Legislature(2017 - 2018)SENATE FINANCE 532

05/01/2018 09:00 AM FINANCE

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Audio Topic
09:36:09 AM Start
09:36:48 AM SB193
10:52:23 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 193 MED. ASSISTANCE WORK REQUIREMENT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                        May 1, 2018                                                                                             
                         9:36 a.m.                                                                                              
                                                                                                                                
9:36:09 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon called the Senate Finance Committee                                                                          
meeting to order at 9:36 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Donny Olson                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Heather Carpenter, Staff, Senator  Pete Kelly; Jon Sherwood,                                                                    
Deputy  Commissioner,  Medicaid   and  Health  Care  Policy,                                                                    
Department  of Health  and Social  Services; Monica  Windom,                                                                    
Director,  Division  of  Public  Assistance,  Department  of                                                                    
Health and Social Services;                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 193    MED. ASSISTANCE WORK REQUIREMENT                                                                                      
                                                                                                                                
          SB 193 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 193                                                                                                           
                                                                                                                                
     "An Act  requiring the Department of  Health and Social                                                                    
     Services  to  apply  for a  waiver  to  establish  work                                                                    
     requirements for  certain adults  who are  eligible for                                                                    
     the state medical assistance program."                                                                                     
                                                                                                                                
9:36:48 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon   read  the  title  of   the  bill.  The                                                                    
committee heard  the bill on  April 12, 2018; at  which time                                                                    
the public hearing was opened and closed.                                                                                       
                                                                                                                                
HEATHER CARPENTER,  STAFF, SENATOR  PETE KELLY,  stated that                                                                    
the bill  took advantage of  a new Centers for  Medicare and                                                                    
Medicaid Services  (CMS) rule that  allowed states  to apply                                                                    
using an 1115  waiver to have work  requirements for certain                                                                    
populations of the Medicaid program.  She explained that the                                                                    
bill   would   require  20   hours   of   work  and   exempt                                                                    
volunteerism.  Other exemptions  included  if  a person  was                                                                    
actively searching  for a  job or caregiving.  On page  2 of                                                                    
the bill,  there was  a list  of specific  exemptions, which                                                                    
were attempted  to be corollary  to those for  the Temporary                                                                    
Cash  Assistance for  Needy Families  (TANF) Program.  Other                                                                    
exemptions  included pregnancy,  participation  in a  tribal                                                                    
work  program,  being  a victim  of  domestic  violence,  or                                                                    
experiencing a  family hardship  outside one's  control. The                                                                    
bill ensured that  a person with a  substance abuse disorder                                                                    
was not prevented from obtaining appropriate treatment.                                                                         
                                                                                                                                
Co-Chair MacKinnon  asked Vice-Chair  Bishop to review  FN 1                                                                    
and FN 8.                                                                                                                       
                                                                                                                                
Vice-Chair  Bishop  reviewed FN  1  from  the Department  of                                                                    
Administration. He  relayed that  the allocation was  to the                                                                    
Office of  Administrative Hearings. In  FY 19, the  cost was                                                                    
$338,000; in FY  20 the cost was $451,800; in  FY 22 through                                                                    
FY 24  the cost was $564,600.  He read from the  Analysis on                                                                    
page 2 of the fiscal note:                                                                                                      
                                                                                                                                
     DHSS   projects  that   denials  and   terminations  of                                                                    
     Medicaid eligibility  pursuant to the  new requirements                                                                    
     would  generate 188  appeals  to OAH  in  FY 2020,  251                                                                    
     appeals  in  FY 2021,  and  314  appeals in  subsequent                                                                    
     years.  We  defer to  DHSS  expertise  in making  these                                                                    
     estimates, but we note that  the appeal rates DHSS used                                                                    
     to calculate these estimates  are consistent with those                                                                    
     AH   has   observed   in  connection   with   Temporary                                                                    
     Assistance,  a program  that  has  a work  requirement.                                                                    
     Work  requirement appeals  are moderately  expensive to                                                                    
     process, in  that they  often require  fairly extensive                                                                    
     actual  development about  the nature  of a  particular                                                                    
     job termination,  the extent of a  person's disability,                                                                    
     or  similar issues.  Our  experience  in calendar  2017                                                                    
     shows  a  cost per  case  of  approximately $1,800  for                                                                    
     appeals of this type.                                                                                                      
                                                                                                                                
