03/05/2015 03:00 PM House HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HB76 | |
| Presentation: Impact of Uncompensated Care | |
| Presentation: Medicaid Expansion and Reform | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 76 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
March 5, 2015
3:04 p.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Liz Vazquez, Vice Chair
Representative David Talerico
Representative Geran Tarr
Representative Adam Wool
MEMBERS ABSENT
Representative Neal Foster
Representative Louise Stutes
OTHER LEGISLATORS PRESENT
Representative Andy Josephson
COMMITTEE CALENDAR
HOUSE BILL NO. 76
"An Act relating to the Governor's Council on Disabilities and
Special Education."
- MOVED HB 76 OUT OF COMMITTEE
PRESENTATION: IMPACT OF UNCOMPENSATED CARE
- HEARD
PRESENTATION: MEDICAID EXPANSION AND REFORM
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 76
SHORT TITLE: GOV COUNCIL ON DISABILITIES/SPECIAL ED
SPONSOR(s): REPRESENTATIVE(s) MILLETT
01/23/15 (H) READ THE FIRST TIME - REFERRALS
01/23/15 (H) HSS
03/03/15 (H) HSS AT 3:00 PM CAPITOL 106
03/03/15 (H) Heard & Held
03/03/15 (H) MINUTE(HSS)
03/05/15 (H) HSS AT 3:00 PM CAPITOL 106
WITNESS REGISTER
BECKY HULTBERG, President & CEO
Alaska State Hospital & Nursing Home Association
Juneau, Alaska
POSITION STATEMENT: Presented a report on the impact of
uncompensated care on the health care system.
VALERIE DAVIDSON, Commissioner Designee
Office of the Commissioner
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint titled "Healthy
Alaska Plan."
ACTION NARRATIVE
3:04:42 PM
CHAIR PAUL SEATON called the House Health and Social Services
Standing Committee meeting to order at 3:04 p.m.
Representatives Seaton, Vazquez, Tarr, Wool, and Talerico were
present at the call to order. Representative Josephson was also
in attendance.
HB 76-GOV COUNCIL ON DISABILITIES/SPECIAL ED
3:05:09 PM
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 76, "An Act relating to the Governor's Council on
Disabilities and Special Education."
3:06:12 PM
REPRESENTATIVE VAZQUEZ moved to report HB 76, Version 29-
LS0369\A, out of committee with individual recommendations and
the accompanying zero fiscal notes.
CHAIR SEATON objected. He reopened public testimony, and after
ascertaining that there was no one asking to testify, he closed
public testimony.
3:06:47 PM
CHAIR SEATON removed his objection. There being no further
objection, HB 76 was moved from the House Health and Social
Services Standing Committee.
^Presentation: Impact of Uncompensated Care
Presentation: Impact of Uncompensated Care
3:07:11 PM
CHAIR SEATON announced that the next order of business would be
a presentation concerning the impact of uncompensated care.
BECKY HULTBERG, President & CEO, Alaska State Hospital & Nursing
Home Association (ASHNHA), announced that there were two general
topics: first, what is uncompensated care, why was it important
to the health care system, and why was it important to have this
conversation; second, what could be expected to happen to
uncompensated care if Medicaid Expansion were to move forward.
3:08:26 PM
MS. HULTBERG directed attention to a handout titled "Impact of
Medicaid Expansion On Hospital Uncompensated Care," [Included in
members' packets] and read:
Uncompensated care is an overall measure of hospital
care provided for which no payment was received from
the patient or insurer. It is the sum of a hospital's
"bad debt" and the charity care it provides.
MS. HULTBERG pointed out that this only included the cost of the
care provided, and not the billed charges, which she declared to
be an important distinction. She continued to paraphrase from
the handout, which read:
Charity care is care for which hospitals never
expected to be reimbursed. A hospital incurs bad debt
when it cannot obtain reimbursement for care provided.
MS. HULTBERG explained that hospitals would often have an
application process for charity care, as patients were sometimes
unable or unwilling to pay their bills. She reported that
hospitals had uncompensated care because they were legally
required to provide emergency medical services and appropriate
stabilization regardless of whether people could pay, as
determined by the federal law, "Emergency Medical Treatment and
Act of Labor Act." People could expect, no matter their
economic status, to be able to receive care at a hospital
emergency room. She declared that, in reality, most hospitals
provided far more in care than simply emergency room care to
those who could not pay. She stated that the non-tribal
hospitals in Alaska provided more than $90 million in
uncompensated care in 2013, reiterating that this only included
the cost to the hospitals and not what they would have charged
for the services. She allowed that, as the tribal hospitals had
different cost reports, it was not possible to directly compare
them with non-tribal hospitals. She pointed out that, in many
communities, as the tribal facilities were the only provider and
they were providing uncompensated care, the cost was more than
$90 million. She clarified that uncompensated care was not free
care, even as it was a needed service for the communities, and
that it had to be paid for in some way. She explained that,
with the structure of Medicare and Medicaid payments, the
uncompensated care costs were passed along through higher rates
for commercial payers from the insurance companies. She opined
that we all pay for uncompensated care, as the $90 million was
not free.
MS. HULTBERG offered an explanation for the result to
uncompensated care if Medicaid were expanded. She read from the
aforementioned handout:
A Colorado study analyzed data from 465 hospitals in
30 states in the first four months of Medicaid
expansion. It found that unpaid care decreased by 30
percent in expansion states and remained largely
unchanged in non-expansion states.
