Legislature(2003 - 2004)

03/18/2003 03:02 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES                                                                         
                       STANDING COMMITTEE                                                                                     
                         March 18, 2003                                                                                         
                           3:02 p.m.                                                                                            
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Peggy Wilson, Chair                                                                                              
Representative Carl Gatto, Vice Chair                                                                                           
Representative Paul Seaton                                                                                                      
Representative Kelly Wolf                                                                                                       
Representative Sharon Cissna                                                                                                    
Representative Mary Kapsner                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Cheryll Heinze                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 152                                                                                                              
"An Act relating to payment  rates under the Medicaid program for                                                               
health  facilities and  to budgeting,  accounting, and  reporting                                                               
requirements for  those facilities; abolishing the  Medicaid Rate                                                               
Advisory Commission; and providing for an effective date."                                                                      
                                                                                                                                
     - MOVED HB 152 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 153                                                                                                              
"An  Act  repealing the  statute  that  sets priorities  for  the                                                               
Department   of  Health   and   Social  Services   to  apply   to                                                               
administration of  the medical assistance program  when there are                                                               
insufficient  funds  allocated  in  the  state  budget  for  that                                                               
program;  authorizing the  department  to  make cost  containment                                                               
decisions  that  may  include   decisions  about  eligibility  of                                                               
persons   and  availability   of  services   under  the   medical                                                               
assistance program; and providing for an effective date."                                                                       
                                                                                                                                
     - MOVED HB 153 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 172                                                                                                              
"An  Act   relating  to  eligibility  requirements   for  medical                                                               
assistance for  certain children, pregnant women,  and persons in                                                               
a medical  or intermediate  care facility;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED HB 172 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 167                                                                                                              
"An Act relating to grants for alcoholism and drug abuse                                                                        
programs; and providing for an effective date."                                                                                 
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 165                                                                                                              
"An Act relating to community schools; and providing for an                                                                     
effective date."                                                                                                                
                                                                                                                                
     - BILL HEARING POSTPONED                                                                                                   
                                                                                                                                
HOUSE BILL NO. 154                                                                                                              
"An Act relating to admission to and advancement in public                                                                      
schools of children under school age; and providing for an                                                                      
effective date."                                                                                                                
                                                                                                                                
     - BILL HEARING POSTPONED                                                                                                   
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HB 152                                                                                                                  
SHORT TITLE: HEALTH FACILITY MEDICAID RATES/ADV. COM'N                                                                          
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0418       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/05/03     0418       (H)        HES, FIN                                                                                     
03/05/03     0419       (H)        FN1: (HSS)                                                                                   
03/05/03     0419       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/18/03                (H)        HES AT 3:00 PM CAPITOL 106                                                                   
                                                                                                                                
BILL: HB 153                                                                                                                  
SHORT TITLE: MEDICAID COST CONTAINMENT & PRIORITY LIST                                                                          
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0420       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/05/03     0420       (H)        HES, FIN                                                                                     
03/05/03     0420       (H)        FN1: ZERO(HSS)                                                                               
03/05/03     0420       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/18/03                (H)        HES AT 3:00 PM CAPITOL 106                                                                   
                                                                                                                                
BILL: HB 172                                                                                                                  
SHORT TITLE: MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY                                                                          
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0446       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/05/03     0446       (H)        HES, FIN                                                                                     
03/05/03     0446       (H)        FN1: (HSS)                                                                                   
03/05/03     0446       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/18/03                (H)        HES AT 3:00 PM CAPITOL 106                                                                   
                                                                                                                                
BILL: HB 167                                                                                                                  
SHORT TITLE: ALCOHOLISM AND DRUG ABUSE GRANTS                                                                                   
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0439       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/05/03     0439       (H)        HES, FIN                                                                                     
03/05/03     0439       (H)        FN1: (HSS); FN2: (HSS)                                                                       
03/05/03     0439       (H)        FN3: (HSS); FN4: (HSS)                                                                       
03/05/03     0439       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/05/03     0439       (H)        REFERRED TO HES                                                                              
03/13/03                (H)        HES AT 3:00 PM CAPITOL 106                                                                   
03/13/03                (H)        Scheduled But Not Heard                                                                      
03/18/03                (H)        HES AT 3:00 PM CAPITOL 106                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOEL GILBERTSON, Commissioner                                                                                                   
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Explained the purpose of HB 152, HB 153,                                                                   
and HB 172, and answered questions from the committee.                                                                          
                                                                                                                                
JACK NIELSON, Executive Director                                                                                                
Medicaid Rate Advisory Commission                                                                                               
Division of Medical Assistance                                                                                                  
Department of Health and Social Services                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions from the committee on HB
152.                                                                                                                            
                                                                                                                                
BOB LABBE, Deputy Commissioner                                                                                                  
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support  of HB 152, HB 153, and                                                               
HB 172, and answered questions from the committee.                                                                              
                                                                                                                                
DENNIS MURRAY, Administrator                                                                                                    
Heritage Place Nursing Facility                                                                                                 
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified on HB 152 and HB 153.                                                                            
                                                                                                                                
ELMER LINDSTROM, Special Assistant                                                                                              
Office of the Commissioner                                                                                                      
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in  support of HB 167 and answered                                                               
questions from the committee.                                                                                                   
                                                                                                                                
PAM WATTS, Executive Director                                                                                                   
Governor's Advisory Board on Alcoholism and Drug Abuse                                                                          
Office of the Commissioner                                                                                                      
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified on HB 167  and answered questions                                                               
from the committee.                                                                                                             
                                                                                                                                
MATT FELIX                                                                                                                      
National Council on Alcoholism                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 167.                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-26, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR PEGGY WILSON called the  House Health, Education and Social                                                             
Services  Standing  Committee  meeting  to  order  at  3:02  p.m.                                                               
Representatives Wilson,  Gatto, Seaton, Cissna, and  Kapsner were                                                               
present at  the call  to order.   Representative Wolf  arrived as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
HB 152-HEALTH FACILITY MEDICAID RATES/ADV. COM'N                                                                              
HB 153-MEDICAID COST CONTAINMENT & PRIORITY LIST                                                                              
HB 172-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY                                                                              
                                                                                                                                
CHAIR WILSON announced that the  first order of business would be                                                               
HOUSE BILL NO.  152, "An Act relating to payment  rates under the                                                               
Medicaid  program   for  health  facilities  and   to  budgeting,                                                               
accounting,  and  reporting  requirements for  those  facilities;                                                               
abolishing the  Medicaid Rate Advisory Commission;  and providing                                                               
for an  effective date";  HOUSE BILL NO.  153, "An  Act repealing                                                               
the statute  that sets  priorities for  the Department  of Health                                                               
and Social  Services to  apply to  administration of  the medical                                                               
assistance program  when there  are insufficient  funds allocated                                                               
in the state budget for  that program; authorizing the department                                                               
to  make cost  containment decisions  that may  include decisions                                                               
about eligibility  of persons and availability  of services under                                                               
the medical  assistance program;  and providing for  an effective                                                               
date"; and  HOUSE BILL NO.  172, "An Act relating  to eligibility                                                               
requirements  for   medical  assistance  for   certain  children,                                                               
pregnant women,  and persons  in a  medical or  intermediate care                                                               
facility; and providing for an effective date."                                                                                 
                                                                                                                                
CHAIR WILSON  explained that the  three bills would be  looked at                                                               
as a  group because  each bill  on its  own does  not demonstrate                                                               
what the administration  is trying to achieve.   She reminded the                                                               
committee  of  the  reorganization  overview  the  Department  of                                                               
Health  and  Social  Services  presented  to  the  committee  [on                                                               
3/11/03] and  said these bills  will assist in  implementation of                                                               
that reorganization.                                                                                                            
                                                                                                                                
Number 0211                                                                                                                     
                                                                                                                                
JOEL GILBERTSON,  Commissioner, Department  of Health  and Social                                                               
Services, explained that HB 152, HB 153  and HB 172 are part of a                                                               
larger  effort by  the  governor  to control  the  growth of  the                                                               
Medicaid  program while  preserving  services for  those who  are                                                               
currently eligible, stabilizing the  program in the coming years,                                                               
and as  end product having  a health care safety-net  system that                                                               
the state can rely on into the future.                                                                                          
                                                                                                                                
Number 0377                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON told  the committee  that a  little over                                                               
two weeks  ago the  department [Department  of Health  and Social                                                               
Services]  announced  a  major restructuring  of  its  operations                                                               
going into fiscal year 2004 (FY 04).   He said there are a number                                                               
of changes  being done to  improve customer service at  points of                                                               
entry,  as well  as  quality of  care that  is  delivered by  the                                                               
department  to  grantees,   client  beneficiaries,  and  provider                                                               
groups.                                                                                                                         
                                                                                                                                
Number 0405                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  referred to  a chart ["FY  2004 Medicaid                                                               
Services Distribution  of Funds"]  provided to the  committee and                                                               
asked the members to note one  of the most significant aspects of                                                               
the  restructuring  in  the  department.    He  pointed  out  the                                                               
redistribution of funding  of the Medicaid program  from where it                                                               
is currently located,  in the Division of  Medical Assistance, to                                                               
the divisions that are  actually administering Medicaid services.                                                               
He told  the committee  next year the  department would  have the                                                               
Division  of   Children's  Services,  Division  of   Health  Care                                                               
Services,  Division  of  Senior   and  Disability  Services,  and                                                               
Division of  Behavioral Health, all  of which will  be delivering                                                               
aspects of  the Medicaid program.   Commissioner  Gilbertson said                                                               
that  the  department  will  have  directors  in  each  of  these                                                               
divisions  making  daily  decisions   on  managing  the  Medicaid                                                               
program, designing the Medicaid  services, issuing regulations on                                                               
Medicaid services  that they  provide, and,  for the  first time,                                                               
having actual budgetary responsibility for those decisions.                                                                     
                                                                                                                                
Number 0475                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON explained  that the  first chart  in the                                                               
packet shows how  the FY 04 Medicaid budget will  be broken up in                                                               
the department.   Currently, all  Medicaid funding is  located in                                                               
the Division  of Medical Assistance,  which will no  longer exist                                                               
under the restructuring plan.   He said roughly $930 million will                                                               
be broken  up, with the  bulk of it,  $630 million, going  to the                                                               
Division of  Health Care Services.   This division  will continue                                                               
on with  most of  the Division  of Medical  Assistance's previous                                                               
functions, but the department will also  be adding in a number of                                                               
functions from the  Division of Public Health.   For example, the                                                               
EPSDT [Early  and Periodic  Screening, Diagnostic  and Treatment]                                                               
for  breast   and  cervical  cancer,  family   planning,  genetic                                                               
screening, and some infant services  will be provided through the                                                               
Division of Health Care Services.                                                                                               
                                                                                                                                
