Legislature(2015 - 2016)SENATE FINANCE 532

01/27/2016 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 78 MEDICAL ASSISTANCE COVERAGE; REFORM TELECONFERENCED
Heard & Held
SB 74 MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                     January 27, 2016                                                                                           
                         9:03 a.m.                                                                                              
                                                                                                                                
9:03:32 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 9:03 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Valerie  Davidson, Commissioner,  Department  of Health  and                                                                    
Social   Services;   Jon  Sherwood,   Deputy   Commissioner,                                                                    
Medicaid and  Health Care Policy,  Department of  Health and                                                                    
Social  Services;  Heather  Shadduck,  Staff,  Senator  Pete                                                                    
Kelly.                                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 74     MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES                                                                               
                                                                                                                                
          SB 74 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 78     MEDICAL ASSISTANCE COVERAGE; REFORM                                                                                   
                                                                                                                                
          SB 78 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
SENATE BILL NO. 78                                                                                                            
                                                                                                                                
     "An   Act  relating   to   medical  assistance   reform                                                                    
     measures;   relating   to   eligibility   for   medical                                                                    
     assistance  coverage;  relating to  medical  assistance                                                                    
     cost containment  measures by the Department  of Health                                                                    
     and  Social Services;  and providing  for an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:04:23 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  explained that the Medicaid  reform bill                                                                    
had been before  the committee in the  previous session. She                                                                    
relayed that  the CS currently before  the committee carried                                                                    
with it the support of the administration.                                                                                      
                                                                                                                                
VALERIE  DAVIDSON, COMMISSIONER,  DEPARTMENT  OF HEALTH  AND                                                                    
SOCIAL SERVICES (DHSS), concurred.                                                                                              
                                                                                                                                
Co-Chair Kelly MOVED to  ADOPT proposed committee substitute                                                                    
for SB 78(FIN), Work Draft 29-GS1055\H (Glover, 1/25/16).                                                                       
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
9:05:43 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  referred to  a letter dated  January 25,                                                                    
2016, from  the Senate  Finance Committee to  the Department                                                                    
of  Health   and  Social   Services,  which   contained  the                                                                    
following five questions (copy on file):                                                                                        
                                                                                                                                
     1. Is  the Medicaid software system  certified? If not,                                                                    
     when did  we apply for  certification and when  will it                                                                    
     be certified?                                                                                                              
                                                                                                                                
     2.  In April  you  had identified  100  defects in  the                                                                    
     software system.  What defects remain? How  many errors                                                                    
     are we  still aware of?  Who do the errors  affect? Are                                                                    
     the defects critical, high, moderate, or low?                                                                              
                                                                                                                                
     3. How quickly are applications being processed?                                                                           
                                                                                                                                
     4. How quickly are providers being paid?                                                                                   
                                                                                                                                
     5. What is the legal  status of our lawsuit with Xerox?                                                                    
     Have  other  states  in  legal  challenges  with  Xerox                                                                    
     systems  been  certified?  Has  Xerox  completed  their                                                                    
     corrective action plan? Is there a financial award? If                                                                     
     so, how much are we requesting as compensation?                                                                            
                                                                                                                                
Co-Chair MacKinnon  said that it  was not the intent  of the                                                                    
committee  to   discuss  policy  issues  contained   in  the                                                                    
legislation, but to have a  brief discussion about where the                                                                    
state was in the reform process.                                                                                                
                                                                                                                                
Commissioner Davidson stated that  she was prepared to speak                                                                    
to the 5 questions put forth by the committee.                                                                                  
                                                                                                                                
Co-Chair  MacKinnon  hoped  that  the  administration  could                                                                    
explain  the  specific changes  in  the  current version  of                                                                    
legislation, and how each section  of the bill would work to                                                                    
address the issue of Medicaid reform in the state.                                                                              
                                                                                                                                
Commissioner  Davidson testified  that the  state's Medicaid                                                                    
program, in its  current form, was not  sustainable and that                                                                    
reform was  essential. She  addressed question  1, submitted                                                                    
by the committee:                                                                                                               
                                                                                                                                
     Is the Medicaid software system certified? If not,                                                                         
     when did we apply for certification and when will it                                                                       
     be certified?                                                                                                              
                                                                                                                                
Commissioner  Davidson   explained  that  in   December  the                                                                    
department  had  met  with  the  Centers  for  Medicare  and                                                                    
Medicaid Services  (CMS) (who provide  system certification)                                                                    
and their contractor. She shared  that the next meeting with                                                                    
CMS,  and their  contractor, was  scheduled for  February 1,                                                                    
2016.                                                                                                                           
                                                                                                                                
9:08:17 AM                                                                                                                    
                                                                                                                                
Senator  Dunleavy   understood  that  the  system   was  not                                                                    
currently certified.                                                                                                            
                                                                                                                                
Commissioner Davidson replied in the affirmative.                                                                               
                                                                                                                                
9:08:32 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon clarified that  deeper discussions of the                                                                    
questions   contained  in   the  letter   would  happen   in                                                                    
subcommittee. She  highlighted that  there had been  a delay                                                                    
in  the   certification  process,  but  hoped   the  present                                                                    
discussion on the matter would be brief.                                                                                        
                                                                                                                                
Commissioner Davidson  admitted that certification  had been                                                                    
delayed, and relayed that the  department was working toward                                                                    
certification.                                                                                                                  
                                                                                                                                
9:09:32 AM                                                                                                                    
                                                                                                                                
Commissioner Davidson addressed question 2:                                                                                     
                                                                                                                                
     In  April  you  had   identified  100  defects  in  the                                                                    
     software system.  What defects remain? How  many errors                                                                    
     are we  still aware of?  Who do the errors  affect? Are                                                                    
     the defects critical, high, moderate, or low?                                                                              
                                                                                                                                
Commissioner Davidson  enumerated that there  were currently                                                                    
121  defects  in the  system.  She  said  that most  of  the                                                                    
defects were  new; as  old defects  were fixed,  new defects                                                                    
were  created in  the coding.  She relayed  that 1  critical                                                                    
defect,  6 high  defects, 111  moderate defects,  and 3  low                                                                    
defects had  been discovered  in the  system. She  said that                                                                    
the defects  were affecting 3 different  service categories:                                                                    
prior authorization  for services - behavioral  health prior                                                                    
authorization   for  approved   units   of  service,   prior                                                                    
authorization  units of  service for  enhanced adult  dental                                                                    
services,  and car  coordination services  for enrollees  on                                                                    
the  Tax  Equity  and   Fiscal  Responsibility  Act  (TEFRA)                                                                    
Waiver.                                                                                                                         
                                                                                                                                
9:10:57 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly queried  the definition  of  "defect" as  it                                                                    
applied to the software system.                                                                                                 
                                                                                                                                
Commissioner    Davidson   explained    that   the    defect                                                                    
classification was  based on the  level of impact it  had on                                                                    
the payment  system. She noted  that there had  been defects                                                                    
in the old  legacy system previously used by  the state. She                                                                    
asserted  that  no  software system  would  be  100  percent                                                                    
defect-free. She  shared that the  goal was to  minimize the                                                                    
defect number.                                                                                                                  
                                                                                                                                