     OAH  does not  currently  have the  capacity to  handle                                                                    
     this  caseload.  OAH  would expect  to  staff  the  new                                                                    
     caseload  with a  total  of three  full-time, range  24                                                                  
     administrative  law  judges, one  to  be  added at  the                                                                    
     beginning  of   FY  2020,  one   approximately  halfway                                                                    
     through that  year, and  the third to  be hired  at the                                                                    
     beginning  of  FY  2022. At  all  times,  the  workload                                                                    
     projected by  DHSS would  somewhat exceed  the capacity                                                                    
     of these  new hires, and  excess work would  be handled                                                                    
     by  judges working  on contract.  The  shortfall to  be                                                                    
     handled by contract peaks in  FY 2021 and declines to a                                                                    
     lower  level  thereafter as  the  third  full-time hire                                                                  
     begins work.  Each newly-hired full-time administrative                                                                
     law  judge  would  be sent  to  the  National  Judicial                                                                    
     College to  attend its training on  conducting hearings                                                                    
     related  to federal  benefit programs.  Travel expenses                                                                    
     related  to  the  training,   as  well  as  commodities                                                                    
     purchases  to  equip the  new  judges  with office  and                                                                    
     hearing technology,  fall primarily  in FY 2020  and FY                                                                    
     2022.                                                                                                                      
                                                                                                                                
9:41:49 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Bishop addressed  FN  8 from  the Department  of                                                                    
Labor  and Workforce  Development, which  was a  zero fiscal                                                                    
note. He  read from  the analysis  on page  2 of  the fiscal                                                                    
note:                                                                                                                           
                                                                                                                                
     This  legislation  will   likely  increase  traffic  to                                                                    
     Alaska job centers, which may  result in increased wait                                                                    
     times  for  Alaskans  seeking  assistance  with  career                                                                    
     services. There  is no fiscal impact  to the Department                                                                    
     of Labor and Workforce Development  as a result of this                                                                    
     legislation.                                                                                                               
                                                                                                                                
Co-Chair MacKinnon asked department  staff to address fiscal                                                                    
notes 2 through 7.                                                                                                              
                                                                                                                                
JON SHERWOOD, DEPUTY COMMISSIONER,  MEDICAID AND HEALTH CARE                                                                    
POLICY,  DEPARTMENT OF  HEALTH AND  SOCIAL SERVICES,  gave a                                                                    
brief overview  of the  fiscal notes.  He stated  there were                                                                    
six fiscal  notes from the  Department of Health  and Social                                                                    
Services (DHSS);  three of  which related  to administrative                                                                    
activities,  and three  of which  related  to reductions  in                                                                    
Medicaid  services which  reflected  reductions in  Medicaid                                                                    
services.  He noted  that one  of  the effects  of the  bill                                                                    
would be a  reduction in caseloads as  individuals chose not                                                                    
to comply with the work requirements.                                                                                           
                                                                                                                                
Mr. Sherwood thought there was  a disproportionate impact to                                                                    
federal  and state  funds. Much  of the  savings was  coming                                                                    
from costs that were eligible  for federal funding; and much                                                                    
of  the expense  from services  that were  not eligible  for                                                                    
federal  funding. The  combined impact  of the  fiscal notes                                                                    
would  result  in  an  increase in  the  General  Fund  (GF)                                                                    
budget.                                                                                                                         
                                                                                                                                
Mr.  Sherwood   addressed  FN  2,   which  went   to  Public                                                                    
Assistance Field  Services, and was related  to working with                                                                    
clients  and  ensuring  clients  were  complying  with  work                                                                    
requirements. He noted that there  were start-up costs in FY                                                                    
19  of $173,000.  In 2020,  the  amount grew  to about  $6.5                                                                    
million,  and  then  declined somewhat  over  the  following                                                                    
years as  it was expected  individuals would fail  to comply                                                                    
with work requirements thereby reducing  the caseload. To do                                                                    
the work  would require 49  positions in FY 20,  which would                                                                    
decline to 45 positions in the out years.                                                                                       
                                                                                                                                