COMMISSIONER GILBERTSON  said the next largest  portion displayed                                                               
on the chart  is the Division of Senior  and Disability Services.                                                               
He said  this will be  a large  portion of the  restructuring and                                                               
integration as the  department takes over the  Division of Senior                                                               
Services from  the Department of Administration.   The department                                                               
will   be  combining   that  division   with  the   developmental                                                               
disabilities services that currently  are underserved through the                                                               
Division  of Mental  Health  and  Developmental Disabilities,  to                                                               
create  a new  Division of  Senior and  Disability Services.   He                                                               
told the committee that this  change will allow the department to                                                               
unify all  of the "waiver services"  in one division.   This will                                                               
also mean that there  will be a single point of  entry for all of                                                               
[the state's] senior services.  He  told the committee this is an                                                               
issue  seniors  have  been  pushing  for a  very  long  time  and                                                               
something they deserve.   Customer service and  continuum of care                                                               
for  seniors will  be overseen  by  one division  director.   The                                                               
amount  of  $196  [$191.6]  million will  be  budgeted  for  that                                                               
division and  the department  will have  a division  director who                                                               
will  be  appearing  before  the  legislature  and  who  will  be                                                               
accountable  for  the  waitlist,  budget,  and  policy  decisions                                                               
behind the waitlist,  rather than having it fractured  the way it                                                               
is right now.                                                                                                                   
                                                                                                                                
Number 0540                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON told  the  committee  the third  largest                                                               
portion of  the budget, which is  $108.7 million, will go  to the                                                               
Division of Behavioral  Health.  He explained  that this division                                                               
joins the current Division of  Alcohol and Drug with the Division                                                               
of Mental Health and Development  Disabilities, taking the mental                                                               
health component  from that and  merging it with the  alcohol and                                                               
drug  abuse  component  so  there  is  one  division  focused  on                                                               
behavioral health  services.  In  many regions across  the state,                                                               
particularly in  Western Alaska, the mental  health providers and                                                               
the substance  abuse providers  are the  [same] individuals.   He                                                               
said  this will  allow grant  efforts  and decisions  to be  made                                                               
recognizing  the fact  that there  is a  tremendous link  between                                                               
alcohol and mental health services.   This change really benefits                                                               
the system and  benefits the quality of care  the state delivers.                                                               
He  reiterated that  this [restructuring]  plan will  assure that                                                               
there  will  be  an  individual who  will  be  administering  and                                                               
managing Medicaid  services and who  will be accountable  for the                                                               
financial condition of the division.                                                                                            
                                                                                                                                
COMMISSIONER GILBERTSON said  a small portion of  the budget that                                                               
goes  to the  Division of  Children's Services  is $5.8  million,                                                               
which  is  associated  with  behavioral  rehabilitation  services                                                               
[residential child care] that are  being administered through the                                                               
Division of Family and Youth Services.                                                                                          
                                                                                                                                
Number 0645                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON  asked   Commissioner  Gilbertson  if  the                                                               
portion  allocated  for the  Division  of  Senior and  Disability                                                               
Services  incorporates estimates  for increases  that may  result                                                               
from the elimination of the Longevity Bonus Program.                                                                            
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that it  does not.   He  said                                                               
this  budgetary   component  is  a  redistribution   of  Medicaid                                                               
funding.   He said if there  is an assumption that  there will be                                                               
additional costs based on the  elimination of the Longevity Bonus                                                               
Program,  it would  certainly be  less than  the longevity  bonus                                                               
payments  themselves.   That cost  is  not shown  in the  figures                                                               
before the committee.                                                                                                           
                                                                                                                                
Number 0716                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  said  that in  conjunction  with  these                                                               
efforts, the  governor has proposed a  number of cost-containment                                                               
mechanisms  within the  Medicaid program  to stabilize  costs and                                                               
preserve services  for beneficiaries, including services  such as                                                               
a  preferred  drug  list, a  transportation  brokerage  for  non-                                                               
emergency  services, and  a  host of  regulatory  actions by  the                                                               
department that will help maintain costs.                                                                                       
                                                                                                                                
Number 0845                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  told  the committee  the  governor  has                                                               
submitted  three statutory  items that  are before  the committee                                                               
today.   The  first  one is  HB 152,  which  would eliminate  the                                                               
Medicaid Rate Advisory Commission (MRAC).   He explained that the                                                               
commission  was  established  in  1984   and  was  at  that  time                                                               
responsible for  establishing the state's Medicaid  payment rates                                                               
to  facilities.   In 1989,  by executive  order, the  MRAC became                                                               
advisory only, and the department  became responsible for setting                                                               
the  rates.    In  1997,  federal law  that  called  for  certain                                                               
statutory requirements  for how  rates would  be set  in Medicaid                                                               
programs was  changed and Alaska  followed those  requirements in                                                               
establishing  fair  and  reasonable  costs.    However,  Alaska's                                                               
statutory  provision remained,  even though  the federal  law had                                                               
changed.                                                                                                                        
                                                                                                                                
COMMISSIONER GILBERTSON  explained that  the proposed  changes to                                                               
these  sections  bring  Alaska's  statutes  into  alignment  with                                                               
federal  law and  remove unnecessary  provisions.   Removing  the                                                               
Medicaid Rate  Advisory Commission  also removes  the duplicative                                                               
public  process  that is  currently  done,  but not  required  in                                                               
federal  statute.   He  said  current  Alaska statutory  language                                                               
requires  a  standard.     The  department  set   rates  for  all                                                               
facilities from  a 10-bed facility  up to  one that has  over 200                                                               
beds  using the  exact  same methodology.    To promote  adequate                                                               
payment  rates as  well as  cost containment  for the  state, the                                                               
department   would   like   the  flexibility   to   use   varying                                                               
methodologies  for  each  facility   because  each  facility  has                                                               
different  circumstances.   The proposed  legislation would  also                                                               
simplify  the  statutes  and  provide   the  department  and  the                                                               
facilities with the  necessary flexibility for rate  setting.  He                                                               
reiterated  that  current  rate  setting is  being  done  by  the                                                               
department, and the  MRAC serves solely in  an advisory capacity.                                                               
He pointed out that there  is an administrative cost, even though                                                               
it  serves in  an advisory  capacity and  the elimination  of the                                                               
commission  will  provide  a  nominal   savings  for  the  state.                                                               
Commissioner  Gilbertson  told  the  committee this  bill  is  an                                                               
acknowledgement  of  current  practice  and  should  be  done  to                                                               
clarify current Medicaid rate setting functions.                                                                                
                                                                                                                                
Number 0866                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER asked  who sits on the  commission now and                                                               
if  those  members  provide  input  that  is  beneficial  to  the                                                               
department.                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  referred the  question to  Jack Nielsen,                                                               
the executive director of the Medicaid Rate Advisory Commission.                                                                
                                                                                                                                
Number 0899                                                                                                                     
                                                                                                                                
JACK   NIELSON,  Executive   Director,  Medicaid   Rate  Advisory                                                               
Commission, Division of Medical  Assistance, Department of Health                                                               
and   Social   Services,   testified  via   teleconference   from                                                               
Anchorage.   He told the  members the  MRAC has a  CPA [certified                                                               
public accountant],  a physician, a department  representative, a                                                               
health  facility  administrator,  and a  consumer  representative                                                               
that preside over the facility  rate hearings and public hearings                                                               
on  rates, and  provide  input and  analysis  based on  "facility                                                               
comments" and staff comments.                                                                                                   
                                                                                                                                
Number 0937                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KAPSNER  asked Mr.  Nielson  if  he believes  the                                                               
department would get adequate information  if the commission were                                                               
disbanded.                                                                                                                      
                                                                                                                                
MR.  NIELSON replied  that  he thinks  the  department could  set                                                               
rates without the commission's assistance.                                                                                      
                                                                                                                                
CHAIR WILSON  commented that she  received a call earlier  in the                                                               
day  from a  member  of  the commission  who  told  her that  the                                                               
members support this legislation.                                                                                               
                                                                                                                                
Number 0973                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA asked,  if the  legislature abolishes  the                                                               
commission and  the method of  gathering public input,  where the                                                               
information will come from.                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  responded that during  the restructuring                                                               
of the department, an office  of rate review will be established.                                                               
He  said the  department  will bring  individuals  who have  been                                                               
working on  rate setting into  one office.   There will  still be                                                               
data  collection covering  department activities  and there  will                                                               
still be  information collected to  provide good  information for                                                               
rate  setting.    Currently,  MRAC serves  only  in  an  advisory                                                               
capacity.    The  department's  position is  that  it  should  be                                                               
aligned with federal law.  He  said MRAC is acting in a different                                                               
capacity  than  what  it was  originally  intended  by  executive                                                               
order.  He  told the committee the department  will have adequate                                                               
access to information through cost  reports and other data to set                                                               
reasonable rates.  Commissioner  Gilbertson said there will still                                                               
be a  public process; however,  rather than two  public processes                                                               
there will be one.                                                                                                              
                                                                                                                                
Number 1078                                                                                                                     
                                                                                                                                
BOB LABBE,  Deputy Commissioner, Department of  Health and Social                                                               
Services, testified that the  department does collect information                                                               
from facilities through  Medicare cost reports.  He  said it also                                                               
gets requests  for information from  other planning  efforts that                                                               
are  ongoing  with  respect  to  the  facility-costs  issues  and                                                               
patient days.   Mr. Labbe told the committee that  the new office                                                               
of rate  review would actually  broaden the scope  of information                                                               
gathering and would work to  find information on various types of                                                               
rate activities  within the department.   He said  the commission                                                               
has  been focused  fairly narrowly  on hospitals,  nursing homes,                                                               
and rural health clinic services,  and not as broadly on pharmacy                                                               
rates, physician  rates, or childcare  rates.  The  department is                                                               
looking at something more comprehensive.                                                                                        
                                                                                                                                
Number 1142                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked Mr. Labbe  how long he has  worked in                                                               
the department.                                                                                                                 
                                                                                                                                
MR. LABBE  said he  has served as  the deputy  commissioner since                                                               
January, but had  previously worked in the  department in another                                                               
role for seven and a half years.                                                                                                
                                                                                                                                
REPRESENTATIVE GATTO asked  why the MRAC was  established and how                                                               
that need has been diminished.                                                                                                  
                                                                                                                                
MR.  LABBE responded  that both  the  need and  federal law  have                                                               
changed.   He said  Mr. Nielson would  have some  recollection of                                                               
the history of the commission.                                                                                                  
                                                                                                                                
