Legislature(2003 - 2004)

01/21/2004 09:01 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                         January 21, 2004                                                                                     
                              9:01 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 1, Side A                                                                                                              
SFC 04 # 1, Side B                                                                                                              
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:01 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
Also Attending:  JOEL GIBERTSON, Commissioner, Department  of Health                                                          
and Social Services;  SHERRY HILL, Special Assistant,  Office of the                                                            
Commissioner,   Department  of  Health  and  Social   Services;  JON                                                            
SHERWOOD, Unit Manager,  Beneficiary Eligibility Policy, Division of                                                            
Medical Assistance, Department  of Health and Social Services; MARIE                                                            
DARLIN,  Coordinator, Capitol  Task Force,  AARP; BOB GRIGGS,  Staff                                                            
Attorney, Disability Law Center                                                                                                 
                                                                                                                                
Attending   via  Teleconference:   There   were  no  teleconference                                                           
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 259-SENIORCARE                                                                                                               
                                                                                                                                
The  Committee  heard  from  the Department  of  Health  and  Social                                                            
Services  and took  public  testimony.  A committee  substitute  was                                                            
adopted, one amendment  was discussed, but not formally  introduced,                                                            
and the bill was held in Committee.                                                                                             
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 259                                                                                                        
     "An Act establishing the SeniorCare program and relating to                                                                
     that program; and providing for an effective date."                                                                        
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  explained that this  legislation would establish  a                                                            
senior  care program  within  the Department  of  Health and  Social                                                            
Services  to provide either  "cash assistance  or prescription  drug                                                            
benefits to eligible  Alaskan seniors 65 years of  age or older." He                                                            
stated  that the program  would  provide these  benefits until  such                                                            
time as  the forthcoming  federal Medicare  drug benefit program  is                                                            
operational in the State.  He pointed out that a memorandum [copy on                                                            
file] from Jean Mischel,  Legislative Counsel, Division of Legal and                                                            
Research  Services, Legislative  Affairs Agency,  dated January  15,                                                            
2004 has been provided  to explain the committee substitute that has                                                            
been provided to the Committee.                                                                                                 
                                                                                                                                
Co-Chair  Green   moved  to  adopt   the  aforementioned   committee                                                            
substitute, CS SB 259,Version  23-GS2123\D, as the working document.                                                            
                                                                                                                                
There being no  objection, the Version "D" committee  substitute was                                                            
adopted.                                                                                                                        
                                                                                                                                
JOEL  GILBERTSON,  Commissioner,  Department  of Health  and  Social                                                            
Services, stated  that, in December  2003, Governor Frank  Murkowski                                                            
introduced   "a   three-pronged   SeniorCare"   program   "to   make                                                            
prescription drugs  more affordable; to assist in  the purchasing of                                                            
prescription  drugs  for seniors;  and to  make the  social  service                                                            
programs and health programs  more available to seniors in the State                                                            
more available  to  seniors through  the establishment  of a  Senior                                                            
Information  Office." He  explained that this  bill, which  presents                                                            
the  only portion  of  the SeniorCare  program  that  would  require                                                            
Legislative  approval,  would establish  "the cash  or drug  subsidy                                                            
assistance  for low-income  seniors in the  State to assist  them in                                                            
purchasing prescription drugs."                                                                                                 
                                                                                                                                
Commissioner   Gilbertson   expounded,  for   the  benefit   of  the                                                            
Committee,  that another of the three  SeniorCare components  is the                                                            
establishment  of a Senior Information Office within  the Department                                                            
to provide  "a single,  one-stop  shop" through  which seniors,  who                                                            
might previously  have had  difficulty in  accessing "the myriad  of                                                            
services" the Department  provides, could access senior programs via                                                            
the telephone  or Internet or in person.  He avowed that  the Senior                                                            
Information  Office would  be staffed by  individuals knowledgeable                                                             
with the entirely  of local, State  and federal assistance  programs                                                            
that would be  available to them. He calculated that,  in FY 04, the                                                            
Department would  be providing in excess of $220 million  in program                                                            
services to seniors  in the form of such things as  food assistance,                                                            
assisted  living,   long-term  care  assistance,  cash  assistance,                                                             
heating assistance and other services.                                                                                          
                                                                                                                                
Commissioner  Gilbertson  informed  the  Committee  that  the  third                                                            
component of  the SeniorCare program  would be the development  of a                                                            
Medicaid  Preferred   Drug  List  "to  make  Alaska  pharmaceutical                                                             
products more accessible and more affordable" for Alaskans.                                                                     
                                                                                                                                
Commissioner   Gilbertson   reiterated   that  the   goal  of   this                                                            
legislation is  to establish "comprehensive health  care coverage to                                                            
low-income  seniors and general universal  health care coverage  for                                                            
prescription  drugs to all  seniors" by serving  as a bridge  to the                                                            
federal  Medicare  prescription  drug benefit  program  proposed  to                                                            
begin January 1, 2006.  However, he warned that the federal program,                                                            
while scheduled  to begin in January  2006, might be delayed  due to                                                            
the complexity  of the  issue. In  the meantime,  he explained,  the                                                            
federal government would  provide an annual $600 Medicare subsidy to                                                            
low-income  seniors living  at or below 135  percent of the  federal                                                            
poverty level  (FPL) and in addition would provide  all seniors with                                                            
a Medicare prescription drug discount card.                                                                                     
                                                                                                                                