9:46:31 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  thought that FN 2  was very interesting.                                                                    
She considered that it appeared  that the department did not                                                                    
want to do the activities associated with the bill.                                                                             
                                                                                                                                
Vice-Chair  Bishop  asked about  the  number  of the  fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Mr.  Sherwood specified  that  he had  discussed  FN 2,  OMB                                                                    
Component 236.                                                                                                                  
                                                                                                                                
Co-Chair  MacKinnon  asked  if  the  fiscal  note  had  $6.1                                                                    
million  for  a  capital  project the  update  the  Medicaid                                                                    
system  could   appropriately  reflect  the   proposed  work                                                                    
component.                                                                                                                      
                                                                                                                                
Mr. Sherwood answered in the affirmative.                                                                                       
                                                                                                                                
Mr. Sherwood addressed FN 3,  pertaining to quality control.                                                                    
The budget allocation was where  the department put its fair                                                                    
hearing work. He informed that  the fiscal note involved the                                                                    
Office of Administrative Hearings  and staff from Department                                                                    
of Administration  (DOA) and  DHSS. The  department expected                                                                    
that as  individuals were denied  to failure to  comply with                                                                    
work requirements,  there would be an  increase in hearings.                                                                    
There was  a small start-up cost  of $20,000; and a  cost in                                                                    
FY 20 of $490,200 growing to  $591,000 in FY 21; $704,000 in                                                                    
FY  22; $686,000  in FY  23; and  $684,000 in  FY 24.  There                                                                    
would be  one additional  position associated with  the fair                                                                    
hearing   representation,   and   there  were   no   capital                                                                    
expenditures.                                                                                                                   
                                                                                                                                
9:49:25 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  mentioned  testimony  regarding how  the                                                                    
work requirements  were similar to  that of TANF.  She asked                                                                    
how many people  participated in TANF and  wondered what the                                                                    
budget was to manage the program.                                                                                               
                                                                                                                                
MONICA  WINDOM,  DIRECTOR,  DIVISION OF  PUBLIC  ASSISTANCE,                                                                    
DEPARTMENT OF HEALTH AND SOCIAL  SERVICES, stated that there                                                                    
were about  3,000 cases per  month for The  Alaska Temporary                                                                    
Assistance  Program  (ATAP).  In  some areas  the  work  was                                                                    
contracted out, and in some  areas state staff completed the                                                                    
work. Se  stated there were  about 1,500 individuals  in the                                                                    
Anchorage area  that were under mandatory  work programs for                                                                    
TANF,  with a  $3 million  per year  contract outsourced  to                                                                    
Nine Star  Education and Employment  Services to  handle the                                                                    
associated work.                                                                                                                
                                                                                                                                
Senator von  Imhof asked if  the division had  thought about                                                                    
whether the program in the bill made sense to outsource.                                                                        
                                                                                                                                
Ms.  Windom considered  that outsourcing  would likely  cost                                                                    
more. She  estimated that 25,000  individuals would  have to                                                                    
comply with  the mandatory work requirements  as proposed in                                                                    
the bill.                                                                                                                       
                                                                                                                                
Vice-Chair Bishop  asked about  the Nine Star  contract, and                                                                    
asked what services were provided.                                                                                              
                                                                                                                                
Ms.  Windom relayed  that when  an  individual applied  with                                                                    
Nine Star,  he or she  would meet  with a case  manager. The                                                                    
case  manager would  consider work  barriers and  facilitate                                                                    
consumers in  completing a self-sufficiency plan  that would                                                                    
illustrate  steps  to self-sufficiency.  Additionally,  case                                                                    
managers  could  place  consumers  in  volunteer  positions,                                                                    
provide training,  and provide help  with resum?s and  a job                                                                    
search.                                                                                                                         
                                                                                                                                