Number 1199                                                                                                                     
                                                                                                                                
MR. NIELSON said in 1984, federal  law required states to pay for                                                               
facilities  services through  a retrospective  cost-based system,                                                               
and costs  were increasing so  rapidly that Congress  changed the                                                               
federal law  to provide more  flexibility to states  to establish                                                               
rates.  He  said it was at  that point when Alaska  decided to go                                                               
from a retrospective cost to  a more flexible process through the                                                               
commission.   Then,  in 1997,  the law  changed again  to provide                                                               
more flexibility, and really all it  does now is require a public                                                               
hearing on  the rates  and opportunities  for people  to comment.                                                               
There has been an evolution in federal law.                                                                                     
                                                                                                                                
Number 1258                                                                                                                     
                                                                                                                                
CHAIR WILSON  asked if  there will  still be  a place  for public                                                               
input.                                                                                                                          
                                                                                                                                
COMMISSIONER GILBERTSON responded  that is correct.   He said the                                                               
way it  now stands,  there are two  public hearings,  but through                                                               
this new public process there  would be a hearing process through                                                               
[the  department's] office  of rate  review.   He said  as Deputy                                                               
Commissioner  Labbe  mentioned,  MRAC does  the  facilities-based                                                               
rate  setting, but  the department  does  a whole  host of  other                                                               
payments as  well.  It  does reimbursement rates  for physicians,                                                               
childcare  services,  and  a whole  host  of  other  rate-setting                                                               
functions that go  through the traditional public  process.  This                                                               
is  a  duplicative  process,  as it  now  exists.    Commissioner                                                               
Gilbertson  explained that  this is  a structural  change in  the                                                               
department  so that  it  has  one office  of  rate  review and  a                                                               
uniform rate-setting system across the state.                                                                                   
                                                                                                                                
Number 1329                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON told the committee  the second bill he is                                                               
here to  introduce on  behalf of  the governor  is HB  153, which                                                               
would eliminate the  options list under Medicare.   He said under                                                               
current statute, a priority list  for medical assistance has been                                                               
created; in which  years when there have  been insufficient funds                                                               
allocated to fully fund the  Medicaid program, the department can                                                               
begin eliminating  services along  the options list  as a  way of                                                               
bring   cost  containments   to  the   Medicaid  program.     The                                                               
administration's position  and the department's position  is that                                                               
the existing list is not an  effective management tool.  If used,                                                               
it  needlessly results  in the  denial of  services and  does not                                                               
necessarily  result  in  cost-effective  management  of  Medicaid                                                               
services.                                                                                                                       
                                                                                                                                
COMMISSIONER GILBERTSON  told the members that  the proposed bill                                                               
would  replace   the  obsolete   language  with   broad,  general                                                               
authority  for  the   department  to  undertake  cost-containment                                                               
measures based  on three key  principles.  First,  the department                                                               
must  pursue  all   other  reasonable  cost-containment  measures                                                               
before eliminating  any eligibility  group or services.   Second,                                                               
the department  must aggressively  pursue strategies  to maximize                                                               
federal  financial participation  in the  Medicaid program.   For                                                               
example,  the  governor's  current   budget  put  a  priority  on                                                               
identifying areas  in which the  federal government is  not fully                                                               
paying for  its share of  the Medicaid program, namely,  close to                                                               
between $17  and $19 million that  should have come to  the state                                                               
for  services that  were eligible  for a  federal Medicaid  match                                                               
through  grant  programs.     Third,  cost-containment  decisions                                                               
should  be made  in a  manner that  best reflects  the needs  and                                                               
interests of eligible recipients.                                                                                               
                                                                                                                                
Number 1396                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON   pointed  out  that  the   fiscal  note                                                               
associated with  this bill  shows a zero  savings.   Assuming the                                                               
governor's budget  and proposals are passed,  the department does                                                               
not  anticipate  using   any  of  this  new   authority  to  have                                                               
additional  cost-containment measures.   He  said this  is simply                                                               
replacing  an  obsolete  options  list  that  the  administration                                                               
believes   is  unworkable   and   not  an   appropriate  way   of                                                               
administering  the Medicaid  program.   He  recommended that  the                                                               
committee look  at the  options list provided  and asked  them to                                                               
note  the services  that would  be eliminated  in years  in which                                                               
there  would be  insufficient funds  allocated to  the department                                                               
for its  Medicaid program operations.   First, would  be clinical                                                               
social  workers   services,  then  psychologist   services,  then                                                               
chiropractic   services,   then   advanced   nurse   practitioner                                                               
services, then  adult dental [services], then  emergency hospital                                                               
service and a host of other services.                                                                                           
                                                                                                                                
COMMISSIONER  GILBERTSON  said  it  would be  difficult  for  the                                                               
department to justify  one before another.  Some  would result in                                                               
increased costs,  some are preventative  in nature, and  some are                                                               
acute care.   Commissioner Gilbertson said it is a  list that the                                                               
department does  not believe is  effective for  cost containment.                                                               
The  administration   does  understand  the  reason   behind  the                                                               
legislation that  created this.   There is  a need  to prioritize                                                               
services at times when the  state cannot fully fund all services;                                                               
however, he offered  the belief that this can best  be managed by                                                               
having  flexibility  retained by  the  executive  branch and  the                                                               
department   that   oversees   the   program   to   ensure   that                                                               
beneficiaries  are  not  being   unnecessarily  harmed  by  those                                                               
decisions.                                                                                                                      
                                                                                                                                
Number 1546                                                                                                                     
                                                                                                                                
CHAIR  WILSON noted  that emergency  hospital  services would  be                                                               
eliminated  before  physical therapy.    She  said she  does  not                                                               
believe  the  options  list  is  even  close  to  being  properly                                                               
prioritized.                                                                                                                    
                                                                                                                                
Number 1545                                                                                                                     
                                                                                                                                
MR.  LABBE   offered  a  point  of   clarification  on  emergency                                                               
services, saying  the item listed  on the options list  refers to                                                               
emergency  services to  a  facility  that is  not  licensed as  a                                                               
hospital.   He said this  does not mean  the state would  not pay                                                               
Bartlett  Hospital for  emergency services.   That  is mandatory.                                                               
This is an odd one, he  remarked.  There is a definitions section                                                               
to the  bill.   Mr. Labbe  pointed out that  in order  to achieve                                                               
savings, since  "we" have about  60 percent federal  funding, and                                                               
the department is  looking for general fund  savings, there would                                                               
have  to be  pretty significant  cuts  down the  list before  the                                                               
department would get any savings.   He told the committee in this                                                               
situation there would have to  be a discussion and decision about                                                               
whether  the state  would cover  all  the people  or not  provide                                                               
prescription drug coverage  for those it does cover.   It is that                                                               
kind of  a discussion  the administration would  be having.   The                                                               
department cannot get there with the list.                                                                                      
                                                                                                                                
Number 1612                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON spoke  to the final bill  in the package,                                                               
HB  172, which  would freeze  income levels  for eligibility  for                                                               
Denali  KidCare, Medicaid  coverage for  pregnant women,  and the                                                               
special income limit  for nursing homes and  home- and community-                                                               
based waiver  services.  Under  current law income  standards are                                                               
adjusted annually based on cost of  living.  There is a desire by                                                               
the  administration  to  not  roll   back  coverage,  not  remove                                                               
individuals  from programs  such  as Denali  KidCare or  insuring                                                               
pregnant women under Medicaid.   However, the administration does                                                               
have to  take steps at  this point to  contain the growth  of the                                                               
program and  strengthen and  stabilize it  to prevent  what could                                                               
occur  in future  years.   The administration  sees that  at some                                                               
point the  state may have  the inability to fully  fund services,                                                               
and  that  would  require  the   department  to  pull  back  core                                                               
emergency  services and  vital  coverage  options for  low-income                                                               
populations.                                                                                                                    
                                                                                                                                
Number 1660                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON said  the administration  needs to  take                                                               
steps to control growth and  maintain the eligibility populations                                                               
at what  the state has  right now, which  is what it  can afford.                                                               
He reiterated  that those  that are being  covered right  now are                                                               
the ones [the state] can afford  to cover; however, new ones will                                                               
be  added  and  some  will  be removed  in  time.    The  general                                                               
structure of what  is affordable and where to draw  the line will                                                               
remain at  the 200 percent  threshold for Denali KidCare  and not                                                               
go higher  after 2003.   This  obviously will  affect eligibility                                                               
levels, and the  fiscal note shows nominal savings  in the coming                                                               
years.  He said the administration  believes it is a prudent step                                                               
that should be taken at this  time to ensure the stability of the                                                               
program  and the  ability  of the  state to  fully  fund all  the                                                               
services it currently offers for  the eligible population that it                                                               
currently covers.                                                                                                               
                                                                                                                                
Number 1695                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF asked  if the  income levels  on page  4 are                                                               
based on gross income, not net income.                                                                                          
                                                                                                                                
Number 1710                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  responded that  is  correct.   He  said                                                               
those  are  the  current  eligibility  standards  for  the  three                                                               
population  [Denali  KidCare  participants, pregnant  women,  and                                                               
individuals receiving care in nursing  homes] groups.  This is an                                                               
effort to lock  the current eligibility levels, which  are at the                                                               
maximum allowable level for the state.                                                                                          
                                                                                                                                
Number 1720                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER  asked what  programs will be  affected by                                                               
this bill.                                                                                                                      
                                                                                                                                
COMMISSIONER  GILBERTSON replied  that they  are Denali  KidCare,                                                               
pregnant women,  and individuals receiving nursing  home care and                                                               
home-based waivers.                                                                                                             
                                                                                                                                
REPRESENTATIVE  KAPSNER asked  if the  income eligibility  levels                                                               
are based on federal poverty guidelines.                                                                                        
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that  they are  based on  the                                                               
federal poverty guidelines for Alaska.                                                                                          
                                                                                                                                
REPRESENTATIVE KAPSNER  commented that the state  could have kids                                                               
who are over the 300-percent-of-poverty  guidelines who might not                                                               
be getting services in the future.                                                                                              
                                                                                                                                
Number 1759                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON   responded  that  the   current  income                                                               
threshold for eligibility for Denali  KidCare is 200 percent over                                                               
the  poverty guidelines  for  FY  03.   That  is  the amount  the                                                               
administration  wants   to  lock  in.     He  said   he  believes                                                               
Representative  Kapsner's   concern  is   based  on   the  effect                                                               
inflation will  have on poverty  levels.  He said  that inflation                                                               
will  not  be   reflected  in  the  poverty   guidelines.    That                                                               
assumption is  correct.   He told  the committee  that this  is a                                                               
policy   decision  by   the  administration   that  the   current                                                               
eligibility levels are what the state can afford.                                                                               
                                                                                                                                
