests come before the Legislature each year
with relatively no option for legislators, except to pay for
the cost of this important program. To answer the question
of how do we create a program that is more predictable,
Senator Green noted program reform options outlined in
Chapters 2 through 6 of the report. Many of these options
are tried and true changes that have been proved successful
in other states. Although Alaska has unique obstacles when
compared to other states, The Pacific Health Policy Group
has identified options that may create positive changes for
Alaska.
Senator Green introduced Andy Cohen and Scott Wittman.
Scott Wittman is located in the Mid-West and worked most
specifically on the review of program compliance and
development of reform options. Andy Cohen works out of
California and worked specifically on the evaluation of
program policies and the comparison of Alaska's policies to
those of other states.
1:44:05 PM
ANDY COHEN, DIRECTOR, THE PACIFIC HEALTH POLICY GROUP,
introduced the "Alaska Medicaid Program Review" (copy on
file), which was based on a 50-state analysis, a regulatory
review, and an operational review. Mr. Cohen showed slides
called "Presentation of Findings" and provided a handout by
the same name for the committee (copy on file). He
addressed the project objectives as shown on Slide 3. The
purpose of the review is to assist the legislature with the
evaluation of short and long term program reform initiatives
and identify strategies that enable the program to operate
with the flexibility necessary to best serve Alaskans,
recognizing budgetary realities. The project should also
identify oversight priorities for the legislature.
1:46:51 PM
Mr. Cohen related the information on Slide 4 - potential
reforms defined in the RFP. He highlighted the six reforms
that were considered.
1:48:31 PM
Mr. Cohen explained Slide 5 - work steps taken. He
explained the five steps of the process.
1:49:22 PM
Mr. Cohen turned to Slide 6 - topics to be covered today.
He planned to address summary finding from the 50-state
review, current operations and trends by service type, and
recommendations for reform and oversight.
1:49:59 PM
Mr. Cohen explained the "Executive Summary" as portrayed on
Slide 7. He pointed out that Alaska is expensive and
mentioned cost pressures. He noted the state's aging
population and reforms that can be taken.
1:51:18 PM
Mr. Cohen discussed Slide 8 - demographics and Medicaid
eligibility. He gave an overview of mandatory and optional
groups. He explained the "medically needy", which are
termed Alaska's Chronic & Acute Medical Assistance (CAMA).
1:53:01 PM
Mr. Cohen explained the 50-State Summary table as shown on
Slide 9 - Federally Defined Coverage Groups. He highlighted
Slide 10 - Alaska Optional Coverage Groups (sfy '05). He
explained how the money is going to be spent on these
beneficiaries.
1:55:04 PM
Mr. Cohen skipped to Slide 12 to explain Coverage of
Optional Populations. He further clarified that the pie
charts compare Alaska to national enrollment and
expenditure. The chart on the lower right is the direction
Alaska is headed due to the aging population and its impact.
1:56:17 PM
Mr. Cohen explained Slide 13 - Enrollment Growth. He made
some comparison points by explaining Slide 14 - Medicaid and
Uninsured Populations. Medicaid covers a large percentage
of Alaskans, but the percentage without insurance is also
relatively high. He discussed the tribal health factor and
the way the federal government counts persons with and
without insurance.
1:59:18 PM
Mr. Cohen highlighted Slide 16 - Medically Needy and CAMA.
Alaska is one of 16 states without a Medically Needy
program, but it has CAMA. He explained how other states
have dealt with this issue. He related how "waiver
eligibles" draw down federal dollars and allow for an agreed
upon level of spending. He used Mississippi as an example
of a state that has added a waiver program - Slide 17.
2:01:54 PM
Mr. Cohen spoke to optional and mandatory covered services,
as depicted on Slide 18. Alaska is comparable to most other
states in terms of the optional services covered, but is
more expensive and spends more per beneficiary than other
states do.
2:02:48 PM
Mr. Cohen compared Alaska to the national average per
beneficiary - Slide 19. The chart on Slide 20, Expenditure
Growth, shows that Alaska's expenditures grew faster than
the average annual rate early in the decade, but have since
fallen back to the middle range. Slide 21 shows
expenditures by beneficiary type, where Alaska is ranked in
the top five in every category.
2:04:37 PM
SCOTT WITTMAN, DIRECTOR, THE PACIFIC HEALTH POLICY GROUP,
explained Slide 22 - Where are the Dollars Spent? He
highlighted each of the five major service categories.
Hospital services are depicted in Slide 23 and
Physician/Clinic services are shown in Slide 24.
2:08:21 PM
Mr. Wittman discussed Pharmacy services seen on Slide 25.
He related that the payment rates and dispensing fees are
among the highest in the country. He suggested strategies
for bringing these costs down.