Vice-Chair  Bishop  asked  if  the  education  and  training                                                                    
services could include a General Education Diploma.                                                                             
                                                                                                                                
Ms. Windom answered in the affirmative.                                                                                         
                                                                                                                                
Mr.  Sherwood addressed  FN 4,  for  Public Assistance  Work                                                                    
Services. The  note reflected the  actual cost  of providing                                                                    
work  services  to  individuals that  were  subject  to  the                                                                    
proposed  work requirements.  The  department had  estimated                                                                    
that 10.5  percent of the state's  total Medicaid enrollment                                                                    
would  be subject  to the  work  requirements. He  estimated                                                                    
there  would be  15 percent  rate of  non-compliance in  the                                                                    
first year,  20 percent the  second year, and 25  percent in                                                                    
subsequent  years.   The  bill  proposed  to   provide  work                                                                    
services to a  substantial number of people each  year, at a                                                                    
cost  of  approximately  $1000 per  person.  There  were  no                                                                    
capital expenses  associated with  the note.  The supportive                                                                    
services were not eligible for  federal funding and would be                                                                    
paid for by GF.                                                                                                                 
                                                                                                                                
9:53:43 AM                                                                                                                    
                                                                                                                                
Mr.  Sherwood   reviewed  FN  5(DHS),  which   pertained  to                                                                    
Medicaid Services - Behavioral  Health. He reiterated that a                                                                    
decrease in  Medicaid caseloads  would be  a result  of some                                                                    
percentage  of non-compliance.  The  bill  would reduce  the                                                                    
Medicaid   spend  by   the  reduction   of  the   number  of                                                                    
individuals  that  qualified.  He  explained  that  Medicaid                                                                    
reduction was  allocated between three of  the four Medicaid                                                                    
Service  Components:  Behavioral  Health,  Adult  Preventive                                                                    
Dental Services, and Medicaid  Health Services. There was no                                                                    
reduction  to the  Senior and  Disability  Services, as  the                                                                    
consumers  of  those  services  would  be  exempt  from  the                                                                    
proposed  work  requirements.  The  department  projected  a                                                                    
reduction to  Behavioral Health Services  of $4.6  million n                                                                    
2020, $6.2 million  in FY 21, and $7.7 million  in FY 22 and                                                                    
beyond. There  was no positions  or capital  associated with                                                                    
the fiscal note.                                                                                                                
                                                                                                                                
Mr.  Sherwood  spoke  to  FN 6  (which  pertained  to  Adult                                                                    
Preventive Dental  Medicaid Services.  He detailed  that the                                                                    
fiscal  note reflected  part of  the allocated  reduction in                                                                    
Medicaid Services  due to the projected  caseload reduction.                                                                    
In FY  20 there would be  a reduction of $494,300;  in FY 21                                                                    
there would  be a reduction  of $659,100;  and in FY  22 and                                                                    
out  years there  would be  a reduction  of $823,900.  There                                                                    
were  no  capital costs  or  positions  associated with  the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
Mr.  Sherwood   addressed  FN  7  for   Healthcare  Medicaid                                                                    
Services. He identified that the  fiscal note reflected part                                                                    
of the allocated  reduction in Medicaid Services  due to the                                                                    
projected  caseload  reduction.   This  note  reflected  the                                                                    
largest component of the reduction.  In FY 20, the reduction                                                                    
would  be  approximately  $25.8   million;  in  FY  21,  the                                                                    
reduction would  be approximately  $34.4 million; and  in FY                                                                    
22  and  out years,  the  reduction  would be  approximately                                                                    
$42.9  million. There  were no  capital  costs or  positions                                                                    
associated with the fiscal note.                                                                                                
                                                                                                                                
9:57:27 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  referenced  her  earlier question  about                                                                    
outsourcing. She  thought Ms. Windom  had been  unsure about                                                                    
whether  outsourcing  would  save  money.  She  wondered  if                                                                    
completing a Request for Proposals  process would inform the                                                                    
question. She estimated that the  fiscal notes totaled $28.8                                                                    
million. She asserted that there  were entities, and perhaps                                                                    
a  data management  company, that  would  to expand  revenue                                                                    
options in the state and make new investments.                                                                                  
                                                                                                                                