COMMISSIONER GILBERTSON  told the committee that  it is essential                                                               
to have prudent cost containment  and to ensure that the services                                                               
are  strengthened so  that cuts  will not  be necessary  in other                                                               
areas.   He  commented  that there  are  not equal  distributions                                                               
along  income  guidelines.   The  number  of individuals  at  190                                                               
percent of  poverty and 200 percent  of poverty are not  the same                                                               
as those below 100 percent of  poverty.  He said there really are                                                               
more individuals in the lower-income  [category] than the higher.                                                               
The numbers get  smaller as income rises.  He  told the committee                                                               
the  number of  individuals who  will be  affected even  over the                                                               
next  five years  is small.   As  an example,  a family  of three                                                               
children  on Denali  KidCare  right  now can  have  an income  of                                                               
$3,130 per  month; however,  the cost-of-living  allowance, which                                                               
is about  1.4 percent inflation  going into 2004,  would increase                                                               
that amount  to $3,179.   So there  are individuals who  made $49                                                               
more  per  month who  could  see  their  services reduced.    The                                                               
possibility  of  people still  not  availing  themselves of  that                                                               
service, knowing that  it is a $49 income  difference, shows that                                                               
there will not  be individuals in bulk removed  from the Medicaid                                                               
eligibility levels, he concluded.                                                                                               
                                                                                                                                
Number 1856                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF  asked if  a family of  four, on  last year's                                                               
levels,  could make  $51,600  per year,  and  qualify for  Denali                                                               
KidCare, including the PFD [permanent fund dividend] income.                                                                    
                                                                                                                                
COMMISSIONER GILBERTSON  replied that is correct.                                                                               
                                                                                                                                
CHAIR WILSON responded that that is  quite a high income to still                                                               
be qualified for the Denali KidCare program.                                                                                    
                                                                                                                                
REPRESENTATIVE WOLF  commented that when  he was raising  his two                                                               
children he did not make $51,000 per year.                                                                                      
                                                                                                                                
COMMISSIONER  GILBERTSON   told  the  committee   the  governor's                                                               
position  is that  there currently  are have  fair standards  for                                                               
eligibility for  the state programs.   He  said in order  for the                                                               
department to continue to provide  the level of service currently                                                               
provided,  it will  be necessary  to cap  the eligibility  income                                                               
guidelines.  Commissioner Gilbertson  reiterated that he believes                                                               
the guidelines  are very fair.   He said the department  does not                                                               
see  this  as  an  arbitrary  reduction  in  eligibility  of  the                                                               
Medicaid program, but as part of  a collection of steps that will                                                               
allow [the department] to preserve the program for the future.                                                                  
                                                                                                                                
Number 1929                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA  prefaced her  comments by saying  that she                                                               
believes the number  of children reduced from the  rolls will not                                                               
be large; however,  she is concerned that  the administration may                                                               
not  factor in  the accelerating  cost of  health care  and other                                                               
possible conditions  that could  occur in  Alaska.   She reminded                                                               
members that  20 years  ago, when  many of  the members  may have                                                               
been raising  kids, the cost  of health  care was not  very high.                                                               
She told  the members that at  that time she paid  100 percent of                                                               
medical expenses, so she can speak to that.                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked the members to  look at page 2 of the                                                               
fiscal note dated March 5, where  there is a table that shows the                                                               
reduction of  eligible recipients  beginning in  2004 at  101; in                                                               
2005 it  doubles, and  the numbers  keep going  up to  five years                                                               
out,  for a  reduction  of  832 recipients.    It  is a  definite                                                               
reduction, and this is money that is for kids, not for adults.                                                                  
                                                                                                                                
CHAIR WILSON commented that if the  members look at page 4 of the                                                               
bill [HB 172]  it shows how much  a family can make  and still be                                                               
eligible for Denali KidCare.                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA  said what  she is  concerned about  is how                                                               
many children are affected, not how much [the family] makes.                                                                    
                                                                                                                                
COMMISSIONER  GILBERTSON interjected  that he  believes he  knows                                                               
Representative Cissna's  concern.  He  asked the members  look at                                                               
the  FY 04  numbers [page  2 of  the fiscal  note dated  March 5,                                                               
2003] where there are 61 fewer  eligible children for the Title I                                                               
[Title  XXI  Children]  Denali  KidCare program.    He  told  the                                                               
committee the state has about  26,000 children on Denali KidCare.                                                               
While the  department shows a reduction  in FY 04 because  of the                                                               
new poverty standard  for that year, new poverty  figures will be                                                               
coming  out in  about  one  month.   The  61  figure is  actually                                                               
inflated up front  because the bill was drafted a  month ago, but                                                               
the  new poverty  figures will  not  come out  until next  month.                                                               
Commissioner  Gilbertson  said  the  state  has  26,000  children                                                               
currently  enrolled  and  will  probably have  far  more  in  the                                                               
future.                                                                                                                         
                                                                                                                                
Number 2073                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON asked if the PFD counts as income.                                                                        
                                                                                                                                
COMMISSIONER  GILBERTSON  responded  that  to  the  best  of  his                                                               
knowledge, the PFD income is held harmless.                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON commented  that for a family  of four, that                                                               
would  be  four  PFDs  and   a  significant  income  amount  held                                                               
harmless.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KAPSNER said  she knows $52,000 sounds  like a lot                                                               
of money.   However,  for individuals living  in a  small village                                                               
with the  price of electricity  at 53  cents a kilowatt  hour, $4                                                               
per  gallon  for  gasoline  for a  snow  machine,  4-wheeler,  or                                                               
outboard motor to  go hunting, and $6 or $7  per gallon for milk,                                                               
that income does  not stretch as far, especially for  a family of                                                               
four.   Representative  Kapsner  asked when  this  issue will  be                                                               
readdressed.   She  said poor  people typically  do not  have the                                                               
capacity  to  hire a  lobbyist  to  come  to the  legislature  to                                                               
advocate for a change in the statute.                                                                                           
                                                                                                                                
Number 2129                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  told the  committee this  is statutorily                                                               
driven and  revisiting it is up  to the legislature.   He said he                                                               
understands the  concern of Representative  Kapsner, but  at this                                                               
particular point, the administration is  trying to figure out how                                                               
it can  afford the  current Medicaid program  as it  is currently                                                               
structured.                                                                                                                     
                                                                                                                                
Number 2165                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  said there is tremendous  pressure being                                                               
placed on the  state's budget, and because of the  rising cost in                                                               
the Medicaid program,  without these changes there  are likely to                                                               
be far  more reductions  to the  Medicaid program,  including the                                                               
inability to finance core services.   The department is trying to                                                               
engage in  a collection of  activities that can bring  about cost                                                               
containment on  the margins  so that  it can  continue to  have a                                                               
strong  Medicaid  program,  strong Denali  KidCare  program,  and                                                               
insurance program  for seniors who  are receiving  long-term care                                                               
services.    Absent  prudent cost  containment,  it  will  become                                                               
increasingly difficult  for this  state to ensure  the individual                                                               
who is well  below 200 percent of poverty will  be able to access                                                               
emergency, dental, or other health care services.                                                                               
                                                                                                                                
COMMISSIONER  GILBERTSON  told  the committee  the  governor  and                                                               
department  are  committed to  taking  those  steps in  order  to                                                               
strengthen   those  programs.     There   is  incredible   fiscal                                                               
instability  in maintaining  the Medicaid  program at  the status                                                               
quo.  He reported that there  was close to $72 million in general                                                               
fund  program  growth in  the  Department  of Health  and  Social                                                               
Services,  and over  80 percent  of that  is associated  with the                                                               
Medicaid  program.   These are  general fund  increases that  the                                                               
state does  not have the  capacity to absorb, absent  steps taken                                                               
at this point, he told members.                                                                                                 
                                                                                                                                
Number 2203                                                                                                                     
                                                                                                                                
CHAIR WILSON  pointed out that  any legislator could  introduce a                                                               
bill to address this issue next  year.  She pointed out that last                                                               
year at  this time there was  a bill in the  legislature to bring                                                               
the percentage  down to 150  percent of  the poverty level.   She                                                               
told the  committee she is  pleased that the governor  is looking                                                               
at  maintaining  the  program  at  200  percent  of  the  poverty                                                               
guidelines.                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  said in reviewing  charts provided  by the                                                               
department,  [he  found]  it looks  as  though  Medicaid-eligible                                                               
children's  costs have  increased  much faster  than have  adult-                                                               
eligible costs  or Medicaid costs for  the elderly.  He  asked if                                                               
there  is a  $40 million  increase  from the  FY 03  supplemental                                                               
[budget]  to the  projection  for  FY 04  in  the Denali  KidCare                                                               
program.                                                                                                                        
                                                                                                                                
Number 2274                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON responded  that that is correct.   The FY                                                               
03  figures, including  the supplemental,  had $264  million, and                                                               
[the state]  is projecting $306  million for coverage  through FY                                                               
04.                                                                                                                             
                                                                                                                                
REPRESENTATIVE  SEATON said  his  concern is  that  the state  is                                                               
allowing this  program [Denali  KidCare] to  grow very  fast, and                                                               
yet  there  are  some  pretty drastic  cuts  being  proposed  for                                                               
education for our children.                                                                                                     
                                                                                                                                
Number 2298                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  responded that the  chart Representative                                                               
Seaton  is looking  at  is  not a  chart  on  the Denali  KidCare                                                               
program, but  rather a  chart on  Medicare services  to children.                                                               
Denali KidCare's  growth is much  lower.   He said he  thinks the                                                               
difference  between 200  percent of  poverty and  150 percent  of                                                               
poverty is  about $3 million  in general  fund dollars.   He told                                                               
the committee he believes Representative  Seaton was referring to                                                               
a larger pool of services in the figures he mentioned.                                                                          
                                                                                                                                
Number 2336                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON   said  Denali  KidCare  is   a  special                                                               
[insurance] program  that allows the  state to bring  in children                                                               
in families  that have  income levels  slightly higher  than that                                                               
for Medicaid  eligibility.  This  program has helped  [the state]                                                               
address  part  of the  problem  for  uninsured children  and  the                                                               
social costs.   He said most of the care  provided to children in                                                               
terms  of  costs  is  delivered outside  of  the  Denali  KidCare                                                               
program through the traditional Medicaid program.                                                                               
                                                                                                                                
CHAIR WILSON asked  if children who live in  Native villages, who                                                               
do not qualify for the  Denali KidCare program, would be provided                                                               
health care through some kind of Native funding.                                                                                
                                                                                                                                
Number 2342                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON replied  that  if the  individual is  an                                                               
Alaska Native, he/she  would be able to  receive services through                                                               
an Indian Health Service [IHS]  facility.  The state has actively                                                               
worked with Native health  corporations towards having enrollment                                                               
in Medicaid  programs.  He told  the committee it is  a good deal                                                               
for  the  state  because  the  department  receives  100  percent                                                               
reimbursement from  the federal government for  Medicaid services                                                               
provided  to Alaska  Native Medicaid  beneficiaries.   That  care                                                               
must  be provided  through Alaska  Native health  care facilities                                                               
that  have compacted  to provide  IHS services  previously.   The                                                               
state  tries  to work  with  Native  corporations to  have  their                                                               
populations become dual-eligible.  They  receive that care at the                                                               
facility and there is no cost to the state.                                                                                     
                                                                                                                                