2:09:37 PM
Mr. Cohen discussed Long Term Care - Nursing Facilities/HCBS
projections shown in Slide 26. He explained the low
utilization load and high rates. He discussed the HCBS
waiver programs shown in Slide 27. There has been a growth
outside of waiver programs in personal care attendant (PCA)
programs. Alaska spent $80 million on PCA, while the two
waivers amounted to only $42 million. PCA would no longer
be a state program if it was converted to a waiver service.
2:13:54 PM
Mr. Cohen addressed Slide 28 - Nursing Facilities/HCBS
Recommendations - Long Term Care.
2:15:03 PM
Mr. Cohen spoke to the Developmentally Disabled aspect of
Long Term Care, as explained on Slide 29. He stated that
Alaska serves all DD beneficiaries through waivers. He
explained the costs of the waiver and how they are managed.
He made suggestions for how to better manage the waivers
with a cost reporting tool for providers, audits, and
updating of rates.
Mr. Cohen noted that 12 percent of the state's DD funding is
from grants, not federal dollars. He spoke of ways to
create a second waiver and to seek federal matches.
2:18:43 PM
Mr. Wittman addressed Behavioral Health - Slide 31. He
spoke about insufficient community based services and
discussed the "Bring the Kids Home" initiative. He
suggested ways to achieve additional early
intervention/community based services.
2:20:48 PM
Mr. Wittman explained Tribal Health issues - Slide 32.
American Indian/Alaska Natïves (AI/AN) represents 40 percent
of the state's Medicaid population; tribal health is a $740
million delivery system. The report suggests a fresh look
at this issue.
2:22:34 PM
Mr. Wittman referred to a graph on Slide 33 to further
explain Tribal Health - AI/AN Current Medicaid Funding. He
explained the state and federal share of Medicaid funding
for both tribal providers and non-tribal providers.
2:24:06 PM
Mr. Wittman discussed Tribal Health Recommendations on Slide
34. Alaska spends about $19 million per year on nursing
facility costs for AI/AN beneficiaries residing in non-
tribal facilities. The report suggests that the state
should consider investing in development of tribal long term
care.
2:25:30 PM
Mr. Wittman discussed Slide 35 - Tribal Health
Recommendation. He maintained that the state should
consider a Section 1115a waiver to designate the tribal
system as a managed care entity. Mr. Cohen added that the
"capitation payment" would move from a state line item to a
100 percent federally funded program.
Mr. Wittman opined that the entity would be well-received.
Mr. Cohen noted that it would be unique to Alaska.
2:28:38 PM
Mr. Wittman address Administration - Slide 36. He explained
that DHSS was reorganized into four major divisions in 2003.
He addressed administrative costs and spending.
2:29:38 PM
Mr. Wittman explained Program Integrity/Provider Payments as
they relate to Administration - Slide 37. He explained that
the federal government is phasing-in a new audit structure
for states, known as the Payment Error Rate Measurement
(PERM). He discussed the demands on the new Medicaid
Management Information System (MMIS).
2:31:12 PM
Mr. Wittman spoke of Regulations - Administration, as seen
in Slide 38. He maintained that the new regulations were
essential, are more clearly drafted, and are already
yielding results.
2:32:24 PM
Mr. Wittman spoke about Broad-Based Reform and Planning for
Reform - Slide 39. Some states have undertaken major
reforms. The state has more flexibility under such reform,
but must commit to a level of spending.
2:34:04 PM
Mr. Wittman covered the Reform Objectives of Broad-Based
Reform - Slide 40. The purpose is to ensure improved
quality of care.
2:35:20 PM
Mr. Wittman listed the steps needed to achieve Broad-Based
Reform - Slide 41. There are several strategies that are
needed for the reform to be effective. He identified
specific reforms to be undertaken.
2:37:17 PM
Representative Wilson asked about long term care and the
developmentally disabled wait list. She wondered if many of
those waitlisted clients are already getting some services.
Mr. Cohen said they were. He suggested that the DD services
could be addressed with waivers and federal dollars.
Representative Wilson voiced a concern about waning federal
dollars and loss of services that have already been offered.
Mr. Wittman talked about the adverse results of the
tightening up of services.
2:40:26 PM
Mr. Cohen thought Representative Wilson's point is well-
taken. He maintained that it is harder to take existing
services away.
2:41:03 PM
Representative Gardner inquired about programs needing
federal approval. Mr. Wittman explained the process of a
concept paper, a less formal waiver application at the state
level, followed by a waiver application process. When
approval is received, dependant on several factors, it
usually takes about 12 to 18 months.
2:42:54 PM
Mr. Cohen added that it must be demonstrated that it has
been a public process.
2:43:28 PM
Representative Gara referred to Slide 19. He wondered if
the cost adjustment was based on Anchorage numbers. Mr.
Cohen replied that it based on federal poverty levels, which
are unique in Alaska and Hawaii. He described how the ratio
was attained. He termed it a crude adjustment and explained
why it was done that way. Representative Gara thought this
comparison was important and should be adjusted for the
reality of medical care costs around the state. Mr. Cohen
agreed, and added that there are unique transportation
costs. Mr. Wittman added that the providers in other states
are complaining about rates. In Alaska there is not a
program with a dramatic cost shift from other payers as a
result of low pay rates on the Medicaid program.