9:12:04 AM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  understood that a  defect was  essentially a                                                                    
glitch that misdirected data in the system.                                                                                     
                                                                                                                                
Commissioner  Davidson  answered  in  the  affirmative.  She                                                                    
reiterated that  the defects  considered critical,  or high,                                                                    
were those that impacted  payments to providers for services                                                                    
rendered.                                                                                                                       
                                                                                                                                
9:12:43 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  asked for  the  definition  of a  "unit  of                                                                    
service".                                                                                                                       
                                                                                                                                
JON SHERWOOD, DEPUTY COMMISSIONER,  MEDICAID AND HEALTH CARE                                                                    
POLICY, DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, explained                                                                    
that  a unit  of service  varied  according to  the type  of                                                                    
service. Typically, professional  services were listed under                                                                    
numerous  procedure codes;  submitted claims  identified the                                                                    
service provided, and the number of service units provided.                                                                     
                                                                                                                                
9:14:01 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  noted that  a written  hard copy  of the                                                                    
answers to  the questions  that the committee  had submitted                                                                    
to the department was anticipated.                                                                                              
                                                                                                                                
Commissioner Davidson addressed question 3:                                                                                     
                                                                                                                                
     How quickly are applications being processed?                                                                              
                                                                                                                                
Commissioner  Davidson  relayed  that  that  the  department                                                                    
processed 8,107 Medicaid application  in December 2016, over                                                                    
20  percent  of  which  were  processed  within  a  week  of                                                                    
submission. He furthered  that 62 percent were  60 days old,                                                                    
or less; 38 percent were over 60 days old.                                                                                      
                                                                                                                                
9:14:58 AM                                                                                                                    
                                                                                                                                
Commissioner Davidson addressed question 4:                                                                                     
                                                                                                                                
     How quickly are providers being paid?                                                                                      
                                                                                                                                
Commissioner Davidson  responded that provided were  paid in                                                                    
the  same  week that  claims  were  submitted, or  the  week                                                                    
after,  with  the  exception of  the  3  defects  previously                                                                    
mentioned. She  stated that the  department paid  an average                                                                    
of 107,000 claims per week  worth approximately $30 million.                                                                    
She  spoke  to  repayment   of  advance  payments  that  the                                                                    
department   made  to   providers   when   the  system   was                                                                    
particularly  dysfunctional.  She  said that  providers  had                                                                    
repaid  a  total  of  $81.6   million,  and  the  state  had                                                                    
approximately   $83.7  million   in  outstanding   payments.                                                                    
Provider repayments were ongoing.                                                                                               
                                                                                                                                
9:16:25 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon asserted  that  the  state had  extended                                                                    
advance payments totaling $164 million.                                                                                         
                                                                                                                                
Commissioner Davidson concurred.                                                                                                
                                                                                                                                
9:16:43 AM                                                                                                                    
                                                                                                                                
Senator  Hoffman queried  the  total dollar  amount for  the                                                                    
number of claims that were 60 days overdue.                                                                                     
                                                                                                                                
Commissioner   Davidson   clarified    that   it   was   the                                                                    
applications for eligibility that  had been overdue, not the                                                                    
payments. She  offered to provide the  information regarding                                                                    
the payments.                                                                                                                   
                                                                                                                                
9:17:11 AM                                                                                                                    
                                                                                                                                
Commissioner Davidson addressed question 5:                                                                                     
                                                                                                                                
     What is  the legal  status of  our lawsuit  with Xerox?                                                                    
     Have  other  states  in  legal  challenges  with  Xerox                                                                    
     systems  been  certified?  Has  Xerox  completed  their                                                                    
     corrective action plan? Is there  a financial award? If                                                                    
     so, how much are we requesting as compensation?                                                                            
                                                                                                                                
Commissioner Davidson explained that  case before the Office                                                                    
of  Administrative  Hearings  was currently  suspended.  She                                                                    
said that a mediation with  Xerox was scheduled for February                                                                    
9, 2016.  She stated that  compensation would be a  topic of                                                                    
discussion  during  the  mediation. She  relayed  that  some                                                                    
providers  had filed  their own  class-action suits  against                                                                    
Xerox. She  said that  the department  was unaware  of other                                                                    
states  engaged in  litigation with  Xerox  over their  MMIS                                                                    
System. She shared  that North Dakota and  New Hampshire had                                                                    
certified  systems   in  2015,   but  Alaska's   system  was                                                                    
different because  Alaska was  a fee-for-service  state. She                                                                    
highlighted  that  Xerox  had 5  items  remaining  on  their                                                                    
corrective action plan that needed to be completed:                                                                             
                                                                                                                                
     · an Edit 8040                                                                                                             
     · TEFRA care coordination services claim processing                                                                        
     · MRO14 Report (Medicaid cost reporting)                                                                                   
     · National Correct Coding Initiative Report                                                                                
     · Mass Adjustment Reprocessing                                                                                             
                                                                                                                                
9:21:30 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche spoke  to the  assumption how  much the                                                                    
department  would  be  required  to  run  and  populate  the                                                                    
system,  prior  to  moving  to the  Xerox  MMIS  system.  He                                                                    
queried  the level  of labor  insensitivity  prior to  going                                                                    
live.                                                                                                                           
                                                                                                                                
Commissioner Davidson  stated that the  early implementation                                                                    
was  much   more  labor  intensive  than   anticipated.  She                                                                    
contended the  new system  was more  efficient than  the old                                                                    
legacy system, and  there had been an increase  in the total                                                                    
amount of total average weekly claims paid.                                                                                     
                                                                                                                                
9:23:02 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon reminded  the  committee  that the  bill                                                                    
would be  moving to subcommittee  and that  policy inquiries                                                                    
should presently be limited.                                                                                                    
                                                                                                                                
Co-Chair   MacKinnon  expressed   concern   that  using   an                                                                    
uncertified system put Alaska at  risk. She wondered how far                                                                    
back  in  time claims  could  be  submitted to  the  federal                                                                    
government.                                                                                                                     
                                                                                                                                
9:24:11 AM                                                                                                                    
                                                                                                                                
Senator  Olson observed  that due  to systemic  defects, the                                                                    
number  of providers  available  for  Medicare patients  was                                                                    
dwindling.  He  wondered   whether  Medicaid  expansion  had                                                                    
affected the number of providers.                                                                                               
                                                                                                                                
Commissioner  Davidson responded  that  in Alaska,  Medicaid                                                                    
paid  more  than  Medicare;  the  department  had  not  seen                                                                    
providers  discontinuing  their participation  in  Medicaid.                                                                    
She  said  a  "refresh"   of  Medicaid  providers  had  been                                                                    
conducted  by the  department in  2015;  providers had  been                                                                    
asked to re-enroll as Medicaid  providers because there were                                                                    
Medicaid  providers in  the old  system who  were no  longer                                                                    
providing services.                                                                                                             
                                                                                                                                