Commissioner Gilbertson  stated even though the interim $600 federal                                                            
assistance subsidy would  be available to seniors living at or below                                                            
135 percent of  FPL, "a gap still exists." He reminded  Members that                                                            
currently  the Department  is providing  $120 per  month to  seniors                                                            
living at or  below 135 percent of  the FPL, via the State's  Senior                                                            
Assistance  Program  that was  established in  the fall  of 2003  to                                                            
assist these  seniors "during the  phase out of the Longevity  Bonus                                                            
Program." He  further explained that  this bill would provide  State                                                            
seniors living at or below  the 135 percent of FPL with their choice                                                            
of either continuing  to receive the $120 per month  cash assistance                                                            
or to receive  a $1,600 annual prescription drug subsidy  to augment                                                            
the federal  subsidy until  the federal drug  assistance program  is                                                            
implemented.                                                                                                                    
                                                                                                                                
Commissioner  Gilbertson  pointed  out that,  in addition,  to  this                                                            
category  of   recipients,  the  legislation   would  expand   State                                                            
assistance  to seniors  living between  135 and  150 percent  of the                                                            
FPL. He  reviewed the details  of the proposal  as specified  in the                                                            
"SeniorCare Comparison  of Qualifications and Benefits"  chart [copy                                                            
on file] as follows.                                                                                                            
                                                                                                                                
                      SeniorCare        SeniorCare          Senior                                                            
                     Prescription     Cash Assistance     Prescription                                                        
                     Drug Subsidy        Subsidy          Drug Subsidy                                                        
                                                                                                                              
     Qualifications *135% of          *135% of        *135% to 150%                                                           
                     Poverty Level   Poverty Level   Poverty Level                                                              
                     *Annual Income  *Annual Income  *Annual Income                                                             
               below           below           below                                                                            
                     $15,135 single  $15,135 single $16,815 single                                                              
                     $20,439 Couple  $20,439 Couple $22,710 Couple                                                              
                     *Liquid Assets  *Liquid Assets *Liquid Assets                                                              
               below           below           below                                                                            
                     $4,000 Single $4,000 Single    $4,000 Single                                                               
                     $6,000 Couple $6,000 Couple    $6,000 Couple                                                               
                                                                                                                                
     SeniorCare      *$1,600 Annual  *$120 a month    *$1,000 Annual                                                          
     Benefit         Prescription     cash assistance  Prescription                                                           
     April  2004 -   Drug Subsidy     (up to $1,440    Drug  Subsidy                                                          
     December 2005 (prorated)          annual)         (prorated)                                                             
                                                                                                                                
     Medicare Bene- *Annual Medi- *Annual Medicare                                                                            
     fit May 2004-  care Subsidy  Subsidy $600                                                                                
     December 2005     $600                                                                                                   
                     *Medicare        *Medicare        *Medicare                                                                
                     drug discount  drug discount    drug discount                                                              
                                                                                                                                
Commissioner  Gilbertson reiterated  that  the proposed legislation                                                             
would  be  terminated   upon  the  implementation   of  the  federal                                                            
prescription  drug  benefit  program;  and  he  reminded  that  this                                                            
legislation  does not specify  a specific  termination date  because                                                            
the desire is to assure  that State assistance would continue were a                                                            
delay in the federal program to occur.                                                                                          
                                                                                                                                
Commissioner Gilbertson  declared that the transition from the State                                                            
assistance program  to the federal program would be  "seamless," and                                                            
that  the  federal  benefits  would be  comparable  to  the  benefit                                                            
provided  by  this  legislation.  He  shared  that  the forthcoming                                                             
federal  assistance  program would  include  such things  no  annual                                                            
premium or deductible  being required of eligible  seniors living at                                                            
or less than  135 percent of poverty  level. He noted that  coverage                                                            
for seniors living  between 135 and 150 percent of  the FPL would be                                                            
subject to  a sliding scale premium  subsidy and a lower  deductible                                                            
than normally available.                                                                                                        
                                                                                                                                
SHERRY  HILL,  Special   Assistant,  Office  of  the  Commissioner,                                                             
Department  of Health  and  Social Services,  noted  that while  the                                                            
Department  has  provided detailed  information  pertinent  to  this                                                            
legislation,  specific details  regarding the  federal program  have                                                            
not been provided.                                                                                                              
                                                                                                                                
Commissioner  Gilbertson  presented a  chart [copy  on file]  titled                                                            
"SeniorCare Bridging  the Gap Comparison of Benefits"  that exampled                                                            
how the SeniorCare  proposal would  affect a senior who might  spend                                                            
$2,500 annually on prescription drug expenses.                                                                                  
                                                                                                                                