2:47:07 PM
Representative Gara referred to Denali Kid Care, known as
the Childhood Health Care program nationally. He asked how
the Alaska program ranks nationally with coverage at 175
percent of poverty, and if other states that provide a
higher level of coverage charge a co-pay to offset costs.
Mr. Cohen replied that co-pays and premiums are often
charged. Mr. Wittman referred to page 23 of the report,
which shows a 50-state comparison of federal poverty limits
(FPL) and State Child Health Insurance Program (SCHIP)
limits for children. Mr. Cohen clarified that the number is
probably at 160 FPL today in Alaska due to a change in law
to a fixed dollar amount.
2:49:19 PM
Representative Wilson referred to Denali Kid Care and
concluded that prevention is the key. Mr. Cohen agreed and
added that employers can not always take up the costs. He
spoke to employer initiatives to pull in the market place
and the private sector into a partnership. He referred to
Oklahoma's experience in launching OFA. The federal
government contributes to the cost of the program.
Individuals under 200 percent of poverty working for small
employers are covered at a fixed level of approximately $100
a month. The employer covers 25 percent, the worker pays up
to 5 percent of their income, and the state covers the rest.
2:53:05 PM
In response to a question by Representative Wilson, Mr.
Wittman explained that the intent is to lower state costs.
2:53:43 PM
Representative Kelly noticed that federal funds are
shrinking. He questioned why the state would want to
support a race-based health system. Mr. Wittman noted that
there is a $740 million health care system, which perhaps
should be expanded to cover everyone. He observed that
there are federal dollars available, but emphasized that the
program could be expanded. Representative Kelly concluded
that the intent is to utilize federal dollars. Mr. Wittman
agreed that the idea is to expand federal dollars.
2:56:57 PM
Representative Stoltze referred to certificate of need (CON)
and how it affects cost. Mr. Wittman observed that there
are new regulations for the CON process. He noted that the
report does not address the appropriateness of the CON
approach.
In response to a question by Representative Stoltze, Mr.
Cohen observed that there is a difference in opinion
regarding the matter and that they did not have sufficient
resources to make a decision.
2:59:15 PM
Representative Thomas asked what would happen if Alaska
Native Health Services were eliminated. Mr. Cohen observed
that if there were no Native health care, eligible for
federal funds, that the state would be responsible for 40
percent ($80 million) for Medicaid. Mr. Wittman added that
INHS dollars would also add hundreds of millions to the
state's percentage.
3:00:57 PM
Co-Chair Chenault referred to the uninsured population of
17.8 percent. He noted that the Native population is not
considered insured if they have no other coverage, which is
the same as in other states.
Mr. Cohen noted that the numbers are from a federal survey.
Mr. Wittman said that many states have moved forward with
additional coverage. Alaska has a high uninsured population
due, in part, to the number of small employers.
Representative Nelson pointed out that there is a 42 percent
cost savings for Natives being treated by a recognized
provider. Mr. Cohen agreed and explained that, in many
cases, the bill is higher, but the federal coverage is 100
percent.
3:04:54 PM
Representative Nelson wondered if Indian Health Service is
being threatened in any way. Mr. Cohen referred to Oklahoma
and concluded that the tribal system would need to be
brought to the table with INHS. Representative Nelson
concluded that it is a political and financial move, not a
racially motivated move. Mr. Wittman interjected that it
needs to be supported on the state level before it is taken
to the federal level. It is more than a financial
motivation; it is a means to bring service to the client
groups.
3:07:56 PM
Representative Joule questioned what the result of Medicaid
revision is, in terms of dollars to the state. Mr. Cohen
stated that there is no end total. He stressed that it
would be impossible to provide an absolute dollar amount.
He could put a dollar amount on a number of items such as
tribal change and CAMA. The question is whether the total
investment in the system should be considered along with
savings.
3:10:45 PM
Representative Gara referred to coverage by other states of
higher income families with a sliding scale fee. He asked
for other examples. Mr. Wittman explained that it is a cost
effectiveness test. The intent is to encourage
sustainability in the employer market, if insurance is less
expansive for enrollment. It is a combination of programs,
with sliding scale premiums. The federal government does
not like to see premiums that exceed 5 percent of family
income. He offered to proved examples.
3:13:34 PM
Representative Gara asked if any of the plans provide 100
percent health care coverage for children. Mr. Wittman
responded that Illinois and Massachusetts do. Vermont is
going to move forward to universal coverage if it does not
achieve 96 percent. Washington is moving toward 300 percent
of poverty level and is trying to make sure that universal
coverage is achieved. Massachusetts is the only state that
has already moved to 300 percent for adults.
ADJOURNMENT
The meeting was adjourned at 3:15 PM.
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