9:25:50 AM                                                                                                                    
                                                                                                                                
Senator Dunleavy asked what the  current version of the bill                                                                    
was meant to accomplish.                                                                                                        
                                                                                                                                
Commissioner  Davidson  asserted  that the  department  took                                                                    
reform  very seriously,  and many  of the  changes that  had                                                                    
been  incorporated into  the committee  substitute were  new                                                                    
reform  opportunities  that  had been  identified  over  the                                                                    
interim.  She added  that research  had included  looking to                                                                    
other states for  guidance and taking advantage  of the best                                                                    
ideas.                                                                                                                          
                                                                                                                                
Senator Dunleavy asked  what the bill would  cost the state,                                                                    
and did the department hope to  recoup monies as a result of                                                                    
the reforms.                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon asked  Commissioner Davidson  to contain                                                                    
remarks  to a  high-level  overview, and  restated that  the                                                                    
policy discussions would occur in subcommittee.                                                                                 
                                                                                                                                
Commissioner  Davidson  stated  that  the  department  would                                                                    
provide fiscal notes for more  detail, but did expect reform                                                                    
opportunities to provide better services for less cost.                                                                         
                                                                                                                                
9:27:48 AM                                                                                                                    
                                                                                                                                
Commissioner  Davidson  relayed   that  the  department  had                                                                    
identified reform  efforts already  existing and  ongoing in                                                                    
the  department in  2015, including  the "over-utilizer"  of                                                                    
emergency services.  She furthered that pharmacy  reform and                                                                    
utilization  control initiatives  had  been priorities.  She                                                                    
stated  that additional  reforms  had been  included in  the                                                                    
original bill  introduced by the governor.  Ove the interim,                                                                    
the department  had undertaken an  effort to  bring national                                                                    
health  policy  expertise  and  actuarial  analysis  to  the                                                                    
process. She  shared that the  resulting report of  the work                                                                    
by  the  department  and  Agnew  Beck  Consulting  had  been                                                                    
released       and       could      be       found       at:                                                                    
dhss.alaska.gov/HealthyAlaska/Pages/Medicaid_                                                                                 
Redesign.aspx.                                                                                                                
                                                                                                                                
Commissioner Davidson  stated that the bill  focused on, and                                                                    
created,  an   Alaska  Medicaid  False  Claims   Act,  which                                                                    
mirrored   the  federal   statute  and   provided  financial                                                                    
incentives for individual Alaskans  who brought fraud to the                                                                    
attention  of the  Attorney General.  This  would allow  the                                                                    
state  to recover  losses from  fraud and  overpayments. She                                                                    
relayed  that   the  bill  proposed   a  number   of  reform                                                                    
opportunities that  had not been  included in  pervious bill                                                                    
versions, such  as, primary care initiatives,  and increased                                                                    
1115 Waiver  opportunities. She stressed that  not investing                                                                    
in a decent  behavioral health system impacted  the state in                                                                    
three  different  ways: increased  incarceration,  increased                                                                    
child-maltreatment  rates,  and   increased  emergency  room                                                                    
overutilization. She  continued that  the bill  would create                                                                    
the  public/private opportunity  to  address the  non-urgent                                                                    
use of  emergency room departments,  and the  opportunity to                                                                    
work with the tribal health  system in order to maximize 100                                                                    
percent   federal   match   opportunities.  One   of   those                                                                    
opportunities included  finalizing a national  policy change                                                                    
issued   by  Secretary   Burwell,  of   the  United   States                                                                    
Department of  Health and  Human Services,  in which  it had                                                                    
been proposed to  allow states like Alaska  to recoup travel                                                                    
and  accommodation services,  under  certain conditions,  at                                                                    
100  percent  federal  match.  Another  opportunity  was  to                                                                    
expand  referred services  from a  tribal organization  to a                                                                    
service not provided  in the tribal system  to be considered                                                                    
for a 100 percent federal match.                                                                                                
                                                                                                                                
9:32:45 AM                                                                                                                    
                                                                                                                                
Senator   Hoffman  asked   whether   the  increased   travel                                                                    
reimbursement included Medivac support in rural Alaska.                                                                         
                                                                                                                                
Commissioner Davis replied in the affirmative.                                                                                  
                                                                                                                                
9:33:06 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  asked  Mr.   Sherwood  to  address  the                                                                    
sectional analysis.                                                                                                             
                                                                                                                                
9:33:52 AM                                                                                                                    
                                                                                                                                
Mr.  Sherwood  discussed  the sectional  analysis  for  CSSB                                                                    
78(FIN):                                                                                                                        
                                                                                                                                
     Section 1      Adopts intent language related to the                                                                     
     need  to  redesign  the  state's  Medicaid  program  to                                                                    
     provide  financial sustainability,  and sets  out goals                                                                    
     for redesign of the program.                                                                                               
                                                                                                                                
     Section 2 Adopts AS  09.10.075, which  establishes time                                                                  
     limits  in which  a  person  may or  may  not bring  an                                                                    
     action under  new sections AS  09.58.010-09.58.950, the                                                                    
     Alaska  Medicaid False  Claims  Act, and  a statute  of                                                                    
     limitations. An action may be  brought within six years                                                                    
     of when  the act  or omission  was committed,  or three                                                                    
     years  after the  date  when the  act  or omission  was                                                                    
     known  or  reasonably should  have  been  known by  the                                                                    
     attorney general  and department, but no  action may be                                                                    
     brought for a  violation more than ten  years after the                                                                    
     date of violation.                                                                                                         
                                                                                                                                
     Section 3 Amends AS  09.10.120(a) to  include reference                                                                  
     to new  subsection AS 09.10.075, creating  an exception                                                                    
     for Medicaid fraud action time limits.                                                                                     
                                                                                                                                
     Section 4 Adopts  AS  09.58, which  establishes  Alaska                                                                  
     Medicaid False  Claim and  Reporting Act  (AFMCA). This                                                                    
     section   includes  several   subsections  related   to                                                                    
     liability  for   certain  acts  and   omissions,  civil                                                                    
     actions,  rights  of   participants  in  such  actions,                                                                    
     awards allowed,  actions that  are not  allowed, limits                                                                    
     state    liability,    and    outlines    whistleblower                                                                    
     protections. This section  identifies the fraudulent or                                                                    
     false  acts  that  can  be   committed  by  a  Medicaid                                                                    
     provider, a corporation,  partnership or individual, or                                                                    
     recipient in effort to defraud  the State. This section                                                                    
     also  outlines  provisions  by  which  a  recipient  or                                                                    
     provider  may  reduce  the  amount  of  liability  from                                                                    
     actual damages.                                                                                                            
                                                                                                                                