[Note: While  the Department's  oral testimony  correctly  specified                                                            
that in order to qualify  for the subsidy, a senior's income must be                                                            
equal to or less than 135  percent of the federal poverty level, the                                                            
following  chart provided  by the Department  incorrectly  specifies                                                            
that the income level must exceed 135 percent.]                                                                                 
                                                                                                                                
                         Bridging the Gap                                                                                     
                      Comparison of Benefits                                                                                  
                       $2,500 Annual Rx Cost                                                                                  
                                                                                                                              
     > 135% FPL                                                                                                                 
     Without SeniorCare:       Out of Pocket:           $1,650                                                                
                               Medicare Discount:      $  250                                                                   
                               Medicare Subsidy:        $  600                                                                  
     SeniorCare  RX Benefit:   SeniorCare  RX Benefit:  $1,600                                                                
                               Out of Pocket:           $   50                                                                  
                               Medicare Discount:      $  250                                                                   
                               Medicare Subsidy:        $  600                                                                  
     SeniorCare  Cash Benefit: SeniorCare  Cash Benefit:$1,440                                                                
                               Out of Pocket:           $  210                                                                  
                               Medicare Discount:      $  250                                                                   
                               Medicare Subsidy:        $  600                                                                  
     Between 135-150% FPL                                                                                                       
     Without SeniorCare:       Medicare Discount:      $  250                                                                 
                               Out of Pocket:           $2,250                                                                  
     SeniorCare RX:            Out of Pocket:           $1,250                                                                
                               Medicare Discount:      $  250                                                                   
                               SeniorCare Cash Benefit:$1,000                                                                   
                                                                                                                                
Commissioner  Gilbertson  avowed  that while  the  proposed  out-of-                                                            
pocket  expenses might  remain a hardship  for some  seniors  in the                                                            
State,  the Governor's  proposal  would provide  "a  safety net"  to                                                            
those who cannot  provide for themselves  until the federal  program                                                            
is implemented.                                                                                                                 
                                                                                                                                
Commissioner  Gilbertson  pointed out  that such  things as  smoking                                                            
cessation aides,  over-the-counter  drugs, cough and cold  remedies,                                                            
and impotency drugs would  be excluded from coverage. Continuing, he                                                            
noted that  while the program encourages  the use of generic  drugs,                                                            
provisions are  included in the bill to cover brand  name drugs when                                                            
designated as "medically necessary" by a prescriber.                                                                            
                                                                                                                                
Commissioner  Gilbertson  exampled  that,  were  this  cash  subsidy                                                            
program  implemented,  regulations   would  be  designed  to  enable                                                            
seniors to access  the program with ease. He stated  that qualifying                                                            
seniors would be issued  a card to present at the point of purchase,                                                            
and, he continued,  that card would electronically  communicate with                                                            
the State's Medicaid Management  Information System (MMIS) and track                                                            
the benefit  subsidies for  the user. He  noted that the  associated                                                            
administrative   expenses   are  specified   in   the  Department's                                                             
accompanying  fiscal notes.  He stated  that  were this legislation                                                             
approved within  the next few weeks,  the application process  could                                                            
begin  in February;  enrollment  could be  conducted  in March,  and                                                            
benefits  could  begin  in April  2004.  He stated  that  were  this                                                            
timeframe to occur,  expenses would be incurred in  the last quarter                                                            
of  FY 04,  throughout  FY  05, and  into  approximately  the  first                                                            
quarter  of FY  06 when the  transition  to the  federal program  is                                                            
expected to occur.                                                                                                              
                                                                                                                                
Senator Bunde asked for  further information regarding the program's                                                            
cash benefit component,  as he perceives that State programs benefit                                                            
more from non-cash benefits as opposed to cash benefits.                                                                        
                                                                                                                                
Commissioner  Gilbertson  responded  that  the Department  would  be                                                            
providing  approximately  $220  million  in  program  assistance  to                                                            
seniors in FY 04 in a variety  of manners; some of which would be in                                                            
the form  of cash.  He stated that,  in addition  to various  senior                                                            
care cash  programs, the  Department also  manages the Adult  Public                                                            
Assistance   Program,  which  expends   approximately  $20   million                                                            
annually  and supplies up  to $362 per month  in cash assistance  to                                                            
approximately  5,000 seniors.  He agreed  that the  State does  "get                                                            
better mileage"  from direct  benefit programs  such as heating  and                                                            
housing assistance  "because the dollars are more  directly targeted                                                            
toward the need,"  could be more "efficiently" delivered,  and could                                                            
deliver  a higher  level of direct  program  resources. However,  he                                                            
noted  that  a  benefit   of  providing  cash  assistance   is  "the                                                            
flexibility"  that it  provides to  the consumer.  He attested  that                                                            
this flexibility  is "important  to protect"  and he noted  that the                                                            
adult  cash assistance  programs proposed  in the  Governor's  FY 05                                                            
budget  would be  fully  funded. On  behalf  of the  Department,  he                                                            
acknowledged  "the need to temporarily"  assist the State's  seniors                                                            
with either  cash assistance  or a subsidy  to address prescription                                                             
drug expenses,  and he stated that the Department  would continue to                                                            
support its cash assistance programs.                                                                                           
                                                                                                                                