MS. HULTBERG relayed that, contrary to earlier statements,
Medicaid expansion did result in a reduction in uncompensated
care because more people were covered by a payer source. She
declared that, based on other reports, it was safe to assume
that Medicaid expansion could result in a decrease of 20 - 30
percent of the total amount of uncompensated care, a reduction
of $18 - $27 million in uncompensated care for non-tribal
facilities. She reported that small and large hospitals were
under an increasing regulatory and financial pressure, as the
industry adapted to a rapidly changing business model, declining
reimbursement, and a variety of other factors. She declared
that this reduction in uncompensated care would have a huge
impact on the future sustainability of small rural hospitals, as
they had lower patient volumes. She stated that critical access
hospitals nationwide, those with 25 beds or less, had found it
increasingly difficult to stay open. She referenced a USA Today
article, reporting that since 2010, 43 critical access hospitals
across the nation had closed. She noted that the closure of a
critical access hospital in Alaska would most likely mean an
expensive medi-vac and delayed treatment. She stated that all
the hospitals were faced with a declining reimbursement from
Medicare. She offered to provide these statistics for
distribution to the committee. She reported that, from 2010 -
2024, Alaska hospitals would see $591 million in Medicare
reductions from a variety of factors. She pointed out that the
Patient Protection and Affordable Care Act had included Medicare
reductions to help pay for the costs of the act, and that these
reductions would happen regardless of whether states expanded
Medicaid. She noted that Alaska hospitals could see another
$320 million of projected cuts, and, should those cuts be
enacted along with the reduction in Medicare, Alaska hospitals
could experience almost $900 million in cuts over a 15 year
period. She emphasized that the hospital industry was facing
financial pressure, while it was also being asked to transform
health care from a system that rewarded volume, "the more things
you do to people the more you get paid," to one that rewarded
value, "paid based on the kinds of outcomes you receive and the
cost of that care." She declared that incentives within the
system were not currently aligned, as hospitals were paid when
people were sick, and not when people were kept well or received
high quality, cost effective care.
3:15:25 PM
MS. HULTBERG presented an example of a Ketchikan hospital which
had received a Centers for Medicare and Medicaid Services (CMS)
innovation grant for care coordination. As a result of
providing better care coordination for all of their patients,
the hospital increased their quality and decreased their
revenue. The subsequent question now asked of hospitals was,
are you going to spend money by hiring care coordinators to
reduce your revenue but to improve quality. She allowed that
this did appear to be a questionable business decision, pointing
out that the incentives for this were not aligned. She
questioned how to transform to a more aligned model, and stated
that it would be necessary to take risks and innovate, which
would require capital, a necessity for any business when they
take risks. She directed attention to Medicaid Expansion, as it
could provide the necessary capital to become the engine of
health care transformation. She declared that it was necessary
for the health care system to transform in order to improve
health care outcomes. She explained that Medicaid Expansion
would supply the risk capital to allow the innovation, and
combined with a payment structure that would reward outcomes
instead of volume, the process of transformation would begin.
She declared that Medicaid needed to turn from being a cost
center to the engine of transformation, because improved health
care outcomes would be good for everyone.
3:17:45 PM
CHAIR SEATON allowed that this would help for a better
understanding to what was necessary for reform, and what the
expansion of Medicaid would mean for hospitals in Alaska.
^Presentation: Medicaid Expansion and Reform
Presentation: Medicaid Expansion and Reform
3:18:20 PM
CHAIR SEATON announced that the next order of business would be
a presentation by the Department of Health and Social Services
on Medicaid Expansion and Reform.
3:20:01 PM
VALERIE DAVIDSON, Commissioner Designee, Office of the
Commissioner, Department of Health and Social Services (DHSS),
stated that the Healthy Alaska Plan was available on the
department website, relaying that it contained four components.
She stated that expanding Medicaid was healthy for Alaskans, it
was healthy for the economy, it was healthy for the state
general fund budget, and it served as a catalyst for reform.
She declared that the department wanted Alaskans to be as
healthy and as productive as possible, pointing out that people
could not work, hunt, or fish if they were not healthy enough to
do so. She declared that the department wanted Alaskans to be
healthy and able to contribute to the economy. She emphasized
that an expansion of Medicaid, along with the assorted necessary
reforms, would improve health outcomes, increase productivity,
and reduce the number of uninsured Alaskans by half, to about 10
percent. She noted that more Alaskans would receive preventive
and primary care, including behavioral health care services and
help with the management of chronic, costly diseases. She
reported that business owners would benefit, as there would be
fewer turnovers and lost days of work from employees with
unintended illnesses and injuries. She stated that state
mortality would also drop, and expansion would afford the
opportunity to address pressing health issues, including access
to behavioral health services.
3:22:28 PM
COMMISSIONER DAVIDSON pointed to slide 2, "Who is covered now?"
and explained that currently in Alaska, an individual had to be
low income, a child, a pregnant woman, or an adult with
dependent children to be eligible for Medicaid. She explained
that the Patient Protection and Affordable Care Act allowed
adults with incomes between 100 percent to 400 percent of the
federal poverty level to qualify for a subsidy to help pay for
health insurance. She relayed that expanding Medicaid was
originally mandatory with passage of the Patient Protection and
Affordable Care Act, but the U. S. Supreme Court ruling had made
Medicaid Expansion optional. This had created a gap in
eligibility for adults without dependent children who earn less
than 100 percent of the federal poverty level, less than $14,720
per year or about $7.07 per hour. She reported that this gap
also included a married couple earning a combined income of less
than $19,920 per year, or about $9.57 per hour. As these
individuals did not qualify for Medicaid, they also did not
qualify for a subsidy.