          This section also allows a private citizen to                                                                         
     pursue  a false  claim  action in  the superior  court,                                                                    
     outlines the  provision by which  they may file  a suit                                                                    
     or an  extension of time  in which to bring  an action,                                                                    
     and  the responsibilities  and time-line  in which  the                                                                    
     attorney general  must investigate  and respond  to the                                                                    
     claim.  This   section  also  identifies   the  options                                                                    
     available  to  private  persons,  should  the  attorney                                                                    
     general  dismiss  the case  due  to  lack of  evidence,                                                                    
     including  pursuing  the  suit  of  their  own  accord.                                                                    
     Throughout the  process, this  section states  that the                                                                    
     attorney  general   holds  the  rights   to  intervene,                                                                    
     settle,   dismiss  the   case,  request   investigation                                                                    
     assistance from  the department and bring  civil action                                                                    
     in superior court.                                                                                                         
                                                                                                                                
     This  section further  allows the  attorney general  to                                                                    
     issue subpoenas  to compel  records in  connection with                                                                    
     an  investigation, and  outlines the  courts' authority                                                                    
     to  issue an  order to  comply and  punishments if  the                                                                    
     Medicaid  provider or  recipient(s) fail  or refuse  to                                                                    
     comply with the courts  order. Further, by this section                                                                    
     the attorney  general may elect  to interview  and file                                                                    
     or   amend   a   new  complaint   based   on   conduct,                                                                    
     transactions or acts set out in the complaint.                                                                             
                                                                                                                                
          Further, this section provides protections for                                                                        
     the private person acting as  a whistleblower and limit                                                                    
     the  liability of  the state  and outlines  time limits                                                                    
     for bringing action.                                                                                                       
                                                                                                                                
          Finally,   this    section   includes   department                                                                    
     regulatory   authority,   identifies  the   limits   of                                                                    
     punitive damages,  and provides definitions  related to                                                                    
     this section.                                                                                                              
                                                                                                                                
     Section 5 Amends  AS  37.05.146(c)  to  include  a  new                                                                  
     paragraph  (88)  adding  monetary recoveries  from  the                                                                    
     Alaska  Medicaid False  Claims Act  to the  program and                                                                    
     non-general fund program receipts definitions.                                                                             
                                                                                                                                
     Section 6 Amends AS  40.25.120, a  conforming amendment                                                                  
     to include new AS.09.58.010  to existing public records                                                                    
     statutes.                                                                                                                  
                                                                                                                                
     Section 7      Amends AS 47.05.010 to include a                                                                          
     requirement that  DHSS develop  a health  care delivery                                                                    
     model that encourages wellness and disease prevention.                                                                     
                                                                                                                                
     Section 8 Amends   AS    47.05.200,   Medicaid   Audits                                                                  
     statute, changes  the number of  program audits   to no                                                                    
     less  than fifty  per year  and adding  that the  state                                                                    
     shall attempt  to minimize concurrent state  or federal                                                                    
     audits.                                                                                                                    
                                                                                                                                
     Section 9 Adopts AS  47.05.200 that the  Department may                                                                  
     assess   interest   and  penalties   on   overpayments,                                                                    
     calculating interest using existing statutory rates.                                                                       
                                                                                                                                
     Section 10     Adopts  AS 47.05.235, which  applies                                                                      
     the duty of enrolled  Medicaid providers to conduct one                                                                    
     annual   review,   identify  overpayment   and   report                                                                    
     findings to  the department within ten   business days,                                                                    
     and create a repayment agreement with the state.                                                                           
                                                                                                                                
     Section 11     Adopts AS 47.05.250, which authorizes                                                                     
     the department  to develop regulations to  impose civil                                                                    
     fines and sets limits on the amount of the fines.                                                                          
                                                                                                                                
          Adopts AS 47.05.260, which authorizes the                                                                             
     department,  after  application  to  the  court  and  a                                                                    
     finding  of probable  cause, to  seize certain  real or                                                                    
     personal property of a  medical assistance provider who                                                                    
     has  committed  or  is  committing  medical  assistance                                                                    
     fraud, to  offset the cost  of the alleged fraud.   The                                                                    
     court  may  authorize  seizure   of  real  or  personal                                                                    
     property to cover the cost of the alleged fraud.                                                                           
                                                                                                                                
     This  section  provides  a list  of  possible  real  or                                                                    
     personal    properties,   including    bank   accounts,                                                                    
     automobiles,  boats, airplanes,  stocks and  bonds, and                                                                    
     inventory.                                                                                                                 
                                                                                                                                
     This  section,  upon issuance  of  the  court order  of                                                                    
     seizure,   prohibits  the   owners  of   property  from                                                                    
     disposing  of the  property, with  a provision  of good                                                                    
     faith  in the  event property  is sold  without written                                                                    
     permission of the court.                                                                                                   
                                                                                                                                
     This section  further authorizes the forfeiture  of any                                                                    
     seized property if the  Medicaid provider is eventually                                                                    
     convicted  of medical  assistance  fraud. This  section                                                                    
     provides instructions  to the  state to sell  or return                                                                    
     properties,  and  depositing  funds  from  disposal  of                                                                    
     seized properties.                                                                                                         
                                                                                                                                
     This section  also allows for the  action of forfeiture                                                                    
     to  be joined  with any  alternative civil  or criminal                                                                    
     action for damages.                                                                                                        
                                                                                                                                
9:39:57 AM                                                                                                                    
                                                                                                                                
Mr. Sherwood continued with the sectional analysis:                                                                             
                                                                                                                                
     Section 12     Amends AS 47.07.036 by adding new                                                                       
     subsections (d)  - (f) to outline  cost containment and                                                                    
     reform measures DHSS  must undertake, including seeking                                                                    
     demonstration  waivers  related to  innovative  service                                                                    
     delivery models,  applying for other options  under the                                                                    
     Social  Security  Act  to obtain  or  increase  federal                                                                    
     match,   and   improving  telemedicine   for   Medicaid                                                                    
     recipients.   This section also requires  DHSS to apply                                                                    
     for an 1115 waiver for  a demonstration project for one                                                                    
     or more  groups of Medicaid  recipients in one  or more                                                                    
     geographic  area.     The  demonstration   project  may                                                                    
     include  managed  care  organizations,  community  care                                                                    
     organizations,   patient-centered  medical   homes,  or                                                                    
     other innovative payment models.                                                                                           
                                                                                                                                
     Section 13     Amends    47.07.900     (4),    Medicaid                                                                  
     Administration  definitions,  by removing  the  grantee                                                                    
     status  requirement  for  outpatient  community  mental                                                                    
     health clinics serving Medicaid patients.                                                                                  
                                                                                                                                
     Section 14     Amends AS 47.07.900 (17) by removing                                                                      
     the  grantee/contractor  status requirement  from  drug                                                                    
     and alcohol treatment  centers and outpatient community                                                                    
     mental health clinics. This change,  and the one in the                                                                    
     previous  section,   allows  mental  health   and  drug                                                                    
     treatment service  providers who do not  receive grants                                                                    
     from  the   department  to  become   enrolled  Medicaid                                                                    
     providers and deliver services to Medicaid recipients.                                                                     
                                                                                                                                
     Section 15     Adds a new section to outline court                                                                       
     rule amendments  as a result  of enactment  of "section                                                                    
     2, 3, and 4 " (AMFCA) of this Act.                                                                                         
                                                                                                                                