Senator Bunde  ascertained, therefore,  that a part of the  proposed                                                            
SeniorCare  cash assistance program  "is a duplication of  the Adult                                                            
Public Assistance" Program.                                                                                                     
                                                                                                                                
Commissioner   Gilbertson   characterized    the   SeniorCare   cash                                                            
assistance "as a supplement,  on top of" the Adult Public Assistance                                                            
program. He  stated that some of the  seniors who might receive  the                                                            
prescription drug  cash benefit or subsidy money might  not meet the                                                            
income  eligibility  requirements  of the  Adult  Public  Assistance                                                            
Program.                                                                                                                        
                                                                                                                                
Senator   Bunde  described   the  SeniorCare   proposal  as   "Adult                                                            
Assistance Program Plus,"  in that higher income level seniors would                                                            
qualify.                                                                                                                        
                                                                                                                                
Commissioner  Gilbertson pointed  out that,  "the one difference  is                                                            
that  if  you are  eligible  for  Adult  Public  Assistance…you  are                                                            
automatically   eligible  for  Medicaid,"  whereas,   he  clarified,                                                            
seniors in  the SeniorCare  program would be  limited to simply  the                                                            
receipt of the cash prescription drug benefit.                                                                                  
                                                                                                                                
Senator   Bunde  commented   that,  in   addition,  the   SeniorCare                                                            
eligibility  levels  also  differ from  those  of the  Adult  Public                                                            
Assistance Program.                                                                                                             
                                                                                                                                
Commissioner Gilbertson  concurred that the eligibility levels would                                                            
differ  in that  the  qualifying  parameters  for the  Adult  Public                                                            
Assistance Program are  an annual income of approximately $12,000 as                                                            
compared to a  SeniorCare annual qualifying income  of approximately                                                            
$15,000.                                                                                                                        
                                                                                                                                
Senator  Bunde  asked  whether  qualifying   for  the  Adult  Public                                                            
Assistance program is based on a percent of the FPL.                                                                            
                                                                                                                                
JON  SHERWOOD,   Unit  Manager,  Beneficiary   Eligibility   Policy,                                                            
Division  of Medical  Assistance,  Department of  Health and  Social                                                            
Services  commented  that  were it  a  factor,  it would  amount  to                                                            
approximately 110 percent of the FPL.                                                                                           
                                                                                                                                
Commissioner Gilbertson  clarified that while the income level would                                                            
amount to approximately  110 percent of the FPL, the  qualifications                                                            
are "not directly tied to the FPL."                                                                                             
                                                                                                                                
Co-Chair  Green asked  for assurance  that the  transition from  the                                                            
State  to  the  federal  medical  prescription   program  "would  be                                                            
seamless  and uncomplicated"  and  that  similar benefits  would  be                                                            
provided.                                                                                                                       
                                                                                                                                
Commissioner  Gilbertson   assured  that  the  transition  would  be                                                            
seamless  and that the initial  federal benefit  "would be  a little                                                            
bit  richer." He  continued  that  seniors living  at  or below  135                                                            
percent  of the  FPL  would amount  to  approximately  8,000 of  the                                                            
approximately  10,500 total Alaskan  seniors anticipated  to receive                                                            
SeniorCare  benefits. He reiterated  that these 8,000 seniors  would                                                            
not be  required to meet  a deductible nor  remit any premiums,  and                                                            
that those seniors living  at between 135 and 150 percent of the FPL                                                            
would have no  premiums and reduced deductible levels.  In addition,                                                            
he stated that their cost  sharing expenses would also be reduced as                                                            
compared to that of the general Medicare population.                                                                            
                                                                                                                                
Co-Chair Green  surmised that the  Senior Information Service  would                                                            
be  available  to  assist applicants  with  the  transition  to  the                                                            
Medicare drug program.                                                                                                          
                                                                                                                                
Commissioner  Gilbertson  agreed.  He specified  that  two  fulltime                                                            
staffers would  be hired and trained to assist seniors  with federal                                                            
and  local  senior programs  in  addition  to  the entirety  of  the                                                            
Department's   programs.  He  mentioned  that  the  Department   has                                                            
restructured  in order  to concentrate  senior  services within  one                                                            
division   and   to  address   seniors'   concerns   regarding   the                                                            
"impenetrability" of the multitude of senior programs.                                                                          
                                                                                                                                
Senator Olson noted that  the legislation specifically identifies in                                                            
Section 1(h) that prescription  drugs, insulin, and insulin syringes                                                            
would be covered  items. Therefore,  he asked whether other  elderly                                                            
persons' medically  necessary items  such as colonoscopy  bags would                                                            
be covered.                                                                                                                     
                                                                                                                                