3:24:34 PM
COMMISSIONER DAVIDSON stated that Medicaid Expansion offered
several important opportunities, slide 3, "Medicaid Expansion,"
which included a higher federal match resulting in an immediate
economic boost to the state economy. She listed calendar years
2014, 2015, and 2016 as years for which the federal match was
100 percent. Over the subsequent three years, through 2019, the
federal match would transition from 95 percent to 94 percent to
93 percent, which she pointed out was similar to the aviation
match for runway improvements. For 2020 and beyond, the federal
match would become 90 percent. She compared this payment with
the regular Medicaid match, which was about 50 percent. She
declared that she did not anticipate the federal match to drop
below 90 percent, as it would require change and approval by the
U. S. Congress and the President. She pointed out that Alaska
had clearly stated that its participation was contingent on
maintaining the 90 percent federal match, which was similar to
the federal transportation funding match. She expressed
appreciation for the opportunity to invest with a significant
federal return on the investment, noting that Alaska currently
did this with runways and roads as it was necessary to have safe
roads and runways for the state population and to promote
business and contributions to the economy. She declared that
this was an important infrastructure investment for the state.
She suggested that investments in health care were another
important infrastructure investment in Alaska, as people could
not be productive if they were not healthy. She shared that
Medicaid Expansion also offered the opportunity to reduce
uncompensated care, as there was currently more than $90 million
in uncompensated care being absorbed by state hospitals every
year. She noted that other states had uncompensated care rates
drop after Medicaid Expansion. She said that it also offered
the opportunity for the state to save general fund monies,
pointing out that this would save the state about $6.6 million
of general fund expenses in 2016. She pointed out that the
state would also have the chance to leverage reform
opportunities.
3:29:36 PM
COMMISSIONER DAVIDSON directed attention to slide 4, "Who would
be covered by Expansion?" and she listed adults without
dependent children, ages 19 - 64, who were not otherwise
eligible for Medicaid or Medicare: Single adults who earn up to
138 percent of the federal poverty level, $20,314 per year or
married couples without dependent children earning a combined
income up to $27,490 per year.
COMMISSIONER DAVIDSON moved on to slide 5, "Where are they?"
She pointed out that the majority of the eligible population
lived in the larger population centers, with the Anchorage and
Matanuska-Susitna region accounting for about 51 percent of the
eligible population, the Gulf Coast and the Interior each
accounting for about 14 percent, Northern Alaska accounting for
about 12 percent, Southeast Alaska accounting for about 6
percent, and Southwest Alaska accounting for about 3 percent.
She concluded that about 42,000 Alaskans would be eligible for
Medicaid Expansion.
COMMISSIONER DAVIDSON directed attention to slide 6 "The
Expansion Population," and stated that almost 44 percent of the
Medicaid Expansion population were working, while another 28
percent were unemployed, and collecting unemployment. She
reminded the committee that to collect unemployment, it was
necessary to have been recently employed and to be actively
searching for work, hence these people were in the workforce.
She pointed out that this would include seasonal work, summer
jobs, or recent lay-offs. She reported that the above totaled
more than 70 percent of the Medicaid Expansion population. She
explained that more than 70 percent of this population did not
have affordable health care benefits, commenting that more than
43 percent had no coverage, and that 29 percent had some access
to health care including Indian Health Service facilities or
community health centers. She pointed out that access to these
facilities were not a health insurance plan or a portable health
care benefit, but were instead a limited benefit. She declared
that access to a community health center on a sliding fee scale
offered a very limited service, and did not allow care coverage
for emergency room visits or specialty services. She emphasized
that this was not insurance. She stated that everyone was
impacted when an individual did not get the necessary health
care, and reminded that 20 percent of the state was uninsured.
She acknowledged that there were many small business owners in
Alaska who were not able to provide health coverage to their
employees, and although these were able bodied working Alaskans,
they did not earn enough to purchase insurance on the private
market. She declared that Medicaid Expansion was something that
could be done to offer health care to our fellow Alaskans, and
that it could save general fund dollars for the state.
COMMISSIONER DAVIDSON addressed slide 7, "How many will sign
up?" and stated that, although about 42,000 Alaskans would be
eligible to enroll in Medicaid Expansion, only about 20,000
would sign up in the first year with a projected 26,500 people
signing up in 2021. She proclaimed that a lot of people were
eligible but did not sign up, even with the current Medicaid
program. She reported that a part of the Healthy Alaskans plan
included a report by Evergreen Economics, a firm which had
analyzed Medicaid data for Department of Health and Social
Services for almost a decade. She shared that the department
had conducted this report for "refreshed information" to
"provide the latest, greatest analysis." She said that this
latest Evergreen report provided analysis in three key areas.
She said that the first area was the projection of the expansion
population for the years 2016 - 2021, slide 7; the second area
was the "Cost Per Enrollee," slide 8; and the third area of
analysis was the total spending of services with a breakdown of
federal match with the corresponding state match by year.
COMMISSIONER DAVIDSON addressed slide 8, "Cost Per Enrollee,"
the second piece of analysis by Evergreen Economics. She
reported that the cost per enrollee was estimated at $7,250 in
the first year [2016] and would increase to about $8,400 in
2021. She explained that this cost was lower than earlier
reports because, when Evergreen Economics looked at the
projected enrollee population, they found that 54 percent were
male, with about 20 percent of that group between the ages of 19
and 34. She shared that existing data from the Medicaid program
reflected that, as younger men did not access health care
services in the same manner as others, their costs were
generally much lower. She stated that working age adults
currently enrolled in the Medicaid program were used as a proxy
for the expansion population, and that the average spending per
enrollee between 2009 - 2013 grew on an average annual basis by
1 percent. Although this amount was $6,560 in 2013, the
projected estimate per enrollee was $7,250 because a portion of
the projected enrollees were in the catastrophic beneficiary
population who were covered at 100 percent by the state general
fund and there needed to be compensation for this. She declared
that the cost per enrollee would range from $7,250 in [2016] to
$8,433 in [2021].