TAPE 03-26, SIDE B                                                                                                            
Number 2378                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KAPSNER said  she  is  not necessarily  concerned                                                               
with  just  Native   kids  in  the  state,  but   kids  in  small                                                               
communities  like Tenakee  Springs where  the cost  of living  is                                                               
very high.   There are a lot of non-Native  villages in Southeast                                                               
Alaska.  She said it is little or  no comfort to her to think the                                                               
legislature can  come back  and readjust  the figures  next year.                                                               
She  referred to  last year's  debate  on the  income tax  versus                                                               
sales tax and  said there was an implied message  that people who                                                               
do not make a lot of  money are not hard workers.  Representative                                                               
Kapsner said  there are not  a lot  of advocates in  the building                                                               
for poor people.   She said she does not  see how the legislature                                                               
will come  back and give  away money  to poor people  or increase                                                               
the money it gives  away to poor people in the  future.  She said                                                               
she is  sensitive to poor  people's issues and taking  money away                                                               
from  people  who need  it,  especially  with kids  and  pregnant                                                               
women.  She  said she does not  see the will being  there [in the                                                               
legislature] to change this at any time.                                                                                        
                                                                                                                                
Number 2336                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF asked if there  is any reimbursement from the                                                               
federal government for the Denali KidCare program.                                                                              
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that the  state does  receive                                                               
funds  for  the Denali  KidCare  program.   Recently,  the  state                                                               
received  a redistribution  of  funds, as  other  states are  not                                                               
fully implemented.  He said  the state received about $12 million                                                               
last  year.   Since the  Denali  KidCare program  is the  state's                                                               
children's  health  care  program,  it  is  able  to  access  the                                                               
advanced  federal  medical  assistance  percentage,  which  is  a                                                               
little   over  58   percent.     The  enhanced   federal  medical                                                               
assistance, which is  for the Denali KidCare  program, Breast and                                                               
Cervical  Cancer  Programs,  and   other  programs,  the  federal                                                               
government has provided incentives  for states to participate and                                                               
[the State  of Alaska] receives  between 71  and 72 percent.   He                                                               
commented that percentage changes each year.                                                                                    
                                                                                                                                
Number 2288                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA  asked what percentage of  enrollees in the                                                               
Denali  KidCare program  is Native  Alaskans.   If  they get  100                                                               
percent  reimbursement from  the  federal  government, does  that                                                               
means there is no cost to the state?                                                                                            
                                                                                                                                
Number 2271                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON replied that  the state only receives 100                                                               
percent reimbursement  when the  services are provided  through a                                                               
IHS-compacted  facility.   If a  child  is eligible  for a  state                                                               
insurance  product,   the  Medicaid  program  for   example,  and                                                               
receives   that  service   through  the   Yukon-Kuskokwim  Health                                                               
Corporation, [the state] will  receive 100 percent reimbursement.                                                               
However,  if  that  same  child   goes  to  any  outside  medical                                                               
facility,  the  reimbursement  reverts back  to  the  traditional                                                               
formula and  is not eligible  for the 100  percent reimbursement.                                                               
He  told  the  committee  that  statewide  the  Medicaid  program                                                               
provides  roughly $240  million  in Medicaid  services to  Alaska                                                               
Native  Medicaid  beneficiaries.    Of that  $240  million,  $170                                                               
million  was provided  outside of  an  IHS-compacted facility  or                                                               
Native  health  care system,  so  the  state currently  pays  $80                                                               
million in general funds to provide  its 42 percent match for the                                                               
Native  Medicaid   beneficiaries  who  have  chosen   to  receive                                                               
services outside  the Native health  care system.   He summarized                                                               
by saying that being an Alaska  Native does not mean there is 100                                                               
percent reimbursement  from the federal  government.  It  is only                                                               
when services are  provide inside the Native  health care system,                                                               
and  currently  most services  are  provided  outside the  Native                                                               
health care system.                                                                                                             
                                                                                                                                
Number 2212                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked how  many Native Alaskan children are                                                               
enrolled in the Denali KidCare program.                                                                                         
                                                                                                                                
COMMISSIONER  GILBERTSON  replied  that  he  would  provide  that                                                               
number to the committee.                                                                                                        
                                                                                                                                
Number 2205                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  asked if there  are any costs to  the state                                                               
when  a  Native Alaskan  walks  into  the Alaska  Native  Medical                                                               
Center in Anchorage and receives care.                                                                                          
                                                                                                                                
COMMISSIONER GILBERTSON replied that  if the individual is Alaska                                                               
Medicaid-eligible, the state  is able to charge that  back to the                                                               
U.S. government at the 100 percent reimbursement rate.                                                                          
                                                                                                                                
REPRESENTATIVE GATTO  asked what the  cost would be to  the state                                                               
if the same  person with the same illness  walked into Providence                                                               
Hospital and  received the  same service.   If, for  example, the                                                               
cost is $1,000, what is the expense to the state?                                                                               
                                                                                                                                
COMMISSIONER  GILBERTSON responded  that in  that case  the state                                                               
would pay  42 percent.  He  told the committee that  the state is                                                               
currently working  with the  congressional delegation  to clarify                                                               
some of the reimbursement language  for IHS to ensure 100 percent                                                               
federal  reimbursement for  some services  that are  not provided                                                               
within the four  walls of an IHS-compacted facility.   This is to                                                               
ensure that  when there are compacted  relationships or referrals                                                               
made through the  IHS facility, that care is  still reimbursed at                                                               
100 percent.  He said this  administration's policy is to sign up                                                               
everyone who  is eligible for Medicaid.   He said that  while the                                                               
department  authorizes care,  it  does not  authorize where  that                                                               
care is provided.  Individuals do  have the right to choose where                                                               
they receive their services, and  the administration is committed                                                               
to  protecting that  right.   He said  the department  is working                                                               
with Native health care systems  to ensure that it recaptures the                                                               
greatest  number possible  for  federal  reimbursement to  Alaska                                                               
Native Medicaid  beneficiaries.  He  said these are  dollars that                                                               
can be  invested into the  tribal health care systems  and Native                                                               
health  care corporations  to expand  services in  their regions.                                                               
Doing this  will allow for  additional general fund  dollars that                                                               
will   ensure   the   department  can   have   fair,   reasonable                                                               
reimbursement rates for non-Native facilities.                                                                                  
                                                                                                                                
Number 2011                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO commented  that  there is  no recourse  for                                                               
patients  who are  eligible for  100 percent  reimbursement at  a                                                               
Native facility, but who go  to a non-Native facility where there                                                               
is a cost to the state.  He  pointed out that it would be cheaper                                                               
to pay for a cab ride to  the Native facility than to provide the                                                               
care at a non-Native facility.                                                                                                  
                                                                                                                                
COMMISSIONER GILBERTSON  told the committee that  the department,                                                               
as  the state's  administrator of  the federal  Medicare program,                                                               
must allow individuals the right  to receive care at the facility                                                               
of their choice.   He said the department  does not differentiate                                                               
between   populations   based   on    heritage   or   any   other                                                               
characteristics.    The  department  will  be  working  with  the                                                               
providers to  ensure that it  designs its  systems in a  way that                                                               
maximizes federal revenues.                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO replied  that a  soldier's family  could do                                                               
the same  thing.  While a  soldier gets free medical  care at the                                                               
air base,  there is the option  of getting medical care  where it                                                               
is more convenient.                                                                                                             
                                                                                                                                
COMMISSIONER  GILBERTSON  responded  that  he  is  talking  about                                                               
Medicaid-eligible individuals.                                                                                                  
                                                                                                                                
REPRESENTATIVE GATTO  replied that  is what  he is  talking about                                                               
too.  A lot of soldier's families are Medicaid-eligible.                                                                        
                                                                                                                                
COMMISSIONER GILBERTSON  told the  committee that  the department                                                               
administers  the  program  in  a   fair  manner.    He  said  the                                                               
department is subject to myriad  other federal laws including the                                                               
Emergency Medical  Treatment and  Active Labor Act  [EMTA], which                                                               
ensures  that hospitals  have to  treat individuals  who come  in                                                               
their doors regardless  of insurance coverage.  There  are a host                                                               
of laws that  require fair treatment of individuals,  and he said                                                               
the department is managed in the spirit of those laws.                                                                          
                                                                                                                                
Number 1987                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked if the  expanded language that covers                                                               
more situations  accommodates the "divert" system.   For example,                                                               
if  there is  an  emergency  in Anchorage  and  the ambulance  is                                                               
called,  an individual  might as  likely  show up  at the  Alaska                                                               
Native  Medical   Center  as  at   Providence  Hospital.     That                                                               
individual might  be headed for  the Native hospital, but  if the                                                               
facility is full,  which is becoming more and more  of a problem,                                                               
then that person would be taken to Providence Hospital.                                                                         
                                                                                                                                
Number 1948                                                                                                                     
                                                                                                                                
COMMISSIONER  GILBERTSON  asked   if  Representative  Cissna  was                                                               
referring  to the  department's efforts  to clarify  federal law.                                                               
In  reply to  her affirmative  response, Commissioner  Gilbertson                                                               
said the department is working  with the congressional delegation                                                               
on the Indian  Health Care Improvement Act of 1976.   He told the                                                               
committee  that services  provided  through an  IHS facility  are                                                               
reimbursed at 100  percent.  So the question is  what is provided                                                               
through an  IHS facility.   That Act included language  that said                                                               
this was  not an effort to  increase any new burden  on states to                                                               
pay  for  care  for  individuals  where  the  federal  government                                                               
maintained  trust  responsibilities.     The  interpretation  the                                                               
federal  government has  reverted to  is that  the care  provided                                                               
includes services within  the four walls of that  facility.  [The                                                               
state] contends that  it has been historically  interpreted to be                                                               
beyond that  scope and that  it should include services  that are                                                               
provided through  a referral.  He  said he does not  believe that                                                               
the change  will be  so expansive  that it  will deal  with where                                                               
individuals' intent  was to receive  services.  Rather,  it would                                                               
be where  there is  a clear  contractual relationship  whereby an                                                               
individual  first  receives  his/her  services  through  an  IHS-                                                               
compacted facility and then is referred  out.  It is similar to a                                                               
gatekeeper in some health care systems.                                                                                         
                                                                                                                                
Number 1887                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA responded  that if there is  a gate keeping                                                               
agreement  between those  hospitals in  Anchorage and  the divert                                                               
system is  very carefully  planned, there  is a  contract between                                                               
the hospitals.                                                                                                                  
                                                                                                                                
COMMISSIONER  GILBERTSON  questioned  whether  that  would  still                                                               
qualify, even if the congressional  delegation were successful in                                                               
changing the federal law.                                                                                                       
                                                                                                                                