Commissioner Gilbertson  clarified that this legislation is targeted                                                            
to  address  the  expense   incurred  by  prescription   drugs,  and                                                            
therefore,  while some  associated items  such as  insulin would  be                                                            
provided for,  the focus of the legislation  is limited.  He pointed                                                            
out that  some items such  things as cough  and cold medicine,  oral                                                            
vitamins,  smoking  cessation  aides, and  brand  name prescription                                                             
drugs when generic  drugs are available, are specifically  excluded.                                                            
However, he noted,  "there is an opt-out" provision  whereby doctors                                                            
could prescribe  a specific brand name drug. He declared  that these                                                            
provisions assist  in making the drug subsidy program  available for                                                            
a "widest  range of seniors"  as opposed to  "a use it or  loose it"                                                            
program  in which such  things as  over the counter  cough and  cold                                                            
medicines  "are snatched  up" at  the end  of the year  in order  to                                                            
expend a specific allotted amount of money.                                                                                     
                                                                                                                                
Senator  Olson asked whether  prescription  cough medicine  would be                                                            
covered.                                                                                                                        
                                                                                                                                
Mr. Sherwood  noted that  the legislation's  language would  exclude                                                            
such  things  as   over  the  counter  cough  remedies   and  "their                                                            
prescribed  equivalents."  However,  he  clarified  that  prescribed                                                            
cough medicine  that does  not have an over  the counter  equivalent                                                            
would be covered.                                                                                                               
                                                                                                                                
Senator  Olson argued  that the  bill's language  is conflicting  as                                                            
"either a drug is a prescription drug or it isn't."                                                                             
                                                                                                                                
Commissioner Gilbertson  clarified that while drugs  that are solely                                                            
available by prescription  would be covered, over  the counter drugs                                                            
for which a  prescription might be  provided, would be excluded.  He                                                            
noted that further  discussion would occur within  the Department to                                                            
clarify the intent of the bill's language.                                                                                      
                                                                                                                                
Senator  Olson surmised  that the  majority of  the State's  seniors                                                            
would choose the  $120 per month cash option as opposed  to the drug                                                            
subsidy  option;  however,  he  noted  that  this  option  would  be                                                            
available once  the federal drug assistance program  is implemented.                                                            
                                                                                                                                
Commissioner  Gilbertson reminded  that the purpose of this  program                                                            
is to  assist  seniors with  their  prescription  drug expenses  via                                                            
their choice of  either the cash assistance or prescription  subsidy                                                            
option.  He stated  that  upon  the implementation  of  the  federal                                                            
program, the prescription  drug expense "burden would be lifted" and                                                            
the State program would be terminated.                                                                                          
                                                                                                                                
Co-Chair  Wilken  asked the  Commissioner  for  further information                                                             
regarding the  Department's Division of Health Care  fiscal note #5;                                                            
specifically  whether its projected  $85,000 FY 04 expense  would be                                                            
funded via a supplemental  request or by existing  Department funds.                                                            
                                                                                                                                
Commissioner  Gilbertson responded  that the Department anticipates                                                             
that a combination of excess  funds in the senior assistance program                                                            
and projected  fourth  quarter budget  surpluses,  assisted by  some                                                            
supplemental funding, would fund the FY 04 expense.                                                                             
                                                                                                                                
Co-Chair  Wilken  noted that  the Department's  Division  of  Public                                                            
Assistance  fiscal note  #2 provides further  information  regarding                                                            
the number of individuals  this legislation would serve. Continuing,                                                            
he asked the total  number of seniors currently being  served by the                                                            
aforementioned   $220   million  FY   04  senior   service   program                                                            
allocation.   Additionally,   he  asked  for   further  information                                                             
regarding a separate FY  05 capital project request for a Department                                                            
computer-indexing program.                                                                                                      
                                                                                                                                
Commissioner   Gilbertson  responded  that  currently,   due  to  an                                                            
inadequate  Information  Technology  (IT)  system,  an unduplicated                                                             
tracking  of individuals  being served  by the  Department's  senior                                                            
services  programs  is  unavailable.  He  expanded  that  while  the                                                            
Department could  provide an accounting of the persons  being served                                                            
within each of its divisions,  the Department's current IT system is                                                            
incapable of tracking individuals  participating in "cross division"                                                            
programs. However  he shared that  this issue is being addressed  in                                                            
separate legislation  that proposes to consolidate  the Department's                                                            
125 separate IT  systems into one master client index  that could be                                                            
utilized  and  shared  amongst  the  entirety  of  the Department's                                                             
divisions.  He declared  that a resolution  to this  issue would  be                                                            
required  in order  to provide  better utilization  and tracking  of                                                            
direct and secondary  support services provided to  individuals and,                                                            
furthermore, to members comprising a family unit.                                                                               
                                                                                                                                
Senator Hoffman  asked regarding Co-Chair  Wilken's intentions  with                                                            
the bill.                                                                                                                       
                                                                                                                                
Co-Chair  Wilken voiced the  intent to hold  the bill in  Committee;                                                            
however,  he  asked  that  Senator  Olson  present,  for  discussion                                                            
purpose, his proposed amendment.                                                                                                
                                                                                                                                