COMMISSIONER DAVIDSON spoke about slide 11, "New Federal
Dollars," which reviewed the total spending on services,
including both federal and state shares. She pointed out that
the projected federal revenue in 2016 would be about $145
million and would result in more than $1 billion in new federal
revenue during the first six years. She emphasized that every
day of delay to Medicaid Expansion in 2016 would cost the state
$398,452 in lost federal revenue.
3:42:46 PM
COMMISSIONER DAVIDSON moved on to slide 12, "Saves Money,"
expressing her agreement that it was an important question to
ask how much free money was going to cost. She explained that
the state match was zero in 2016, and would transition to a cost
of $19,587,000 in 2021 as the state match transitioned up 10
percent. She noted that the administrative costs for expansion,
including enrollment and claims processing, would begin at $1.3
million and increase to about $1.6 million in 2016.
COMMISSIONER DAVIDSON declared that there were also potential
offsets to the state budget, slide 13, "Saves Money." She
directed attention to state fund savings which were currently
being paid 100 percent with state general funds. She
anticipated that many of these aforementioned 100 percent
beneficiaries could be transitioned with Medicaid Expansion to a
10 percent cost to the state general funds. She reported
potential savings of $1 million during the first year of
expansion [2016] and transitioning to $1.5 million [2021] for
Alaskans who were not eligible for Medicaid and in the Chronic &
Acute Medical Assistance (CAMA) program; about $4.1 million in
the first year [2016] and increasing to about $7 million in
[2021] for inmates in the Department of Corrections who were
admitted to an overnight stay in a medical facility out of the
prison. She reported that the first year savings estimate was
conservative to allow time for enrollment. She noted that
another cost saving opportunity would be in the reduction of
recidivism, which she offered to discuss later in the
presentation. She shared that the third anticipated cost
savings offset was with behavioral health grants. She reported
that the state currently provided these grants to a number of
behavioral health providers, and she offered a conservative
estimate that this savings would grow from $1.5 million in the
first year [2016] to about $16 million in annual savings [2021].
She allowed that this would take time for enrollment and "to
ramp up these programs." She shared that these were only some
of the initial offsets identified, and she expected to see more
savings through additional reform opportunities. She stated
that slide 14, "Saves Money," combined the information from the
last three slides, pointing to the net savings for the general
fund and the corresponding federal revenue on the bottom two
lines. She expressed thanks to the Alaska Mental Health Trust
Authority for its provision of the necessary funds to pay the
cost of administration during the first year.
3:48:45 PM
COMMISSIONER DAVIDSON returned to slide 9, "Reducing
Recidivism," and directed attention to the link to the
recidivism reduction plan presented to the House Finance
Committee. She shared that Medicaid Expansion had been
recommended in this report as a means to finance an anti-
recidivism effort. She reported that, although some of the
prison population was able to access behavioral health services,
once they were released from prison it was a challenge for
continued access to these services as they were not eligible for
Medicaid and there was not a payer source to provide care. She
referenced the March 2012, Judicial Council analysis of the
Department of Corrections' substance treatment program, which
reflected a 12 percent rate of recidivism versus a 20 percent
rate in the control group, within 12 months of release from
custody. She shared a 2009 report from ISER (Institute of
Social and Economic Research) that explained how Alaska could
limit the number of inmates and stem the rising costs, while
keeping the public safe and using state dollars efficiently.
The report detailed that if there was not a change to policy,
the number of Alaska inmates was likely to double by 2030.
However, if the state spent an additional $4 million annually to
expand existing education and substance abuse programs, the
prison population might be 10 percent smaller in 2030. She
shared that more recent information showed other states with
issues similar to Alaska had focused on providing behavioral
health services earlier and more efficiently, and had recognized
a drop in recidivism rates. She stated that the rate of
recidivism fell 25 percent in Michigan between 2007 and 2012,
after the state connected newly released prisoners, on the day
of their release, to a medical home in the community. She spoke
about Texas, which had its recidivism rate drop 22 percent from
2000 - 2007, partly due to its expanded rehabilitation and
treatment programs. She said that other states were looking at
Texas as a model for its investment in behavioral health
services. She noted that Texas had been in a similar situation
as Alaska was currently. They also had a limited state budget,
and were also faced with building another state prison to
accommodate the increasing prison population. She raised the
question for investing in behavioral health services to make
Alaskans healthier, or for building another prison. She pointed
out that Texas had used 100 percent state general funds, and, as
Alaska had a shortage of funds, Medicaid expansion could help
fund this payment for behavioral health services, subsequently
leading to a lower rate of recidivism.
3:54:50 PM
COMMISSIONER DAVIDSON shared slide 10, "Improving Health," and
stated that an increase of access to health care resulted in
improved health outcomes and a reduction by half of the
uninsured population. She said that more Alaskans would receive
preventive and primary care, which included behavioral health
care services. This availability of health care services would
help to manage costly chronic disease. She stated that
uninsured adults were much less likely than insured adults to
receive preventive services or screenings for the most
prevalent, costly, and preventable or controllable health care
problems. She reported that the five most common causes of
death in Alaska were cancer, heart disease, unintentional
injuries, stroke and chronic lower respiratory disease. She
pointed out that four of these were preventable or treatable if
caught early. She shared that, through the experiences of other
states, it could be expected for the Alaska mortality rate to
drop. She cited a recent Harvard University study which
compared the mortality rates for adults for five years prior and
five years following the dates the states undertook a
significant health reform effort to expand coverage. This
analysis found that for every 830 adults who gained health
insurance, one death per year was prevented. She suggested that
applying this analysis to the 20,000 expected enrollees would
result in about 30 saved lives. She reported that Alaska had
challenges for access by survivors of domestic violence and
sexual assault, as many people did not have coverage. She
shared that access to health care was showing a positive
improvement to the homeless population in other states. She
cited a Kaiser Family Foundation report which indicated that
Medicaid expansion was already contributing to improved access
to care as well as broader benefits to the homeless.