     Section 16     Requires   DHSS   to  collaborate   with                                                                  
     Alaska Tribal  health organizations  and the  U.S. DHHS                                                                    
     to implement new federal  policy regarding 100% federal                                                                    
     funding  for  services  provided  to  Medicaid-eligible                                                                    
     American Indian and Alaska Native individuals.                                                                             
                                                                                                                                
     Section 17     Requires DHSS to implement the primary                                                                  
     care  case   management  system  authorized   under  AS                                                                    
     47.07.030(d).   The purpose  of this  new system  is to                                                                    
     increase  Medicaid   enrollees'  use  of   primary  and                                                                    
     preventive care, while decreasing  the use of specialty                                                                    
     care and hospital emergency department services.                                                                           
                                                                                                                                
     Section 18     Requires  DHSS  to  develop  a  plan  to                                                                  
     strengthen   the  health   information  infrastructure,                                                                    
     including health data  analytics capability, to support                                                                    
     transformation of the health system in Alaska.                                                                             
                                                                                                                                
     Section 19     Authorizes DHSS to support one or more                                                                    
     private  initiatives designed  to reduce  nonurgent use                                                                    
     of emergency departments by Medicaid recipients.                                                                           
                                                                                                                                
     Section 20     Authorizes DHSS to contract with one or                                                                   
     more accountable care  organizations to demonstrate the                                                                    
     use  of local,  provider-led coordinated  care entities                                                                    
     that  agree  to  monitor   care  across  multiple  care                                                                    
     settings, and that will be  accountable to DHSS for the                                                                    
     overall cost and  quality of care.   DHSS is authorized                                                                    
     to  participate  in  public-private  partnerships  with                                                                    
     other  purchasers  of  health  care  services,  and  is                                                                    
     required  to implement  an evaluation  plan to  measure                                                                    
     the success of this demonstration project.                                                                                 
     Section 21     Instructs DHSS to immediately amend the                                                                   
     Medicaid  state plan  to be  consistent with  this Act,                                                                    
     and  submit the  amendments to  the federal  government                                                                    
     for approval.                                                                                                              
     Section 22     Authorizes DHSS to adopt regulations to                                                                   
     implement provisions of this Act.                                                                                          
                                                                                                                                
     Section 23     Provides that Section 4 is effective                                                                      
     conditional  on  Section   15  receiving  a  two-thirds                                                                    
     majority vote.   The new  sections of law  creating the                                                                    
     civil  Medicaid false  claims act  do  not take  effect                                                                    
     unless the  indirect court rule change  sections of the                                                                    
     bill receive the necessary two-thirds vote.                                                                                
                                                                                                                                
     Section 24     Provides that Section 22 is effective                                                                     
     immediately under AS 01.10.070(c).                                                                                         
                                                                                                                                
     Section 25     Provides that, except for Section 22,                                                                     
     the  provisions of  this  Act take  effect  on July  1,                                                                    
     2016.                                                                                                                      
                                                                                                                                
9:44:08 AM                                                                                                                    
                                                                                                                                
Senator Hoffman asked about Section  14, and wondered how it                                                                    
changed the current  system and care for  individuals on the                                                                    
FASD spectrum.                                                                                                                  
                                                                                                                                
Mr.  Sherwood  explained  that   the  principal  effect  the                                                                    
section   would  bring   more   substance  abuse   treatment                                                                    
providers  into the  Medicaid system.  He suggested  that it                                                                    
would   make   substance   abuse  treatment   more   readily                                                                    
available, with shorter wait times.                                                                                             
                                                                                                                                
Senator Hoffman  asked whether  the legislation  offered any                                                                    
other preventative measures.                                                                                                    
                                                                                                                                
Mr.  Sherwood  referred to  Section  7  of the  bill,  which                                                                    
addressed the  duties of the department,  which required the                                                                    
department  to  develop a  health  care  delivery model  and                                                                    
encourage wellness and disease prevention.                                                                                      
                                                                                                                                
Co-Chair MacKinnon  directed attention  to Page 13,  line 16                                                                    
of the legislation.                                                                                                             
                                                                                                                                
9:47:10 AM                                                                                                                    
                                                                                                                                
Commissioner  Davidson stated  that  one critical  component                                                                    
included  in  the  Agnew-Beck  report  was  a  demonstration                                                                    
project   that  would   be   allowed   under  the   proposed                                                                    
legislation for accountable  care organization demonstration                                                                    
projects. She said that  accountable care organizations were                                                                    
a  way  to  be  able  to   manage  the  care  of  a  defined                                                                    
population.                                                                                                                     
                                                                                                                                
9:49:08 AM                                                                                                                    
                                                                                                                                
Senator  Olson wondered  how many  groups provided  input in                                                                    
the crafting of the legislation.                                                                                                
                                                                                                                                
Commissioner Davidson  responded that the  Agnew-Beck report                                                                    
listed all of the participants  in the Appendix and included                                                                    
tribal health  providers. She added  that the  webinars that                                                                    
had  been  provided  were   available  on  the  department's                                                                    
website.                                                                                                                        
                                                                                                                                
Senator Olson asked why the  provider would be penalized for                                                                    
overpayments as well as an interest payment.                                                                                    
                                                                                                                                
9:51:27 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  articulated that  she was going  to send                                                                    
both Medicaid  reform bills to a  subcommittee consisting of                                                                    
the following lawmakers:                                                                                                        
                                                                                                                                
     Co-Chair MacKinnon, Chair                                                                                                  
     Co-Chair Kelly                                                                                                             
     Vice-Chair Micciche                                                                                                        
     Senator Olson                                                                                                              
     Senator Cathy Giessel                                                                                                      
                                                                                                                                
Co-Chair  MacKinnon  said  that Senator  Olson  and  Senator                                                                    
Giessel both had  expertise in the medical  field that would                                                                    
supply  additional insight  into  the  bills. She  requested                                                                    
that  Senator  Olson submit  his  previous  question to  the                                                                    
department in written form.                                                                                                     
                                                                                                                                
9:54:26 AM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  wanted 2 questions  on the  record, but                                                                    
did not need them to be answered.                                                                                               
                                                                                                                                
Co-Chair  MacKinnon  asserted   that  the  subcommittee  was                                                                    
created with geographic and  regional sensitivities in mind.                                                                    
She  added that  the subcommittee  would meet  at 1:30pm  on                                                                    
Monday, Wednesday, and Friday into the future.                                                                                  
                                                                                                                                
9:55:48 AM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  commented that  the department  was the                                                                    
second highest cost-driver in the  state, and shared that he                                                                    
was very focused on false claims.  He believed that it was a                                                                    
fairness issue for all Alaskans.  He asked about the statute                                                                    
of limitations for  the reporting of false  claims. He asked                                                                    
for further explanation of Sections  2 and 3. He asked about                                                                    
the change  of the word  "relator" to "person",  and whether                                                                    
the definition included state employees.                                                                                        
                                                                                                                                
9:57:37 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  referred to  Section 4, and  asked about                                                                    
the difference between "false" and  "fraud". She asked about                                                                    
Section  8,  and   wondered  if  the  state   would  have  a                                                                    
memorandum   of  understanding   (MOU)   with  the   federal                                                                    
government  to receive  federal audit  finding results.  She                                                                    
spoke to Section 13, and queried the role of the grantee.                                                                       
                                                                                                                                