Senator Hoffman  asked whether the  proposed prescription  drug cash                                                            
benefit  and   subsidy  would  be   considered  income  and   would,                                                            
therefore, be taxable.                                                                                                          
                                                                                                                                
Commissioner  Gilbertson understood  the subsidy to be non-taxable;                                                             
however, he  was unsure as to the  determination regarding  the cash                                                            
subsidy.  He stated  that  the  Department  would address  this  tax                                                            
burden concern and report its findings to the Committee.                                                                        
                                                                                                                                
Senator  Hoffman  asked regarding  the  30-day  consecutive  absence                                                            
language as compared to  the Alaska Permanent Fund allowable absence                                                            
of 180 days,  and its affect on program  recipients as specified  in                                                            
Section 1(k),  subsection (2) on page  three, line 31 that  reads as                                                            
follows.                                                                                                                        
                                                                                                                                
     (k)  An  eligible  individual  who  leaves the  state  may  not                                                            
     receive  cash assistance  or prescription  drug benefits  under                                                            
     this  section   during  the  absence,  unless  the   individual                                                            
     temporarily leaves for one of the following:                                                                               
          (1) medical treatment; or                                                                                             
          (2) a vacation, business trip, or other absences of less                                                              
     than  30  days,  unless  the individual  has  applied  for  and                                                            
     received  a  time extension  from  the department  for  special                                                            
     circumstances.                                                                                                             
                                                                                                                                
Commissioner Gilbertson  responded that limiting a  vacation absence                                                            
to 30  consecutive days  was a  discretionary decision  made  by the                                                            
Administration.  He stressed that  the intent of the legislation  is                                                            
to  provide  assistance  to  senior citizens  within  the  State  of                                                            
Alaska.                                                                                                                         
                                                                                                                                
Senator Hoffman  asked for confirmation that the program  recipients                                                            
must apply  for and  select one  of the two  proposed subsidy  plans                                                            
once a year, as specified  in Section 1(e) of the bill, on page two,                                                            
line 23 that reads as follows.                                                                                                  
                                                                                                                                
     (e) In place of the  cash assistance under (d) of this section,                                                            
     an  eligible individual  may  make an irrevocable  election  to                                                            
     receive  prescription drug benefits  annually, provided  in the                                                            
     manner  specified by  the department  in regulation. The  total                                                            
     maximum  prescription  drug benefit an  individual may  receive                                                            
     under  this   subsection  in  a  fiscal  year   is  $1,600.  An                                                            
     individual  who has prescription  drug coverage under  AS 47.07                                                            
     is  not eligible to  receive prescription  drug benefits  under                                                            
     this subsection.                                                                                                           
                                                                                                                                
Commissioner   Gilbertson  confirmed   that  applications   must  be                                                            
submitted  on an annual  basis, and  that individuals  living  at or                                                            
below 135 percent of the  FPL could elect to receive either the cash                                                            
assistance option or the prescription subsidy option.                                                                           
                                                                                                                                
Senator  Hoffman  suggested  that this  language,  specifically  the                                                            
phrase "irrevocable election," be further clarified.                                                                            
                                                                                                                                
Commissioner  Gilbertson  shared  that  this  issue  and  a  related                                                            
amendment  were discussed  in  a House  of  Representatives  Finance                                                            
Committee hearing.  He stated that  the amendment would be  supplied                                                            
to  the  Committee.  He  stated  that  the  Department  agrees  that                                                            
clarifying language should be furthered.                                                                                        
                                                                                                                                
Senator Hoffman asked for  an explanation regarding the exclusion of                                                            
coverage for name  brand prescription drugs, as he  ascertained that                                                            
the bill's language automatically  provides coverage for these items                                                            
in language, located  in Section 1(h) on page three,  line 15 of the                                                            
bill that reads as follows.                                                                                                     
                                                                                                                                
     …However,  the department may  pay for brand name multi-source                                                             
     drugs if  the prescriber writes on the prescription  "The brand                                                            
     name  drug is medically  necessary" and  the prescriber  writes                                                            
     the reason that the brand name drug is medically necessary.                                                                
                                                                                                                                
Commissioner  Gilbertson responded  that changing the word  "may" to                                                            
"shall"  in Section  1(h) was also  discussed in  the House  Finance                                                            
Committee.  He stated  that  the Department  would  not oppose  this                                                            
change, as  the intent of the Department  is to honor a physician's                                                             
determination   that  a  specific   rather  than  generic   drug  be                                                            
prescribed.                                                                                                                     
                                                                                                                                
Co-Chair Wilken  asked the Department to provide the  Committee with                                                            
determinations  regarding whether the cash payment  would be taxable                                                            
and how coverage of name brand drugs should be addressed.                                                                       
                                                                                                                                
Co-Chair   Green  asked   whether  the   Department's  proposed   IT                                                            
improvements would provide  a family with multiple needs the ability                                                            
to work consistently  with one agency rather than  being required to                                                            
meet with several different agencies.                                                                                           
                                                                                                                                