3:58:34 PM
COMMISSIONER DAVIDSON addressed slide 15, "Reform is Necessary,"
declaring that reform was necessary, and sharing that reform
efforts had already been undertaken at Department of Health and
Social Services. She expressed recognition for the budget
challenge, and referenced the governor's request to review a 25
percent cut in funding in four years. She declared that DHSS
reform efforts were enhanced with expansion opportunities, and
that they wanted the Medicaid program to be a sustainable
program. She relayed that the DHSS budget was $2.7 billion,
with $1.7 billion of this for Medicaid. She added that $700
million of this was from the state general fund, with the
majority of the rest paid by a federal match, which she declared
was an important distinction. She stated that reform was an
opportunity to identify and implement efficiencies, to make
improvements, to deploy innovations, and to minimize the impact
to the most vulnerable Alaskans. She declared that it was
necessary to have a conversation that went beyond rate freezes,
and beyond cutting eligibility and optional services, to find
the health plan that was right for Alaska.
COMMISSIONER DAVIDSON presented slide 16, "Building on Reforms
Underway," and she listed some that were currently underway at
DHSS: Control the overutilization of hospital emergency room
services. She reported that about 5,000 individuals utilized
about $29 million in annual emergency room visits. She said
that the department had started a care management program to
direct these individuals to more appropriate levels of care,
with a target of $7 million in savings. She said that this
would necessitate a regulation change to increase the mandatory
number of participants. She discussed the second and third
points on slide 16, and shared that it was necessary to "crack
down" on providers found to be fraudulent, which she deemed to
be an issue in any program. She declared that the department
had targeted about $15 million in annual avoided costs, sharing
an anecdote for the requirement that personal care attendants
individually enroll as Medicaid providers, instead of a previous
requirement that only the hiring organization had to enroll as
the Medicaid provider. She stated that this allowed the
department to review payments to individual providers and notice
any discrepancies. She shared that there were opportunities in
home and community-based service improvements, which were
Patient Protection and Affordable Care Act options available
since 2010. She said there were options through the 1915(i)
waiver which would replace funding for services for those who
did not meet nursing level of care but did meet other criteria,
currently using 100 percent state general funds, with funding
from federally matched Medicaid services. She explained that
the 1915(a) waiver could replace existing Medicaid home and
community-based waiver services, currently at a 50 percent
federal match, with 1915(k) Medicaid services matched at a 56
percent federal rate. She declared that the target annual
savings was for $24 million upon full implementation in two or
three years. She discussed coordination of three Patient-
Centered Medical home initiatives, with a goal to help people
with chronic health issues receive appropriate care in an
appropriate setting, reduce hospitalization, and reduce the
"high dollar emergency room visits." She expressed the aim for
a reduction of costs by $78,000 - $165,000 per thousand
enrollees annually.
COMMISSIONER DAVIDSON shared that another opportunity was for
coordination with the Alaska Tribal Health System, with regard
to a Medicaid beneficiary who was an IHS beneficiary and who
received their services in an IHS facility. She relayed that
this was completely separate from Medicaid Expansion, and the
department anticipated about 10 percent savings, $15 million
annually, through policy and agreements. She went on to explain
that this opportunity could be even more aggressive by
investigating waiver options, which she opined could save about
$100 million in state general funds annually. She relayed that
the Division of Senior and Disabilities Services was also
investigating other opportunities.
4:09:17 PM
COMMISSIONER DAVIDSON identified slide 17, "Additional Reforms,"
and mentioned $20 million in savings in the Fiscal Year 2016
budget, which included some tribal cost shifts recognized in the
partnership with the Alaska Tribal Health system. She reported
that any new facility which had the opportunity to expand its
level of service had a downward cost shift, as they would have
previously needed to refer those services, often resulting in a
lower match. She listed a number of increased services
throughout the state that offered additional opportunities for
savings, noting that there was a target savings of $10 million
in FY 2016.
4:11:55 PM
CHAIR SEATON asked whether the $10 million savings was for the
combination of services.
COMMISSIONER DAVIDSON replied that the savings was for the
combination of those services, and she opined that it was a
conservative estimate. She returned attention to slide 17,
pointing to a change in eligibility requirements for personal
care assistance services from one to two or more activities of
daily living. She detailed that there was close work with the
primary care provider association to ensure that individuals
were getting the right amount of care at the right time. She
relayed that there were other opportunities for savings in
durable medical equipment, vision, and audiology. She spoke
about the increase to the number of individuals added to the
Super Utilizer contract for management of care resulting in a
general fund savings of about $2.5 million in FY 2016. She
noted that $1 million in general fund savings had been
identified for dental services in FY 2016. She stated that
there was a focus on clearer program standards, stronger
admission criteria, review for residential psychiatric treatment
centers and acute psychiatric service settings, and revision of
requirements for recipient support services. She acknowledged
that transportation guidelines to services out of the area for
family groups needed to be reviewed for savings.