9:58:41 AM                                                                                                                    
                                                                                                                                
Co-Chair     MacKinnon     directed    the     public     to                                                                    
www.akleg.gov/BASIS for meeting documents.   She referred to                                                                    
the sectional  analysis and a  memo from  Legislative Legal.                                                                    
She  announced that  all legislative  staff  was welcome  to                                                                    
attend the SB 78 subcommittee meetings.                                                                                         
                                                                                                                                
SB  78  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:59:54 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
10:01:29 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 74                                                                                                            
                                                                                                                                
     "An Act relating to  permanent fund dividends; relating                                                                    
     to a medical assistance  reform program; establishing a                                                                    
     personal  health savings  account  program for  medical                                                                    
     assistance recipients;  relating to  the duties  of the                                                                    
     Department of Health  and Social Services; establishing                                                                    
     medical   assistance    demonstration   projects;   and                                                                    
     relating to  a study  by the  Department of  Health and                                                                    
     Social Services."                                                                                                          
                                                                                                                                
10:01:41 AM                                                                                                                   
                                                                                                                                
Co-Chair   Kelly    stated   that   Medicaid    had   become                                                                    
unsustainable  in   its  current  form  and   needed  to  be                                                                    
reformed.  He noted  that  his office  had  hired a  private                                                                    
contractor  to  draft  a  Medicaid   reform  bill  over  the                                                                    
interim, the result of which was  SB 74. He relayed that the                                                                    
heart of the bill was  the case management system, otherwise                                                                    
called managed care,  and added that Alaska was  one of only                                                                    
12 systems  that did not  have a case management  system. He                                                                    
relayed  that through  a case  management  system the  state                                                                    
could  regulate  emergency  facility  use,  make  sure  that                                                                    
people  were using  cheaper, generic  prescription drugs  as                                                                    
much  as possible,  restrict travel  for care,  and to  keep                                                                    
recipients  from engaging  in  self-referral to  specialists                                                                    
when primary  care physicians were sufficient.  He said that                                                                    
the  bill contained  a feasibility  study that  would direct                                                                    
the administration  toward privatization. He added  that the                                                                    
bill contained language on fraud prevention and recovery.                                                                       
                                                                                                                                
10:06:38 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon  pointed out to the  committee that there                                                                    
were individuals available online for questions.                                                                                
                                                                                                                                
10:07:22 AM                                                                                                                   
                                                                                                                                
HEATHER  SHADDUCK,  STAFF,  SENATOR PETE  KELLY,  began  the                                                                    
sectional analysis.                                                                                                             
                                                                                                                                
10:08:20 AM                                                                                                                   
AT EASE                                                                                                                         
10:11:55 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Ms. Shadduck continued discussing the Sectional Analysis                                                                        
for CSSB 74:                                                                                                                    
                                                                                                                                
          Section  1: Allows  the Department  of Health  and                                                                  
          Social Services  (DHSS) to  enter into  a contract                                                                    
          through the competitive  bidding process under the                                                                    
          State   Procurement  Code   for  durable   medical                                                                    
          equipment  or specific  medical services  provided                                                                    
          in the Medicaid program.                                                                                              
                                                                                                                              
          Section 2: Requires the  department to establish a                                                                  
          computerized  eligibility  verification system  to                                                                    
          verify eligibility  and to deter waste  and fraud.                                                                    
          It also  requires DHSS enter into  a competitively                                                                    
          bid  contract with  a third-party  vendor for  the                                                                    
          eligibility verification system.                                                                                      
                                                                                                                              
          Section  3: Adds  new sections  establishing civil                                                                  
          penalties for false  claims for medical assistance                                                                    
          and  authorizing  the  Department  of  Health  and                                                                    
          Social Services  (the department) to  assess civil                                                                    
          penalties against medical assistance providers.                                                                       
                                                                                                                              
          Section  4: Requires  DHSS to  design, adopt,  and                                                                  
          implement a  medical assistance  (Medicaid) reform                                                                    
          program.  Requires the  department to  prepare and                                                                    
          submit a report about  reforms, savings, and costs                                                                    
          related to  the Medicaid  program. Provides  for a                                                                    
          definition of "telemedicine."                                                                                         
                                                                                                                              
          Ms.  Shadduck discussed  the sub-sections  related                                                                    
          to Section 4:                                                                                                         
                                                                                                                                