Ms. Windom  relayed that there  was a possibility  the state                                                                    
would  not  be reimbursed  by  Medicaid  for work  that  was                                                                    
contracted  out for  work  services.  Medicaid guidance  had                                                                    
communicated  that  it  would  not  pay  for  specific  work                                                                    
services.   For  state   staff,  the   department  used   an                                                                    
allocation  code   that  allowed  for  50   percent  federal                                                                    
reimbursement.  She thought  that  if the  state pursued  an                                                                    
1115  waiver  for  work  requirements,  it  could  submit  a                                                                    
Request For Information (RFI, a  less formal process than an                                                                    
RFP) to see if there were interested parties.                                                                                   
                                                                                                                                
Senator von Imhof asked if the  process would be to obtain a                                                                    
waiver, then complete an RFI.                                                                                                   
                                                                                                                                
Ms. Windom believed  it was possible to pursue  a waiver and                                                                    
put an RFI out at the same time.                                                                                                
                                                                                                                                
9:59:28 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon referred back to  FN 2, which included 49                                                                    
requested  positions.  She  understood the  cost  associated                                                                    
with the capital expenditures and  necessity of updating the                                                                    
records system.  She asked  the department  to go  into some                                                                    
detail  about  why it  needed  the  49 new  technicians  for                                                                    
employment services  when Department of Labor  and Workforce                                                                    
Development (LWFD) usually handled the work.                                                                                    
                                                                                                                                
Ms.  Windom  stated that  when  the  fiscal note  was  being                                                                    
developed,  the  department  had   looked  at  the  services                                                                    
provided  for the  state's ATAP  clients. She  discussed the                                                                    
list of  services provided by  Nine Star case  managers, and                                                                    
noted that  there were state  staff in other areas  that did                                                                    
the  same  work.  She  did  not  believe  that  state  staff                                                                    
provided the level of detail of a self-sufficiency plan.                                                                        
                                                                                                                                
Co-Chair  MacKinnon  asked  if self-sufficiency  plans  were                                                                    
required through Medicaid.                                                                                                      
                                                                                                                                
Ms. Windom stated that the  guidance from CMS stated that if                                                                    
the state were to pursue  work requirements for Medicaid, it                                                                    
would have to  provide supportive services to  the client in                                                                    
seeking employment.                                                                                                             
                                                                                                                                
Co-Chair MacKinnon asked  if the support work  could be done                                                                    
by LWFD or contracted out.                                                                                                      
                                                                                                                                
Ms. Windom answered in the affirmative.                                                                                         
                                                                                                                                
Co-Chair MacKinnon  asked what the addition  of 49 positions                                                                    
would do to  the state's pension obligation  rate. She asked                                                                    
about the  department's vacancy rate  and wondered  how many                                                                    
dollars  were associated  with it.  She asked  about filling                                                                    
the vacant positions.                                                                                                           
                                                                                                                                
Mr.  Sherwood agreed  that  there was  a  certain degree  of                                                                    
constant vacancy  and anticipated  filling the  positions in                                                                    
2020. He noted that the  positions would decline slightly as                                                                    
the  caseload  diminished. He  could  not  elaborate on  the                                                                    
effects on  the state's  pension obligation. He  stated that                                                                    
the  department would  expect when  going into  negotiations                                                                    
with  CMS on  the  1115 wavier,  to  have discussions  about                                                                    
options for  reimbursement for some  of the work  that could                                                                    
be  characterized by  administrative.  The department  would                                                                    
consider doing contracting  if it was feasible,  but for the                                                                    
purposes  of   the  fiscal  note,  the   department  took  a                                                                    
conservative approach since it  was not known if contracting                                                                    
the work was the wisest financial course.                                                                                       
                                                                                                                                
Mr. Sherwood continued  his remarks. He thought  there was a                                                                    
degree of  certainty with the  approach taken in  the fiscal                                                                    
notes; while  there was  a higher  degree of  uncertainty in                                                                    
the viability  of contracting  an entity to  do the  work of                                                                    
the proposed 49 positions.                                                                                                      
                                                                                                                                