Number 1850                                                                                                                     
                                                                                                                                
MR.  LABBE commented  that  he  does not  know  if  that kind  of                                                               
agreement would apply, but said he would look into it.                                                                          
                                                                                                                                
Number 1821                                                                                                                     
                                                                                                                                
DENNIS  MURRAY, Administrator,  Heritage Place  Nursing Facility,                                                               
testified via  teleconference from  Kenai on HB  152 and  HB 153.                                                               
He urged  caution on the  part of  the committee with  respect to                                                               
eliminating the Medicaid  Rate Advisory Commission [HB  152].  He                                                               
said  he  would  not  be  as  concerned  as  long  as  the  state                                                               
prescribes a process  for public hearings.  He  said the language                                                               
"fair and reasonable" is a  problem because it creates a standard                                                               
for  the  state  in  terms  of  providing  services  to  Medicaid                                                               
recipients and adequate  reimbursement to providers.   He said he                                                               
would not be in favor of elimination of that language.                                                                          
                                                                                                                                
MR.  MURRAY  commented  that  in   HB  153  the  current  options                                                               
described by  the commissioner  do have  flaws in  them; however,                                                               
the  legislature has  looked at  the various  priorities and  has                                                               
determined  that  some are  higher  than  others.   He  said  the                                                               
elimination of  that language  would certainly  leave uncertainty                                                               
in terms of  whether one service is more crucial  to someone than                                                               
something  else.   He told  the committee  as a  nursing facility                                                               
administrator, he knows  that these clients are some  of the most                                                               
vulnerable  in  the  state  and that  the  elimination  of  those                                                               
service would  be devastating.   He said it would  be unfortunate                                                               
if  passing this  legislation would  mean  that those  priorities                                                               
established by the  legislature would be lost  and the department                                                               
would have  total discretion in  what services it chose  to fund.                                                               
The legislature  would be left out  of that equation in  terms of                                                               
giving its sense of what those priorities are.                                                                                  
                                                                                                                                
Number 1654                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON  responded that the purpose  of this bill                                                               
is to align  Alaska Statute with current federal  law and current                                                               
practice.   The  Medicaid Rate  Advisory Commission  when it  was                                                               
established  did serve  in a  rate-setting function;  however, it                                                               
now serves  in an  advisory capacity.   The  department maintains                                                               
the  rate-setting  functions.    The  Boren  Amendment  that  was                                                               
referred to  is the  federal law  that established  the standard,                                                               
and the  Alaska Statute  was established  to mirror  that federal                                                               
statute.  The Boren Amendment  has been repealed; this bill would                                                               
repeal that state law.  He  told the committee that there will be                                                               
rate-setting  at [the  department's] new  office of  rate review.                                                               
There will still be a public  process for rate setting.  Facility                                                               
rate  setting  will  have  the   same  structure  and  design  as                                                               
physician-based   reimbursement  and   all  other   non-inpatient                                                               
reimbursement services.  The department  will have an office that                                                               
will reflect the varied rate-setting  functions of the department                                                               
including childcare and subsidized adoption.                                                                                    
                                                                                                                                
Number 1437                                                                                                                     
                                                                                                                                
CHAIR WILSON  asked the commissioner  to respond to  Mr. Murray's                                                               
comment concerning the options list.                                                                                            
                                                                                                                                
COMMISSIONER   GILBERTSON    told   the   committee    that   the                                                               
administration's  position is  that the  options list  is not  an                                                               
effective  cost-containment  mechanism.   The  options  list  has                                                               
rarely been utilized and is not  an effective way to manage costs                                                               
in the Medicaid  program.  He said the options  list will replace                                                               
the obsolete  language with general authority  for the department                                                               
to utilize  cost-containment mechanisms.   There are  three clear                                                               
principles that  have to be used  by the department.   First, the                                                               
department  must  pursue  all other  reasonable  cost-containment                                                               
measures  before eliminating  any eligibility  group or  service.                                                               
Second,  the  department  will actively  pursue  strategies  that                                                               
maximize federal receipts.  Third,  decisions should be made in a                                                               
manner that  best reflects  the needs  and interests  of eligible                                                               
Medicare  recipients.    The department  will  still  have  cost-                                                               
containment  reviews and  make prudent  decisions on  where cost-                                                               
containment  should  be  made,  what  services  should  be  fully                                                               
funded,  and if  there  needs to  be  a reduction  in  a type  of                                                               
service.   However, that would have  to be done with  the guiding                                                               
principles  protecting  the  public  interest.    Long-term  care                                                               
facilities  and nursing  home facilities  certainly would  not be                                                               
the  first areas  the department  would  be looking  at for  cost                                                               
containment.  These facilities would  be protected by more direct                                                               
and explicit  authority by the department,  rather than reverting                                                               
to an options list that is not constantly under review.                                                                         
                                                                                                                                
Number 1430                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  moved to  report HB  152 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 152 was reported  from the                                                               
Health, Education and Social Services Standing Committee.                                                                       
                                                                                                                                
Number 1420                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO moved  to report  HB 153  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 153 was reported  from the                                                               
Health, Education and Social Services Standing Committee.                                                                       
                                                                                                                                
Number 1396                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  moved to  report HB  172 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
Number 1379                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA objected  to the  motion, saying  that she                                                               
has difficulty  with cost containment  in the areas  addressed by                                                               
this bill.   Representative Cissna  said that she  believes these                                                               
kinds of measures will cause more people to leave the state.                                                                    
                                                                                                                                
Number 1326                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KAPSNER   agreed  with   Representative  Cissna's                                                               
objection.  She said the  cap being placed on poverty guidelines,                                                               
with  no   date  set   out  for   readdressing  this   issue,  is                                                               
problematic.   Representative  Kapsner  commented  that there  is                                                               
such   a  high   turnover   in  the   legislature,  and   limited                                                               
institutional memory,  that by the  time kids and  pregnant women                                                               
are at  300 to 400  percent of the  poverty guidelines, a  lot of                                                               
the legislators will  not be here.  She said  that more than half                                                               
of the House  has been here two  years or less, and  more than 75                                                               
percent  of  the  House  has   been  here  four  years  or  less.                                                               
Representative Kapsner said  that the climate in  the building is                                                               
very unfriendly to people with  hardships, and she cannot in good                                                               
conscience vote  for the bill.   She told the committee  she does                                                               
understand what the governor is  looking at with cost-containment                                                               
measures,  but she  does  not think  kids,  elders, and  pregnant                                                               
ladies  are the  people to  target.   There  are a  lot of  other                                                               
avenues to look  for money.  She told the  members she is totally                                                               
opposed to this bill.                                                                                                           
                                                                                                                                
Number 1257                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  asked Commissioner Gilbertson  whether, as                                                               
the poverty level is adjusted,  not including the Alaska cost-of-                                                               
living adjustment, those numbers will change.                                                                                   
                                                                                                                                
Number 1234                                                                                                                     
                                                                                                                                
COMMISSIONER GILBERTSON asked for the question to be clarified.                                                                 
                                                                                                                                
REPRESENTATIVE  SEATON said  that he  understands that  this bill                                                               
would revise statute from a percentage to a fixed number.                                                                       
                                                                                                                                
Number 1205                                                                                                                     
                                                                                                                                
CHAIR WILSON called  a brief at-ease at 4:19 p.m.   The committee                                                               
was reconvened at 4:20 p.m.                                                                                                     
                                                                                                                                
Number 1142                                                                                                                     
                                                                                                                                
A  roll call  vote  was taken.    Representatives Wilson,  Gatto,                                                               
Wolf,  and  Seaton  voted  in  favor of  reporting  HB  172  from                                                               
committee.  Representatives Cissna  and Kapsner voted against it.                                                               
Therefore,  HB  172  was  reported   out  of  the  House  Health,                                                               
Education and Social Services Standing  Committee by a vote of 4-                                                               
2.                                                                                                                              
                                                                                                                                
Number 1120                                                                                                                     
                                                                                                                                
CHAIR WILSON called  a brief at-ease at 4:21 p.m.   The committee                                                               
reconvened at 4:22 p.m.                                                                                                         
                                                                                                                                
HB 167-ALCOHOLISM AND DRUG ABUSE GRANTS                                                                                       
                                                                                                                                
CHAIR WILSON announced  that the next order of  business would be                                                               
HOUSE BILL  NO. 167,  "An Act relating  to grants  for alcoholism                                                               
and drug abuse programs; and providing for an effective date."                                                                  
                                                                                                                                
Number 1103                                                                                                                     
                                                                                                                                
ELMER LINDSTROM,  Special Assistant, Office of  the Commissioner,                                                               
Department of  Health and Social  Services, testified  in support                                                               
of HB  167.  He explained  that the bill is  very straightforward                                                               
in  that it  requires that  the alcohol  and drug  abuse grantees                                                               
increase their local match to 25 percent from 10 percent.                                                                       
                                                                                                                                
MR.  LINDSTROM pointed  out  that the  fiscal  note reflects  the                                                               
reduction in state support for  these programs, with a savings of                                                               
approximately   $1.6  million.     It   is  assumed   that  local                                                               
communities  will be  successful in  providing for  an additional                                                               
match and  therefore [the department]  would not expect  there to                                                               
be a  reduction in services at  the community level.   He offered                                                               
the  belief that  the grantees  would be  able to  increase their                                                               
local contribution  to the program.   He said this  proposal came                                                               
from the Division  of Alcohol and Drug Abuse as  a result of [the                                                               
department's] budget  exercise earlier in  the session.   He said                                                               
the  25  percent local  match  requirement  is  the same  as  the                                                               
standard for the mental health grant program.                                                                                   
                                                                                                                                
Number 1050                                                                                                                     
                                                                                                                                
MR.  LINDSTROM said  the Division  of Behavioral  Health will  be                                                               
constituted from the existing Division  of Alcohol and Drug Abuse                                                               
and the  existing Mental Health  Program portion of  the Division                                                               
of  Mental   Health  and  Developmental  Disabilities.     It  is                                                               
reasonable that the substance-abuse  grant program and the mental                                                               
health  grant program  would require  the same  25 percent  match                                                               
from grantees.   He  said he  overstated the  case in  a previous                                                               
hearing on  this bill in the  other body.  He  told the committee                                                               
he did  suggest that 25  percent was  the standard across  all of                                                               
the  department's  grant programs,  and  that  is not  the  case.                                                               
There is  wide variation in  what the local match  requirement is                                                               
from  various programs  funded through  the department.   The  25                                                               
percent  is the  standard for  the mental  health grant  program,                                                               
which [the department] believes is the best comparison.                                                                         
                                                                                                                                