          (1)  referrals  to  community and  social  support                                                                    
          services,   including   career     and   education                                                                    
          training    services    available   through    the                                                                    
          Department of Labor and                                                                                               
           Workforce   Development  under   AS  23.15,   the                                                                    
          University of Alaska, or other sources;                                                                               
          (2)  distribution  of  an explanation  of  medical                                                                    
          assistance  benefits  to   recipients  for  health                                                                    
         care services received under the program;                                                                              
          (3) expanding the use  of telemedicine for primary                                                                    
         care, behavioral health, and urgent care;                                                                              
          (4)  enhancing  fraud prevention,  detection,  and                                                                    
          enforcement;                                                                                                          
          (5)  reducing  the   cost  of  behavioral  health,                                                                    
          senior,   and  disabilities  services provided  to                                                                    
          recipients   of  medical   assistance  under   the                                                                    
          state's home and   community-based services waiver                                                                    
          under AS 47.07.045;                                                                                                   
          (6) pharmacy initiatives;                                                                                             
          (7) enhanced care management;                                                                                         
          (8)   redesigning    the   payment    process   by                                                                    
         implementing fee agreements  that include                                                                              
               (A)   premium   payments   for   centers   of                                                                    
               excellence;                                                                                                      
               (B)    penalties     for    hospital-acquired                                                                    
               infections,   readmissions,     and   outcome                                                                    
               failures;                                                                                                        
               (C)  bundled payments  for specific  episodes                                                                    
               of care; and                                                                                                     
               (D)  global payments  for contracted  payers,                                                                    
               primary  care   managers,  and case  managers                                                                    
               for  a recipient  or for  care  related to  a                                                                    
               specific diagnosis;                                                                                              
          (9)  stakeholder  involvement  in  setting  annual                                                                    
          targets for quality and cost-effectiveness;                                                                           
          (10) to  the extent  consistent with  federal law,                                                                    
          reducing travel  costs by   requiring  a recipient                                                                    
          to  obtain  medical  services in  the  recipient's                                                                    
          home   community,   to  the   extent   appropriate                                                                    
          services  are available  in  the recipient's  home                                                                    
          community.                                                                                                            
               (b) The  department shall identify  the areas                                                                    
               of the state where  improvements in access to                                                                    
               telemedicine  would  be   most  effective  in                                                                    
               reducing the costs  of medical assistance and                                                                    
               improving access to  health care services for                                                                    
               medical     assistance    recipients.     The                                                                    
               department  shall  make  efforts  to  improve                                                                    
               access  to  telemedicine  for  recipients  in                                                                    
               those  locations.  The department  may  enter                                                                    
               into agreements with Indian                                                                                      
               Health  Service providers,  if necessary,  to                                                                    
               improve   access    by   medical   assistance                                                                    
               recipients  to  telemedicine  facilities  and                                                                    
               equipment.                                                                                                       
               (c)  On or  before October  15 of  each year,                                                                    
               the Department of  Health and Social Services                                                                    
               shall prepare a report  and submit the report                                                                    
               to the  senate secretary and the  chief clerk                                                                    
               of  the House  of Representatives  and notify                                                                    
               the   legislature   that    the   report   is                                                                    
               available. The report must include                                                                               
                    (1)  realized  cost savings  related  to                                                                    
                    reform efforts under this section;                                                                          
                    (2)  realized  cost savings  related  to                                                                    
                    medical   assistance    reform   efforts                                                                    
                    undertaken by the  department other than                                                                    
                    the  reform  efforts described  in  this                                                                    
                    Act;                                                                                                        
                    (3)   a   statement   of   whether   the                                                                    
                    Department   of    Health   and   Social                                                                    
                    Services  has  met  annual  targets  for                                                                    
                    quality and cost-effectiveness;                                                                             
                    (4)  recommendations for  legislative or                                                                    
                    budgetary  changes  related  to  medical                                                                    
                    assistance   reforms  during   the  next                                                                    
                    fiscal year;                                                                                                
                    (5)  changes in  federal  laws that  the                                                                    
                    department  expects  will  result  in  a                                                                    
                    cost  or savings  to the  state of  more                                                                    
                    than $1,000,000;                                                                                            
                    (6)   a  description   of  any   medical                                                                    
                    assistance  grants, options,  or waivers                                                                    
                    the  department   applied  for   in  the                                                                    
                   previous fiscal year;                                                                                        
                    (7)   the   results   of   demonstration                                                                    
                    projects     the      department     has                                                                    
                    implemented;                                                                                                
                    (8) legal and  technological barriers to                                                                    
                    the   expanded   use  of   telemedicine,                                                                    
                    improvements in the  use of telemedicine                                                                    
                    in  the state,  and recommendations  for                                                                    
                    changes or investments  that would allow                                                                    
                    cost-effective        expansion       of                                                                    
                    telemedicine;                                                                                               
                    (9) the percentage  decrease in costs of                                                                    
                    travel     for    medical     assistance                                                                    
                    recipients  compared   to  the  previous                                                                    
                    fiscal year;                                                                                                
                    (10)  the  percentage  decrease  in  the                                                                    
                    number of  medical assistance recipients                                                                    
                    identified   as    frequent   users   of                                                                    
                    emergency  departments  compared to  the                                                                    
                   previous fiscal year;                                                                                        
                    (11)   the    percentage   increase   or                                                                    
                    decrease  in  the   number  of  hospital                                                                    
                    readmissions  within  30  days  after  a                                                                    
                    hospital  stay  for  medical  assistance                                                                    
                    recipients  compared   to  the  previous                                                                    
                    fiscal year;                                                                                                
                    (12)   the    percentage   increase   or                                                                    
                    decrease in  average state  general fund                                                                    
                    spending  for  each  medical  assistance                                                                    
                    recipient   compared  to   the  previous                                                                    
                    fiscal year;                                                                                                
                    (13)   the    percentage   increase   or                                                                    
                    decrease  in  uncompensated  care  costs                                                                    
                    incurred    by     medical    assistance                                                                    
                    providers  compared  to  the  percentage                                                                    
                    change   in  private   health  insurance                                                                    
                    premiums for individual  and small group                                                                    
                    health insurance;                                                                                           
                    (14)  the  cost,  in state  and  federal                                                                    
                    funds,  for providing  optional services                                                                    
                    under AS 47.07.030(b).                                                                                      
               (d)  In  this section,  "telemedicine"  means                                                                    
               the   practice  of   health  care   delivery,                                                                    
               evaluation,   diagnosis,   consultation,   or                                                                    
               treatment,  using  the  transfer  of  medical                                                                    
               data   through   audio,   visual,   or   data                                                                    
               communications  that are  performed over  two                                                                    
               or more  locations between providers  who are                                                                    
               physically  separated from  the recipient  or                                                                    
               from each other.                                                                                                 
                                                                                                                                
          Section 5: Requires the legislature to approve                                                                      
          any new additional groups added to the Medicaid                                                                       
          program on or after March 23, 2010.                                                                                   
                                                                                                                              
          Section 6:  Requires the department to  design and                                                                  
          implement  a   demonstration  project   to  reduce                                                                    
          nonurgent   use   of  emergency   departments   by                                                                    
          Medicaid recipients.                                                                                                  
                                                                                                                                
Ms. Shadduck spoke to subsection 5 of Section 6:                                                                                
                                                                                                                                
     (5) a  process for assisting frequent  users with plans                                                                    
     of   care  and   for  assisting   patients  in   making                                                                    
     appointments  with  primary  care providers  within  96                                                                    
     hours after an emergency department visit;                                                                                 
                                                                                                                                
10:20:49 AM                                                                                                                   
                                                                                                                                
Ms. Shadduck continued with the sectional analysis:                                                                             
                                                                                                                                
Section 7: Requires the department  and the attorney general                                                                  
to  annually prepare  a report  regarding fraud  prevention,                                                                    
abuse,  prosecution,  and  vulnerabilities in  the  Medicaid                                                                    
program.                                                                                                                        
                                                                                                                              
Section 8:  Requires the department  to develop one  or more                                                                  
managed  care  or  case  management  demonstration  projects                                                                    
through  a contract  with a  third party.  The managed  care                                                                    
program would  be for individuals  enrolled in  all Medicaid                                                                    
programs.                                                                                                                       
                                                                                                                                
Ms. Shadduck spoke to the subsections in Section 8:                                                                             
                                                                                                                                
     (b) The department shall enter  into contracts with one                                                                    
     or  more   third-party  primary  care   case  managers,                                                                    
     managed care  organizations, prepaid  ambulatory health                                                                    
     plans, or  prepaid inpatient health plans  to implement                                                                    
     the  project   established  under  this   section.  The                                                                    
     contract must provide  for a fee based on  a per capita                                                                    
     expense that is fair  and economical. The department or                                                                    
     administrator shall  develop a comprehensive  system of                                                                    
     prior authorizations for payment  of services under the                                                                    
     project.  However,  prior   authorization  may  not  be                                                                    
     required for mental health or primary care services.                                                                       
     (c)  The  department  or  a  third-party  administrator                                                                    
     shall designate  health care providers  or one  or more                                                                    
     teams  of health  care  providers  to provide  services                                                                    
     that  are   primary  care   and  patient   centered  as                                                                    
     described by  the department for purposes  of a project                                                                    
     under  this section.  The department  or a  third-party                                                                    
     administrator shall  enter into necessary  provider and                                                                    
     fee  agreements. For  primary care  case managers,  the                                                                    
     fee   agreement   must   include   an   incentive-based                                                                    
     management fee  system. The fee  agreements may  not be                                                                    
     based  on  a fee  for  service  but  must be  based  on                                                                    
     performance measures, as determined by the department.                                                                     
     (d)  A   project  under   this  section   must  include                                                                    
     additional    cost-saving    measures   that    include                                                                    
     innovations to                                                                                                             
          (1)  reduce travel  through  the  expanded use  of                                                                    
          telemedicine  for primary  care, urgent  care, and                                                                    
          behavioral  health services;  to the  extent legal                                                                    
          barriers    prevent    the   expanded    use    of                                                                    
          telemedicine, the department shall identify those                                                                     
          barriers;                                                                                                             
          (2)   simplify   administrative   procedures   for                                                                    
          providers, including streamlined audit, payment,                                                                      
          and stakeholder engagement procedures.                                                                                
     (e) In this section,  "department" means the Department                                                                    
     of                                                                                                                         
     Health and Social Services.                                                                                                
                                                                                                                                