4:15:30 PM
COMMISSIONER DAVIDSON declared that reform was a process and
that reform efforts had already been started. She stated that
Alaska was different than other states, and that the state
should require development of its own model. She directed
attention to slide 18, "Designing Reform," and lauded the
generous support of the Alaska Mental Health Trust Authority for
its Requests for Proposal (RFPs) asking for technical assistance
to build the Alaska plan, which included a review of the reform
efforts underway in other states for both Medicaid and Medicaid
Expansion. She ensured that every report would be put on the
department website so that the public would be aware of the
direction and have the opportunity for input. She declared
that, as this was challenging and complicated, a diversity of
opinion was necessary and important. She opined that reform
would look different to everyone. She pointed out that Alaskans
had made tough decisions before, and it was done best when
Alaskans spoke with each other.
4:20:27 PM
COMMISSIONER DAVIDSON moved on to slides 19 and 20, "Additional
Reform Options," and discussed some of the additional reform
options for evaluation, including those other states had
reviewed. She explained payment reform, a review of the fee for
service payment structure which incentivized high service volume
and rewarded inefficiencies in the delivery system, with a
transition to an alternative payment mechanism that would drive
improved value. She declared that the department would
strengthen primary care with patient centered medical home
opportunities, and make it easier to access primary care
providers. She explained that care management would ensure that
the right care was provided in the right setting at the right
time in the right place. She referenced the care model of the
Mayo Clinic. She stated that it was necessary to review
workforce innovation, including new provider types such as
community health aides, behavioral health aides, and dental
health aide therapists, which allowed the next level of provider
to offer care at the upper end. She pointed to the
opportunities to maximize federal match and to improve tele-
health capacity to the general population.
COMMISSIONER DAVIDSON said that reform options and strategies
should increase prevention and responsibility. She relayed that
cost sharing for adults already existed in the Medicaid program
for physician visits, prescription drugs, and out-patient and
in-patient hospital care. She noted that other states had
reviewed health saving accounts (HSAs) to help pay for co-
payments and deductibles. She suggested choice restrictions to
direct services and enrollees to the appropriate care. She
talked about incentives for healthy behaviors including shared
responsibility. She spoke about increasing access to
preventative services and work assistance benefits for the
Medicaid Expansion group.
4:28:13 PM
COMMISSIONER DAVIDSON allowed that these suggestions for health
care would help people along on a path to self-sufficiency. She
spoke about slide 21, "Impact to the Economy," and noted that
improving the health of Alaskans was also good for the Alaska
economy, as this would bring more than $1 billion in new federal
revenue, 4000 new jobs based on the economic multiplier effect
for new revenues, and $1.2 billion in wages and salaries paid to
Alaskans. She pointed out that, as Medicaid also paid for
medically necessary travel, there would be an increase in the
travel industry for hotel accommodations and related needs. She
shared that her department had received many calls from people
worried about the Alaska economy given the budget challenges.
She declared that it was necessary to be careful and responsible
during the transition to a smaller size state government. She
stated that the department was looking for other opportunities
for diverse revenue in Alaska. She allowed that it would take
time to finance and build many of the opportunities before there
was a significant impact on the state revenue. In the meantime,
Medicaid expansion was "the fastest, earliest way for us to be
able to infuse additional resources into our economy in Alaska."
She noted that this infusion would be $145 million in 2016
alone, almost $390,000 each day, and would go a long way toward
shoring up the losses from shrinking the state budget. She
expressed her appreciation that Medicaid Expansion was not just
an economic benefit that only went to Anchorage, Fairbanks, and
Juneau, but accrued to every community in the state where health
care was provided. She declared the desire for Alaskans to be
as healthy as possible and able to contribute to the economy.
4:33:05 PM
CHAIR SEATON submitted some questions from the committee: What
is Medicaid Reform?; What are some appropriate examples of
Reform from other states and how would they work in Alaska?;
and, While examining super-utilizers for reform, has the
Department considered Medicaid Health Home Model, which provides
90 percent operational funding federal match for homes which
target specific high-cost Medicaid patients during the first two
[operating] years? He asked if this was what she had addressed
earlier.
4:34:34 PM
COMMISSIONER DAVIDSON, in response, explained that the home
health model was also called the Patient Centered Medical Home
model, and was one of the reforms being explored by the state.
She reiterated that the DHSS intent was for the proposed
contracted consultant to do a thorough analysis, with
recommendations for implementation in Alaska.
CHAIR SEATON resumed his questions, and asked: Is Medicaid
reform best accomplished through statute or regulation?
COMMISSIONER DAVIDSON replied that Medicaid reform can be done
through both statute and regulation, that it depended on whether
it was voluntary or compulsory. She referenced slide 16,
"Building on Reforms Underway," and reported that hospital room
utilization control was already underway through simple policy,
but if it was under regulation, it would become a mandatory
requirement. She directed attention to the second and third
bullet points on the slide, and stated that, as fraud, waste,
and abuse had been addressed internally in DHSS through policy,
it did not require regulation. Referencing the third bullet
point, she explained that DHSS would pursue a waiver with CMS
for the home and community-based service improvements. Moving
on to the fourth bullet, she relayed that a regulations change
would be required to expand or compel participation with the
Patient-centered Medical Home initiatives. She declared that
coordination with the Alaska Tribal Health System providers
could be accomplished with policy and agreements with those
providers, although the real opportunities for additional
savings was with the waiver opportunities currently being
negotiated with CMS.
CHAIR SEATON questioned the match and the operational funding
amounts available for the Medicaid home health model and the
home and community based services, and asked whether this was
being pursued.
COMMISSIONER DAVIDSON explained that DHSS was pursuing two
waivers for the home and community based services, 1915(i) for a
50 percent match, and 1915(k) for a 56 percent match. She
explained that the Medicaid home health model was for the
aforementioned patient-centered medical home models, of which
there were three currently underway in Alaska. She shared a
desire to explore additional opportunities for savings,
especially in tribal health.