Number 0952                                                                                                                     
                                                                                                                                
CHAIR WILSON  commented that there  is a spreadsheet in  the bill                                                               
packet that shows  the amount of reductions for each  area in the                                                               
state.   She  said  it is  very difficult  decision  for all  the                                                               
members in  these days when there  are limited funds and  so many                                                               
needs.                                                                                                                          
                                                                                                                                
Number 0908                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA referred  to  the  sponsor statement  from                                                               
[U.S.]   Senator   Lisa  Murkowski,   who   was   then  a   state                                                               
Representative, for  the alcohol  tax bill that  was put  in last                                                               
year.   In that  statement, [then-Representative  Murkowski] said                                                               
that she  "introduced the bill  to help offset the  soaring costs                                                               
of alcohol-related  expenses."  Representative Cissna  went on to                                                               
say  Representative  Murkowski  ended her  sponsor  statement  by                                                               
saying, "This legislation  is an important part of  the effort to                                                               
address the  problem of alcohol  and alcohol abuse in  Alaska and                                                               
would  help provide  revenue needed  for the  expanded treatment,                                                               
therapeutic  courts, diversion  programs,  and other  initiatives                                                               
now  under consideration  in  the  legislature."   Representative                                                               
Cissna  commented that  although that  is not  dedicated funding,                                                               
this is  one of  the few  revenue-enhancement measures  that came                                                               
about  last  year, and  the  purpose  was  to provide  funds  for                                                               
programs  that would  curb one  of the  most expensive  habits in                                                               
this state.                                                                                                                     
                                                                                                                                
CHAIR  WILSON agreed  with Representative  Cissna on  that point,                                                               
but noted  that in the original  bill, the tax was  actually much                                                               
higher than the one that passed the legislature.                                                                                
                                                                                                                                
Number 0779                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA  commented  that  may  be  true,  but  the                                                               
problem has not decreased; if anything, it has increased.                                                                       
                                                                                                                                
CHAIR  WILSON  responded  that  unfortunately  [the  legislature]                                                               
cannot designate  where the funds  go.  She commented  that maybe                                                               
the legislature would have been  able to prevent these reductions                                                               
if the higher tax had passed.                                                                                                   
                                                                                                                                
REPRESENTATIVE CISSNA  said the tax  is in  place.  She  told the                                                               
committee she  has an  amendment she would  like to  introduce at                                                               
the appropriate time.                                                                                                           
                                                                                                                                
CHAIR WILSON told the committee she  wants to be advised ahead of                                                               
time when a member has an amendment.                                                                                            
                                                                                                                                
Number 0711                                                                                                                     
                                                                                                                                
MR.  LINDSTROM  told  the  committee passing  this  bill  is  the                                                               
appropriate thing  to do.  It  is the only statutory  local match                                                               
requirement that  exists.  He said  there is another area  in the                                                               
governor's budget  for FY 04  that he believes will  address some                                                               
of  Representative Cissna's  concerns.    There is  approximately                                                               
$3.5  million  in  alcohol  tax  receipts  for  new  programmatic                                                               
efforts,  and there  is an  expectation that  the program,  under                                                               
[the administration's]  emphasis on maximizing  federal receipts,                                                               
ought to be  able to generate a significant  amount of additional                                                               
federal dollars for the Medicaid  program by leveraging that $3.5                                                               
million.    Mr. Lindstrom  offered  to  get that  information  on                                                               
additional substance  abuse treatment proposed in  the governor's                                                               
budget.                                                                                                                         
                                                                                                                                
Number 0599                                                                                                                     
                                                                                                                                
CHAIR WILSON  referred to  page 1, lines  8-11, which  says, "The                                                               
department may  waive all or  part of the requirement  that state                                                               
money be matched by community  money if the department finds that                                                               
community money is  unavailable and waiver of  the requirement is                                                               
in the best interests of the  state."  She asked Mr. Lindstrom to                                                               
explain that language.                                                                                                          
                                                                                                                                
Number 0544                                                                                                                     
                                                                                                                                
MR. LINDSTROM referred  to a spreadsheet in the  bill packet that                                                               
was labeled "SB  124/HB 167 Increase in  Local Match Requirements                                                               
for  Substance  Abuse  Grants  (Revised  3/12)."    He  told  the                                                               
committee  that  exempted  from community  grant  match  are  the                                                               
community-based  suicide-prevention projects  and those  projects                                                               
that are  less than $30,000.   He said in these  cases either the                                                               
communities do  not have a local  match at all or  other programs                                                               
that are  services for  families would remain  at the  10 percent                                                               
match.   Community prevention services  under $30,000  would also                                                               
remain  at  the  10  percent  match.    Mr.  Lindstrom  told  the                                                               
committee  the  language provides  for  the  department to  waive                                                               
match requirements in full or in part under a hardship.                                                                         
                                                                                                                                
Number 0425                                                                                                                     
                                                                                                                                
REPRESENTATIVE WOLF asked if the  grantees are normally nonprofit                                                               
corporations.                                                                                                                   
                                                                                                                                
MR. LINDSTROM answered in the affirmative.                                                                                      
                                                                                                                                
REPRESENTATIVE  WOLF pointed  out that  these organizations  have                                                               
the  ability to  seek  corporate or  federal  grants outside  the                                                               
[state] government sector.                                                                                                      
                                                                                                                                
CHAIR  WILSON  asked  Representative  Wolf to  expand  on  grants                                                               
obtained from sources other than state government.                                                                              
                                                                                                                                
Number 0381                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF  referred  to 501(c)(3)  nonprofit  funding,                                                               
which he  said is virtually untapped  nationwide.  Representative                                                               
Wolf  told the  committee there  was over  $160 million  in grant                                                               
funding that  was not applied  for last  year.  If  the nonprofit                                                               
organizations  in  the state  of  Alaska  were more  enthusiastic                                                               
about  trying to  build  partners, he  said, it  would  be a  lot                                                               
easier to accommodate these programs.                                                                                           
                                                                                                                                
REPRESENTATIVE  CISSNA  asked  if groups  that  this  legislation                                                               
affects are  existing nonprofits  and if  the new  programs being                                                               
suggested by  the governor's legislation  are also  nonprofits or                                                               
are government programs.                                                                                                        
                                                                                                                                
Number 0273                                                                                                                     
                                                                                                                                
MR.  LINDSTROM  replied  that  virtually   all  support  for  the                                                               
substance abuse  treatment programs  are for  "our grant  in aid"                                                               
program to  nonprofits.  He  said he believes the  priorities for                                                               
the  additional funding  are for  women and  children's services,                                                               
particularly for families  that may be involved  in the child-in-                                                               
need-of-aid  system.     He  said  there  is   also  emphasis  on                                                               
adolescent treatment in rural areas.                                                                                            
                                                                                                                                
Number 0221                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER asked why a 25 percent match was chosen.                                                                 
                                                                                                                                
MR. LINDSTROM  replied that  the suggestion  at the  first budget                                                               
meeting  was that  25  percent was  the standard  in  all of  the                                                               
department's grant  programs.  However,  he said  he subsequently                                                               
learned that  really is  not true.   It is  the standard  for the                                                               
most analogous grant program, which  is for mental health grants.                                                               
He told  the committee there  is a  wide variety of  match rates.                                                               
Mr.  Lindstrom said  it was  stated by  the former  director that                                                               
this is  relatively low;  in looking for  budget savings,  it was                                                               
something that  rose to the  top of the list  as one of  the most                                                               
feasible and least harmful things to propose.                                                                                   
                                                                                                                                
REPRESENTATIVE KAPSNER  asked Mr.  Lindstrom if  he has  rates of                                                               
alcohol consumption  versus crime.   She asked if he  could think                                                               
about that with respect to cost to the state.                                                                                   
                                                                                                                                
MR.  LINDSTROM replied  that  there is  a  wealth of  information                                                               
about  that  subject  and  a recently  published  report  by  the                                                               
criminal justice  assessment commission, which compiles  a lot of                                                               
alcohol-related  statistics.    He  said  he  has  found  in  his                                                               
conversations  with law  enforcement and  corrections staff  that                                                               
there is a very high  percentage of criminal behavior where there                                                               
is substance abuse involved.                                                                                                    
                                                                                                                                
Number 0003                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER  asked if the department  considered using                                                               
a sliding  scale for the  communities that could least  afford to                                                               
pay for  the services.   For  instance, municipal  assistance and                                                               
revenue sharing  is going to  go down  this year, and  there have                                                               
been  huge decreases  in that  program over  the last  ten years.                                                               
Many  communities  are  not faring  well  with  timber,  mineral,                                                               
tourism, and oil markets such as  they are.  Would the department                                                               
consider a sliding  scale for communities that can  afford to pay                                                               
more?                                                                                                                           
                                                                                                                                
TAPE 03-26A, SIDE A                                                                                                           
Number 0013                                                                                                                     
                                                                                                                                
MR.  LINDSTROM  said  he  did  not believe  that  there  was  any                                                               
expectation that  local governments would be  stepping forward to                                                               
make up the  shortfall.  It was much more  of an expectation that                                                               
through various  types of fundraising, grants,  and other sources                                                               
of  funds, the  nonprofits would  generate the  additional match.                                                               
Mr. Lindstrom said  that there is an expectation that  all of the                                                               
treatment providers in  the system offer a  sliding-fee scale for                                                               
the  clients who  come  in to  be  served.   This  is the  public                                                               
treatment  system, so  the patients  tend to  be very  low-income                                                               
individuals.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAPSNER replied  that her  understanding is  that                                                               
communities  would  be  asked  to   pay,  and  asked  if  she  is                                                               
misreading the bill.                                                                                                            
                                                                                                                                
MR. LINDSTROM replied  that the word "community" is  in the broad                                                               
sense of  the word, and  not referring  to local government.   He                                                               
pointed   out  the   exemptions  for   very  small   communities,                                                               
particularly  those communities  that  only  receive the  suicide                                                               
prevention  grant, which  is  approximately  $12,000 to  $17,000.                                                               
There is not the expectation of a match from those communities.                                                                 
                                                                                                                                
Number 0166                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER  asked what  the waitlist  is for  some of                                                               
these treatments programs.                                                                                                      
                                                                                                                                
Number 0177                                                                                                                     
                                                                                                                                
MR. LINDSTROM responded that there  is an updated waitlist report                                                               
that  he has  not yet  seen.   It  was  due in  January or  early                                                               
February.   He said  he would get  a copy of  that report  to the                                                               
committee.   Mr. Lindstrom  said he  heard discussions  about the                                                               
report  and  believes  the  number is  similar  to  the  previous                                                               
waitlist, which  is very significant  in many areas of  the state                                                               
at  any given  time.   The waitlist  report from  a year  ago was                                                               
about 300 individuals waiting for treatment.                                                                                    
                                                                                                                                