Commissioner  Gilbertson responded  that while a family's  needs and                                                            
circumstances  would be the determining  factor, the primary  intent                                                            
of  the  IT  enhancements  would  be  to share  information   intra-                                                            
departmentally.  He noted that other legislation is  being developed                                                            
to address  program  design and  administration  to improve  program                                                            
recipients'  interaction with the  Department as well as  with local                                                            
agencies to which program grants are awarded.                                                                                   
                                                                                                                                
Co-Chair Wilken  asked Senator Olson  to address his amendment,  and                                                            
in  addition,  he  asked  that  Senator  Olson  and  the  Department                                                            
consider  incorporation   of  the   amendment  into  a  forthcoming                                                             
committee substitute.                                                                                                           
                                                                                                                                
                                                                                                                                
SFC 04 # 1, Side B 09:50 AM                                                                                                     
                                                                                                                                
                                                                                                                                
Amendment #1: This amendment  deletes the language on page one, line                                                            
four  that reads  "Section 1.  The uncodified  law of  the State  of                                                            
Alaska  is amended by  adding a  new section to  read" and  replaces                                                            
that language with the following.                                                                                               
                                                                                                                                
      "Section 1. AS 47.65 is amended by adding a new section'                                                                  
                                                                                                                                
In addition,  the  amendment deletes  "SENIORCARE  PROGRAM" on  page                                                            
one, line six and inserts:                                                                                                      
                                                                                                                                
       "Article 4. Cash and Drug Benefit for Older Alaskans.                                                                    
      Sec. 47.65.300. Senior care program."                                                                                     
                                                                                                                                
Furthermore, the amendment  deletes all material on page five, lines                                                            
7 through 12 that read as follows.                                                                                              
                                                                                                                                
     Sec. 3. (a) This Act  is repealed on the date that the Medicare                                                            
     Part D  benefit under P.L. 101-173  for prescription  drugs for                                                            
     Medicare  recipients  is  operational  for  recipients  in  the                                                            
     state,  as  communicated  to  the commissioner  of  health  and                                                            
     social services  by the United States Department  of Health and                                                            
     Social Services.                                                                                                           
          (b) The commissioner of health and social services shall                                                              
     notify the revisor  of statutes of the date described in (a) of                                                            
     this section.                                                                                                              
                                                                                                                                
                                                                                                                                
Senator Olson  explained, but did not formally offer,  Amendment #1.                                                            
He voiced  concern that  the implementation  of the federal  program                                                            
might inadequately  address the situation,  and therefore,  he noted                                                            
that the  intent of the  amendment would be  to make the  SeniorCare                                                            
drug assistance program permanent.                                                                                              
                                                                                                                                
Co-Chair Wilken asked the  Department to evaluate the effects of the                                                            
amendment on the Department.                                                                                                    
                                                                                                                                
MARIE  DARLIN,   Coordinator,   Capitol  City   Task  Force,   AARP,                                                            
referenced  the AARP Alaska letter  [copy on file] addressed  to the                                                            
Co-chairs, dated January  20, 2004 that expresses the organization's                                                            
support  of this  legislation.  She  shared  that while  the  recent                                                            
elimination  of  the  Longevity  Bonus  Program  combined  with  the                                                            
escalating  cost of prescription drugs  has incurred a hardship  for                                                            
many of  the State's  seniors, this  program would  be a  beneficial                                                            
bridge  to numerous  low-income  seniors  until  the time  that  the                                                            
federal  drug assistance  program  is implemented.  She stated  that                                                            
AARP  would  be available  to  assist  the  Administration  in  this                                                            
endeavor.  In  addition  she  voiced   support  for  the  two  other                                                            
components of the SeniorCare  program, as she avowed, the assistance                                                            
that  would  be  provided  to seniors  and  their  families  by  the                                                            
recently established  Senior Information  Office is appreciated  and                                                            
would be required  to serve the needs of the State's  growing senior                                                            
population. She also noted  that the development of a preferred drug                                                            
list  (PDL)  for  Medicaid  and  this  program,  combined  with  the                                                            
assurance  that name  brand drugs  would be  covered when  medically                                                            
prescribed,  would be  necessary in  order to  contain expenses.  In                                                            
summary,  she noted that  the members of AARP  are cognizant  of the                                                            
State's  fiscal  situation,  and she  attested  that one  of  AARP's                                                            
initial concerns  about the SeniorCare  program was how the  program                                                            
would be  funded; specifically  that the cost  of the program  would                                                            
not negatively affect another necessary State program.                                                                          
                                                                                                                                
Senator  Bunde voiced  appreciation  for AARP's  recognition of  the                                                            
State's fiscal situation.                                                                                                       
                                                                                                                                