4:39:16 PM
REPRESENTATIVE TARR asked whether the transition of the
Anchorage Neighborhood Health Center to a patient centered
medical home model was a possibility for more immediate
participation.
COMMISSIONER DAVIDSON expressed her agreement.
CHAIR SEATON resumed his questions and asked, if [Medicaid]
reform and expansion were accomplished in different time frames,
could expansion legislation integrate a delayed implementation
timeline.
COMMISSIONER DAVIDSON emphasized that significant reform efforts
had already been underway for some time, and that additional
reform efforts were being undertaken during the next several
years, even prior to the hiring of the contractor to address
additional reform options. She offered her belief that it would
be difficult to develop a plan for a delay on expansion based on
reform, and she declared that the department did not recommend
it. She suggested that this would delay Medicaid expansion for
at least another year, with a subsequent loss of $145 million
from federal revenues to Alaska. She advocated for building
upon the reforms already undertaken and already planned, while a
longer term plan for additional reform options for the entire
Medicaid population was being developed. She stated that Alaska
had delayed long enough, and it was time to move forward.
4:41:29 PM
CHAIR SEATON relayed that a lot of people in the building were
wary of passing [Medicaid] expansion prior to implementation of
[Medicaid] reforms. He asked whether a bill for Medicaid
expansion could have elements of reform with delayed
implementation to allow time for these [Medicaid] reforms.
COMMISSIONER DAVIDSON suggested that there was a need to expand
and provide additional health care services to Alaskans as
quickly as possible while also undertaking reform efforts. She
posed the question of waiting for [Medicaid] expansion until
reform was completed, and declared, as reform was already
underway, "gosh darn it, let's start those expansion efforts."
She opined that, although some others had ideas for reform
efforts, the department had already started with its reforms and
the state budget left no choice but for reform.
CHAIR SEATON stated that there were significant road blocks to
moving forward, if there was not something to ensure that "more
drastic, more pervasive reform is going to take place." He
suggested that DHSS put reforms in the proposed bill with
delayed effective dates in order to give time for
implementation. He offered his belief that this would "speed
the Medicaid expansion bill along because we would be in law
saying that these reforms will be developed over this period of
time and getting that commitment." He opined that this was
important to develop a working relationship and trust going
forward. He asked if reform and expansion needed to be combined
so the conversion of charity care cases into participants at a
higher federal reimbursement rate means providers receive enough
income to accomplish reform?
COMMISSIONER DAVIDSON offered her belief that the earlier
presentation by ASHNA supported that the combination of reform
and expansion would more quickly reduce the burden on providers
for uncompensated care, as well as the increased cost to those
already insured. She reported that, in Arizona, the hospitals
had seen a 30 percent reduction in uncompensated care in the
first six months of expansion. She relayed that 27 states plus
the District of Columbia had expanded Medicaid. She referenced
another presentation which had declared that this expansion had
not worked for two states in particular, as the rates of
enrollment and the costs were higher. She pointed out that this
information was based on data from 1999 - 2011, which was prior
to the authorization of Medicaid Expansion under the Patient
Protection and Affordable Care Act on January 1, 2014. She
declared that if comparing "blueberries to blueberries" it was
necessary to discuss the relevant year, 2014. She reported
that, in Arkansas, about 240,000 people had enrolled, the rate
of uninsured was cut in half, and the rural hospitals were doing
better, noting that they had similar challenges to Alaska. She
noted that the University of Arkansas hospital had its rate of
uncompensated care drop from 14 percent to 4 percent. She
shared that Arkansas, similar to Alaska, had a legislative task
force for recommendations of future improvements. She declared
that it was important to track the progress and make adjustments
for any newly implemented programs. She referenced that the
uncompensated care in Arizona was reduced by 30 percent in the
first six months. She opined that states must be really
thoughtful and thorough in designing their Medicaid programs.
She stated that the department had outlined some of its reform
efforts already undertaken, as well as some new reform efforts.
She pointed out the DHSS had underlined a defined, concrete
strategy for future reform. She acknowledged that ideas for
reform came from many directions in order to create a thoughtful
reform package that worked for all Alaskans and was consistent
with the unique challenges for remoteness faced by Alaska.
4:50:23 PM
COMMISSIONER DAVIDSON commented that employer provided health
insurance had been declining for 20 years, long before the
Patient Protection and Affordable Care Act. She declared that
Alaskans make really tough decisions, which were done best in
conjunction with other Alaskans. She emphasized that it was not
possible to purchase a health plan at an affordable cost with an
income of $20,000 each year, pointing out that 20 percent of the
state population was uninsured.
4:52:44 PM
CHAIR SEATON asked if some types of reform would lower provider
participation, and, if so, how was it possible to protect
against this.
COMMISSIONER DAVIDSON explained that reform had to proceed with
the full participation of everyone who had a stake in the
outcome. She stated that a goal of any reform by the state had
to look at maximizing rather than minimizing provider
participation and to be a responsible partner with the patients
and providers. She emphasized that it was necessary to have
many conversations to develop a plan that worked for Alaska.
CHAIR SEATON asked, if Medicaid expansion required parity
between mental health and physical health services, how would
the state address behavioral or mental health services given the
current limited services for these.
COMMISSIONER DAVIDSON shared her excitement for behavioral
health parity with Medicaid expansion. She pointed out that the
continual challenges for the state required availability of a
full array of behavioral health services. She offered her
belief that Medicaid expansion would spur additional development
of behavioral health services, as many people in the expansion
population did not have any coverage and were not able to
receive services. She declared that grants could not be a
target for cuts, as behavioral health providers needed to have a
level of certainty in order to plan for and provide service.
She stated that behavioral health parity was "awesome."