REPRESENTATIVE  WOLF said  for  the record  that  many state  and                                                               
federal   governments   recognize  nonprofit   organizations   as                                                               
community organizations.  The 25  percent match for nonprofits is                                                               
a  comparatively   low  number.    Most   government  grants  for                                                               
nonprofit, community-based organizations start  at 33 percent and                                                               
go up from  there.  He told  the committee he has  seen a two-to-                                                               
one match, so  a 25 percent match  is a low number.   By bringing                                                               
in the community,  the organization has an  opportunity to expand                                                               
understanding  and  knowledge  of   the  care  that  organization                                                               
provides.   He  told the  committee bonding  and stewardship  are                                                               
very  tough to  regulate, and  a  lot easier  to educate  [people                                                               
about].                                                                                                                         
                                                                                                                                
Number 0340                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO said  the state  spends a  lot of  money on                                                               
substance  abuse treatment  and he  is  curious if  the state  is                                                               
getting anything  out of  it.  Do  [these programs]  cure people,                                                               
and if they  do, is it a  percent or a serious number?   He asked                                                               
Mr. Lindstrom  what the success rate  is over one, five,  and ten                                                               
years,  having people  be drug-free  for 24  and 48  hours before                                                               
they  come back.    Does  [the state]  have  numbers to  indicate                                                               
success in all the money the state spends?                                                                                      
                                                                                                                                
MR.  LINDSTROM pointed  to the  "New Standards  Report of  1998,"                                                               
where  a firm  came in  under  contract and  did a  study on  the                                                               
success  rates of  alcohol  and substance  abuse  programs.   The                                                               
conclusion was  that programs  are effective.   He said  the most                                                               
compelling  discussion he  has heard  on  this issue  was from  a                                                               
previous director of the division,  Ernie Turner, who changed the                                                               
way Mr.  Lindstrom thought  about alcohol  abuse.   Mr. Lindstrom                                                               
said  he and  most  of the  folks in  the  health care  community                                                               
believe  that defining  what success  means is  important because                                                               
alcoholism is a disease that  is chronic, progressive, and if not                                                               
treated  the outcome  is  death.   In  thinking  about any  other                                                               
chronic disease, one  would not ask this kind of  question.  If a                                                               
person  has diabetes  or chronic  diseases and  is treated,  gets                                                               
better,  and then  subsequently  is required  to be  hospitalized                                                               
again,  there  would  not  be   the  suggestion  that  the  first                                                               
treatment was a failure in some sense, Mr. Lindstrom commented.                                                                 
                                                                                                                                
Number 0511                                                                                                                     
                                                                                                                                
MR. LINDSTROM went on to say  that there is recognition that with                                                               
some chronic diseases  there are some people who will  be able to                                                               
go on  and not have  a relapse; however,  it is not  uncommon for                                                               
there  to be  a  relapse.   The  short answer  is  that there  is                                                               
success, but  not 100  percent success, the  first time;  for the                                                               
rest of their lives, that answer is no.                                                                                         
                                                                                                                                
Number 0603                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  told Mr. Lindstrom  he understands  what he                                                               
is saying, but  diabetics are told that unless  they take insulin                                                               
every day  for the rest  of their lives,  they will get  sick and                                                               
die.   If a  person does  not take it  and gets  sick, that  is a                                                               
problem with  a person  who is  abusing himself  or herself.   He                                                               
said he  is more concerned about  a person who is  a diabetic who                                                               
does  the right  thing,  watches his/her  diet, and  occasionally                                                               
comes back.   That  is quite a  different story.   Representative                                                               
Gatto said  he is not expecting  100 percent of anything,  but he                                                               
said he is  expecting a number that  says this is not  a waste of                                                               
state money.   He said the  legislature is spending a  great deal                                                               
of  money and  that he  gets a  lot of  input from  the community                                                               
concerning repeat offenders.                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  shared that after  25 years on  the streets                                                               
of Anchorage as a paramedic, he  can tell the first names, second                                                               
names, and  family names of  people who  come back over  and over                                                               
again.   He  offered his  belief that  these individuals  have no                                                               
interest in  any kind of a  cure.  Their main  interest is living                                                               
on the dole.  That is their  primary goal in life.  He questioned                                                               
whether the state  wants to support people whose  primary goal is                                                               
to live on the dole.                                                                                                            
                                                                                                                                
Number 0661                                                                                                                     
                                                                                                                                
MR.  LINDSTROM apologize  for overstating  the  case for  alcohol                                                               
treatment, and he said  he would get a copy of  the report to the                                                               
committee.   He said  treatment does  have good  value and  he is                                                               
well aware  of the situations Representative  Gatto described and                                                               
does not dispute for one second that they [exist].                                                                              
                                                                                                                                
Number 0709                                                                                                                     
                                                                                                                                
PAM  WATTS,  Executive  Director, Governor's  Advisory  Board  on                                                               
Alcoholism   and  Drug   Abuse,  Office   of  the   Commissioner,                                                               
Department of  Health and Social  Services, testified on  HB 167.                                                               
She  said  that while  she  did  not  hear  all of  the  previous                                                               
testimony,  what she  heard was  very  important.   She told  the                                                               
committee  when looking  at legislation  that  changes the  match                                                               
rate  from 10  percent  to  25 percent,  the  committee needs  to                                                               
acknowledge  that  the  Division  of Alcoholism  and  Drug  Abuse                                                               
funding has  been flat  for approximately 10  years.   There have                                                               
been a  lot of discussions about  inflation-proofing funding, and                                                               
that has not been done with  this program.  She said the grantees                                                               
have had cuts over the past  10 years, and this will increase the                                                               
burden on them.                                                                                                                 
                                                                                                                                
MS. WATTS pointed  out that the client population  served by this                                                               
program is either very low-income  or indigent, so while there is                                                               
a sliding-fee scale, the ability  to collect from this population                                                               
is extremely limited.   The Veterans' Administration  used to pay                                                               
for  some of  this treatment;  however, that  is now  impossible.                                                               
Providers used  to be  able to  collect permanent  fund dividends                                                               
from some  of these  folks, but child  support enforcement  and a                                                               
lot of  other important entities  are first  on the list  in that                                                               
regard.    If current  legislation  being  proposed to  take  the                                                               
permanent fund  dividend away from  individuals who  are arrested                                                               
for  driving under  the influence  [passes],  providers will  not                                                               
have  that any  longer  either.   Many of  these  people are  not                                                               
employed.   Ms.  Watts said  she understands  what the  committee                                                               
members  have  said,  that there  should  be  accountability  for                                                               
treatment, and many  times down the road once  they have received                                                               
treatment, become productive,  and can pay for  treatment, "we do                                                               
receive it."                                                                                                                    
                                                                                                                                
Number 0919                                                                                                                     
                                                                                                                                
CHAIR WILSON asked Ms. Watts  how often individuals who have been                                                               
through treatment come back and pay for that treatment.                                                                         
                                                                                                                                
MS. WATTS said when she worked  as a treatment provider for eight                                                               
and  a  half  years  [both residential  services  and  outpatient                                                               
prevention  services], the  big-ticket item  was the  residential                                                               
services.   Unfortunately,  those  are the  people  who are  most                                                               
severely impaired.   That is why  residential treatment sometimes                                                               
is not as  successful as outpatient treatment,  because these are                                                               
really late-stage people.   Many of them  were provided treatment                                                               
on  a sliding-fee  scale,  and some  of them  were  right out  of                                                               
corrections; some of them had no  cash.  They were on a treatment                                                               
plan,  and it  would not  be  very much  a month,  but they  were                                                               
paying something.   If  the individual did  not pay  anything, it                                                               
was turned over to collections.                                                                                                 
                                                                                                                                
MS. WATTS  told of a  provider in Seward  that says if  its match                                                               
rate  goes up,  it will  be very  difficult because  it gets  its                                                               
[matching funds] from clients.                                                                                                  
                                                                                                                                
Number 0930                                                                                                                     
                                                                                                                                
MS. WATTS  responded to Representative  Gatto's question  and Mr.                                                               
Lindstrom's comment on  the New Standards Study,  which does show                                                               
that  Alaska  is  not only  comparable  in  successful  treatment                                                               
outcomes compared  to the  rest of the  country, but  showed that                                                               
Alaska was  slightly above the  national average.  Right  now the                                                               
Mental Health Trust  Authority and the legislature  are funding a                                                               
study  through the  University  of Alaska  to  give more  current                                                               
information  about  treatment  outcomes.     As  soon  as  it  is                                                               
available,  she  said,   she  will  make  it   available  to  the                                                               
committee.                                                                                                                      
                                                                                                                                
Number 1042                                                                                                                     
                                                                                                                                
MS. WATTS strongly encouraged the  committee to keep the language                                                               
intact  that refers  to  the department's  ability  to waive  the                                                               
match  if  the  department  determines that  community  money  is                                                               
unavailable and a waiver is in the best interest of the state.                                                                  
                                                                                                                                
Number 1068                                                                                                                     
                                                                                                                                
MATT  FELIX,   National  Council  on  Alcoholism,   testified  in                                                               
opposition to  HB 167.  He  gave a brief description  of his long                                                               
career in the alcoholism treatment  field.  He told the committee                                                               
he believes this bill is not  needed because the 25 percent match                                                               
is a goal  that most community nonprofits cannot  reach in public                                                               
programs.  He pointed out that  with this population, by the time                                                               
they  need treatment,  most of  their  resources are  gone.   The                                                               
grant-in-aid regulations  under Governor  Hickel found  that this                                                               
is a  very efficient  way of  providing services  and that  it is                                                               
probably done  at a third  of the  cost of providing  services by                                                               
state  employees.   The  grant-in-aid  regulations  by the  state                                                               
require a nonprofit  to charge for those services.   The provider                                                               
is  required   to  use  the   federal  regulations   for  poverty                                                               
guidelines on a sliding-fee scale.   Some of these people can pay                                                               
and  some do.    He said  when  he was  running  the hospital  in                                                               
Juneau,  city  government  provided  some of  the  funding.    In                                                               
Anchorage,  the  city would  receive  the  same grant  and  match                                                               
funding  for programs  or  nonprofits, but  it  was difficult  to                                                               
match because the funds were  substantial.  Since the late 1980s,                                                               
Anchorage has  decided not to  match funding, and since  the late                                                               
1990s, the city of Juneau has decided not to either.                                                                            
                                                                                                                                
MR.  FELIX said  in  rural  Alaska there  has  been  a hard  time                                                               
reaching the 10 percent match.   The people out there do not have                                                               
the  ability  to pay  at  all.   He  said  he  recalls that  some                                                               
individuals paid in fish and handmade products.                                                                                 
                                                                                                                                
Number 1313                                                                                                                     
                                                                                                                                
CHAIR  WILSON announced  that  she would  end  testimony at  this                                                               
time.  [HB 167 was held over.]                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 1340                                                                                                                     
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Health, Education and Social  Services Standing Committee meeting                                                               
was adjourned at 5:03 p.m.                                                                                                      

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