BOB GRIGGS,  Staff Attorney, Disability  Law Center, referenced  his                                                            
testimony  [copy on  file] that was  recently submitted  to the  Co-                                                            
chairs and clarified  that, rather than being written  on January 6,                                                            
2004 as  incorrectly dated,  it was actually  penned on January  20,                                                            
2004.  He  also  pointed  out that  an  analysis  he  wrote,  titled                                                            
"Alaska's  Disabled Medicare  Beneficiaries &  The Debate Over  Drug                                                            
Benefits: A  Forgotten Population?"  [copy on file] accompanies  the                                                            
letter.                                                                                                                         
                                                                                                                                
Co-Chair  Wilken  confirmed  that  this  information   was  recently                                                            
received and that  it information would be considered  for inclusion                                                            
in a forthcoming committee substitute.                                                                                          
                                                                                                                                
Mr. Griggs  communicated  that the  Disability Law  Center has  been                                                            
advocating   since  approximately   1996,  that  prescription   drug                                                            
coverage be provided  to all eligible Medicare persons  because, due                                                            
to "an irony" in the federal  and State disability benefit programs,                                                            
there are  225 Alaskans under  the age of  65 who have disabilities                                                             
and receive  Medicare benefits, but  who, due to the fact  that they                                                            
worked and paid  Social Security taxes for ten or  more years do not                                                            
qualify  to participate  in  the Medicaid  program  that provides  a                                                            
prescription drug benefit.  However, he pointed out that individuals                                                            
with  disabilities  who have  no work  history  do qualify  for  the                                                            
Medicaid prescription drug benefit.                                                                                             
                                                                                                                                
Mr. Griggs  continued that while this  legislation "is an  excellent                                                            
step" in providing a bridge  until the time that the federal program                                                            
is implemented, numerous  individuals with disabilities would not be                                                            
provided  for. Furthermore,  he stated  that, as  referenced in  his                                                            
analysis,  a total of 707  disabled individuals  in the State  under                                                            
the age of 65 could be  characterized as "medically indigent because                                                            
they spend  more than five percent  of their income on prescription                                                             
drugs alone  per year."  He also  noted that  these individuals  are                                                            
expensive  to provide coverage  for, as based  on available  "dated"                                                            
1998 information,  $1,284  is spent annually  nationally per  capita                                                            
for prescription drugs  as compared to an annual expenditure of $841                                                            
per capita  for  those over  the age  of 65. He  communicated  that,                                                            
using  the 1998  figures, including  Alaska's  "medically  indigent"                                                            
disabled  under  the age  of  65,  in this  legislation  would  cost                                                            
approximately  $726,000 per  year using a  20-percent co-payment  as                                                            
compared  to  a  $288,000  per  year  expense  were  these  disabled                                                            
individuals  provided  for  using  FPL incomes  as  the determining                                                             
factor.                                                                                                                         
                                                                                                                                
Mr. Griggs acknowledged  the fiscal constraints the State is facing,                                                            
but urged that,  if possible, this  issue be further considered  out                                                            
of concern that  the forthcoming federal prescription  program might                                                            
not adequately provide  for this population group. He voiced support                                                            
for the bill.                                                                                                                   
                                                                                                                                
Senator Bunde  keyed in on the fact  that the cost projections  were                                                            
based  on  1998 information   and asked  whether  more  recent  cost                                                            
estimates might be available.                                                                                                   
                                                                                                                                
Mr. Griggs  responded  that more recent  data is  being pursued.  He                                                            
stated  that the  information  being presented  was  provided as  it                                                            
contains the most pertinent data that is available.                                                                             
                                                                                                                                
Senator Bunde requested  that possible funding sources be identified                                                            
to support this need.                                                                                                           
                                                                                                                                
Co-Chair Wilken asked whether  this information has been provided to                                                            
the  House  of  Representatives   Finance  Committee   as  they  are                                                            
considering a similar companion bill.                                                                                           
                                                                                                                                
Mr. Griggs assured that  this information was recently been provided                                                            
to the House Finance Committee.                                                                                                 
                                                                                                                                
Co-Chair Wilken  noted that, upon  evaluation, the Department  would                                                            
issue a  recommendation regarding  this information.  He noted  that                                                            
this is  considered  a priority  bill, as the  Administration  would                                                            
like to enact the legislation as soon as April 2004.                                                                            
                                                                                                                                
At the  request of  Co-Chair  Wilken, Committee  Members  identified                                                            
their Committee aides as  follows: Co-chair Wilken's Committee aides                                                            
are Sheila  Peterson, Darwin  Peterson, and  Marty Meyers;  Co-Chair                                                            
Green's  Committee  aides are  Deb Davidson  and  Jacqueline  Tupou,                                                            
Senator Ben Stevens'  Committee aides are Phelan Straube  and Kristy                                                            
Tibbles;  Senator  Bunde's Committee  aide  is Lynn  Smith;  Senator                                                            
Olson's  Committee aide is  Dave Grey;  Senator Hoffman's  Committee                                                            
aide  is Tim  Grussendorf;  and Senator  Dyson's  Committee aide  is                                                            
Lucky Shultz.                                                                                                                   
                                                                                                                                
The bill was HELD in Committee.                                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 10:11 AM                                                                          

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