4:57:14 PM
REPRESENTATIVE TARR asked if there was more information about
individuals with mental health services, noting that a challenge
existed for those individuals without good access to care, as
often they did not take their medications, resulting in the
associated problems for family and community.
COMMISSIONER DAVIDSON said that she would provide that
information.
CHAIR SEATON asked if the department was looking into additional
funding, such as a provider tax or a copay or a surcharge from
major providers of Medicaid Expansion. He opined that the
providers would see the benefits from converting charity care to
fully compensated care, whereas the state was absorbing the
risk. He asked if there was any mechanism for sharing of the
revenue by those receiving this increased revenue because of the
expansion.
COMMISSIONER DAVIDSON replied that, once the proposed contractor
provided technical assistance, all potential reform
opportunities and payment opportunities would be on the table.
She stated that the department would do this responsibly and
would listen to the opportunities and to the impacts on the
providers.
4:59:32 PM
CHAIR SEATON opened up discussion on the presentation.
REPRESENTATIVE WOOL reflected on the increase of the incoming
federal dollars, and even though the state payment also
increased over time, it resulted in a state net gain. He added
that there were also more jobs and improved health care for
those who did not currently have health care. He relayed that
there were concerns for the cost and the risk of federal
withdrawal of payments, even as the state maintained that it
would withdraw from the Medicaid Expansion program if federal
funding stopped. He pointed out that this same concern for
federal withdrawal of funding was not an issue for road
projects. He asked what were the other big risks, offering his
belief that it was a win - win situation.
COMMISSIONER DAVIDSON expressed her agreement that in 2021 there
was a net savings to the state, and she corrected the amount on
slide 11 to be $224,500,000. She noted that the state did not
often have the opportunity to invest state general fund dollars
to leverage significant federal dollars, which would allow
Alaska to realize a net savings. She suggested that the
concerns were mainly philosophical and a policy distinction.
She emphasized that the perspective of DHSS was that it was
important to invest in the health care of people. She
reiterated that Alaskans did not turn their backs on Alaskans
who needed help, but instead offered help and assistance. She
stated that Medicaid expansion was a way to do this. She
acknowledged to those people who believed that Medicaid
expansion would lead to the end of the world and that the
federal government would implode, that there were not any
guarantees. She stated that it was necessary to continue to
live for today while planning for the future, and that it was
not likely for the federal government to reduce its future
match. She clarified that the federal medical assistance
percentage (FMAP) was determined by the Centers for Medicare and
Medicaid Services (CDC) which reviewed the average income for
the average citizen in a state. As Alaska had higher incomes,
even though there was a higher cost of living, Alaska had the
lowest possible federal match, 50 percent. She relayed that
there had previously been an enhanced FMAP to Alaska of 58
percent, the result of an appropriations rider by the late
Senator Ted Stevens, Chair of the Senate Appropriations
Committee.
5:06:43 PM
CHAIR SEATON announced that the questions submitted by
Representative Vazquez would be posted. He noted that she would
not be available for the House Health and Social Services
Standing Committee meetings during the following week.
REPRESENTATIVE VAZQUEZ clarified that, although she would prefer
to ask the questions in person, she may participate
telephonically. She declared that she would like to modify some
of the questions in light of the testimony.
CHAIR SEATON asked that any other committee members' questions
be submitted in writing so that the department would have the
opportunity to prepare its responses. He asked that DHSS
prepare a presentation based on full participation as well as
half participation for Medicaid Expansion.
COMMISSIONER DAVIDSON said it would include the cost to the
state and the additional receipt authority.
REPRESENTATIVE TARR asked if the reform measures and their
target savings could also be listed.
REPRESENTATIVE TALERICO asked about the provider tax or co-pay
from major providers, as there had been a report regarding $91
million in uncompensated care from non-tribal Alaska hospitals.
He asked if any net income information was available, as it
would help during discussion regarding the co-pay from
providers.
CHAIR SEATON asked about an estimate for the charity care in
those hospitals, as using a percentage of recovery would then
provide "a full gamut of what a provider fee might provide."
REPRESENTATIVE TALERICO suggested that the net income could
better clarify a proposed co-pay from the providers.
REPRESENTATIVE VAZQUEZ stated that she would have very specific
questions on that subject. She asked that a person from the
rate review office be available to answer questions regarding
the uncompensated care on course reports, and its subsequent
reimbursement through Medicaid.
REPRESENTATIVE VAZQUEZ [Due to technical difficulties, part of
this discussion was indecipherable] asked that someone versed in
the eligibility system and someone able to update the status of
litigation or negotiations on the two systems be available. She
[indisc] asked for someone knowledgeable about the eligibility
of personal care assistant services in the activities of daily
living to be available. She asked for a graph detailing the
number of Medicaid enrollees during the past ten years and
another graph displaying total Medicaid expenditures.
5:13:33 PM
ADJOURNMENT
There being no further business before the committee, the House
Health and Social Services Standing Committee meeting was
adjourned at 5:13 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Uncompensated care Talking Points_ASHNHA_for 3-3-2015.pdf |
HHSS 3/5/2015 3:00:00 PM |
Uncompensated Care |
| DHSS_Medicaid-Healthy Alaskans_3.5.2015.pdf |
HHSS 3/5/2015 3:00:00 PM HHSS 3/21/2015 4:00:00 PM |
Medicaid Presentations by DHSS |
| Impact of Medicare Cuts 2015_ASHNHA.pdf |
HHSS 3/5/2015 3:00:00 PM |
ASHNHA Medicaid information |
| Rep Vazquez_ final questions regarding expansion.pdf |
HHSS 3/5/2015 3:00:00 PM |
Medicaid questions |