10:23:20 AM                                                                                                                   
                                                                                                                                
     Section 9:  Requires the department to  conduct a study                                                                  
     analyzing  the   feasibility  of   privatizing  certain                                                                    
     services.                                                                                                                  
                                                                                                                              
Ms.  Shadduck explained  that the  studies  would vary  from                                                                    
item  to  item;  exploration  into  privatizing  the  Alaska                                                                    
Psychiatric  Institute  was  one  plan, another  was  be  to                                                                    
privatize certain divisions  of juvenile justice facilities,                                                                    
and certain pioneer homes.                                                                                                      
                                                                                                                                
     Section 10: Requires the department  to amend the state                                                                  
     Medicaid plan  and apply for  any waivers  necessary to                                                                    
     implement the  projects and  programs described  in the                                                                    
     bill. Requires  the Commissioner  of Health  and Social                                                                    
     Services to certify to the  revisor of statutes federal                                                                    
     approval of specified measures.                                                                                            
                                                                                                                              
     Section 11: Allows the  department to adopt regulations                                                                  
     necessary  to implement  the changes  made by  the Act.                                                                    
     The regulations  may not take  effect before  the dates                                                                    
     the relevant provision of the Act takes effect.                                                                            
                                                                                                                              
     Section 12: Conditional effects.                                                                                         
                                                                                                                              
     Sections  13 -  17:  Provides for  effective dates  for                                                                  
     provisions   that  require   waiver   and  state   plan                                                                    
     amendment approvals  from the United  States Department                                                                    
     of Health and Human Services.                                                                                              
                                                                                                                              
     Section 18:  Provides an  immediate effective  date for                                                                  
     sections 9 - 12.                                                                                                           
                                                                                                                                
10:25:29 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked about Section  8. He asked  whether any                                                                    
private  entities  had  expressed interest  in  taking  over                                                                    
healthcare facilities in the state.                                                                                             
                                                                                                                                
Ms.  Shadduck answered  in the  affirmative.  She said  that                                                                    
there was a lot of  interest and excitement from the private                                                                    
sector.                                                                                                                         
                                                                                                                                
Senator Olson wondered whether the  interest was coming from                                                                    
national  corporations,  as  opposed   to  an  Alaska  based                                                                    
private company.                                                                                                                
                                                                                                                                
Ms.   Shadduck  replied   that  the   process  was   legally                                                                    
prescribed.  The study  would simply  reveal feasibility  on                                                                    
the  matter. She  assumed  that  privatization would  follow                                                                    
state procurement code.                                                                                                         
                                                                                                                                
10:27:19 AM                                                                                                                   
                                                                                                                                
Vice-Chair Micciche  observed the  fiscal notes  attached to                                                                    
the bill reflected savings beginning in FY18.                                                                                   
                                                                                                                                
Ms.  Shadduck  responded  that the  fiscal  notes  had  been                                                                    
prepared by the  administration in 2015 and  could not speak                                                                    
to why savings would not begin until FY18.                                                                                      
                                                                                                                                
10:28:15 AM                                                                                                                   
                                                                                                                                
Co-Chair Kelly  encouraged the scrutinizing  of the  bill in                                                                    
subcommittee.   He  said   that   there   had  been   recent                                                                    
developments that  would result in serious  savings in 2017,                                                                    
that  would impact  the FY18  budget  process. He  furthered                                                                    
that the  finance committee would  move quickly  and reserve                                                                    
substantive  policy debates  for  subcommittee. He  asserted                                                                    
that Medicaid  was a huge  cost driver for the  state, which                                                                    
suggested that the  state was doing a poor  job in providing                                                                    
the  service.  He  concluded   that  the  legislation  would                                                                    
deliver savings and better care.                                                                                                
                                                                                                                                
10:31:07 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Micciche   felt  that  the  effort   would  take                                                                    
teamwork.                                                                                                                       
                                                                                                                                
10:31:59 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked about  Section 6.  He wondered  how the                                                                    
bill addressed the problem of  the prescription of narcotics                                                                    
in the emergency room.                                                                                                          
                                                                                                                                
Ms.   Shadduck   replied   that  there   was   currently   a                                                                    
prescription drug database, which  would continue to receive                                                                    
funding under the bill.                                                                                                         
                                                                                                                                
10:33:36 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon  assigned SB 74 a  subcommittee comprised                                                                    
of:                                                                                                                             
                                                                                                                                
     Co-Chair MacKinnon                                                                                                         
     Co-Chair Kelly                                                                                                             
     Vice-Chair Micciche                                                                                                        
     Senator Olson                                                                                                              
     Senator Geissel                                                                                                            
                                                                                                                                
Co-Chair MacKinnon clarified that both  SB 78 and SB 74 were                                                                    
being referred  to the same subcommittee.  She asserted that                                                                    
the   subcommittee  would   examine   valuable  pieces   and                                                                    
components  of  each in  order  to  come  up with  a  single                                                                    
recommendation for  the committee  to consider.  She offered                                                                    
that the timeline was expected to be one month.                                                                                 
                                                                                                                                
SB  74  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair MacKinnon discussed housekeeping.                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:35:33 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:35 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 78 Corrections White Paper.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Economic Benefits of Medicaid Expansion-12april2015.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Sectional Analysis.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporters List and Support Documents - Vol 1 of 2.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporters List and Support Documents - Vol 2 of 2.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporting Document Evergreen Medicaid Expansion Analysis 020615.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Supporting Document Healthy Alaska Plan FINAL.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 Transmittal Letter.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 74 Explanation of Changes.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Sectional Analysis.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - LRS Report 15.284.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - Lewin Group Medicaid Managed Care Cost Savings.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - Legislative Finance Graphs.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Supporting Documents - Aetna Letter 3.27.15.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 74 Sponsor Statement.pdf SFIN 1/27/2016 9:00:00 AM
SB 74
SB 78 Legal Services Memo 16-053dla.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
CSSB 78 FIN Sectional Analysis.docx SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 SFC Letter 5 Questions.pdf SFIN 1/27/2016 9:00:00 AM
SB 78
SB 78 CSSB78 version H.pdf SFIN 1/27/2016 9:00:00 AM
SB 78