10:04:30 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon mentioned her  history at the legislature                                                                    
and shared  her concern  that the department  was requesting                                                                    
support  beyond the  actual need  to implement  the program.                                                                    
She  referenced  FN  2  and   FN  4.  She  wondered  if  the                                                                    
additional request  for personnel should be  eliminated from                                                                    
FN 2. She referenced  open "hollow" Position Control Numbers                                                                    
(PCNs). She  found it difficult  to increase  the department                                                                    
by 49 positions while  increasing contribution to the Public                                                                    
Employees'  Retirement System  while  there  was an  unknown                                                                    
amount  of open  PCNs. She  asked the  members for  input on                                                                    
whether  the  fiscal  note  should be  modified  or  if  the                                                                    
members shared her concerns.                                                                                                    
                                                                                                                                
Senator  von Imhof  discussed  Medicaid  expansion, and  the                                                                    
approximately  40,000  additional  enrollees  from  the  two                                                                    
previous years. She asked how  many new employees were hired                                                                    
to handle the new enrollees.                                                                                                    
                                                                                                                                
Ms. Windom  stated that there  were no new  employees hired,                                                                    
but there was a backlog of 17,000 Medicaid applications.                                                                        
                                                                                                                                
Senator von Imhof recalled that  a large part of the backlog                                                                    
was due to a computer and technology issue.                                                                                     
                                                                                                                                
Ms. Windom stated  that there was a variety  of factors that                                                                    
had contributed  to the backlog, including  computer issues.                                                                    
Caseworkers  were working  in  two  systems. She  referenced                                                                    
charts that  showed the growth  of the  application backlog,                                                                    
which did increase after expansion.                                                                                             
                                                                                                                                
Senator  von   Imhof  asked  why  the   department  had  not                                                                    
considered  temporary outsourcing  to help  catch up  on the                                                                    
backlog.                                                                                                                        
                                                                                                                                
Ms.  Windom informed  that  federal  regulations required  a                                                                    
state  employee to  authorize Medicaid  benefits as  well as                                                                    
Alaska  Supplemental  Nutrition  Assistance  Program  (SNAP)                                                                    
benefits.                                                                                                                       
                                                                                                                                
10:08:26 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman  asked if the  department had  requested 41                                                                    
new positions to address the backlog.                                                                                           
                                                                                                                                
Ms. Windom answered in the affirmative.                                                                                         
                                                                                                                                
Vice-Chair  Bishop  asked  about  the  estimated  number  of                                                                    
people  that   would  be  affected  by   the  proposed  work                                                                    
requirements in the bill.                                                                                                       
                                                                                                                                
Ms. Windom  stated that 22,000  individuals were  10 percent                                                                    
of all  Medicaid recipients.  The department  had researched                                                                    
the  group of  recipients to  determine what  percentage was                                                                    
working  already or  were children,  which equaled  about 10                                                                    
percent  of  Medicaid recipients.  Of  the  10 percent,  the                                                                    
department  considered  which  individuals would  be  exempt                                                                    
from  the proposed  work requirement.  A national  study had                                                                    
shown  that about  10 percent  would have  a mandatory  work                                                                    
requirement if it was implemented.                                                                                              
                                                                                                                                
Senator Micciche thought  it seemed as though  there was not                                                                    
a lot of credit given toward  the idea of entire families no                                                                    
longer   needing  to   be  on   Medicaid.  He   thought  the                                                                    
department's  approach  was  interesting. He  discussed  the                                                                    
high number of  people on Medicaid in the  state. He thought                                                                    
85 percent  of Medicaid spending  was on children.  He asked                                                                    
if the  department considered the  number of  children which                                                                    
would  no  longer  qualify  for  Medicaid  if  parents  were                                                                    
working and no longer dependent on Medicaid.                                                                                    
                                                                                                                                
Mr. Sherwood stated that the  department had not estimated a                                                                    
particular number  of children  expected to go  off Medicaid                                                                    
rolls. The exemptions in the  bill included certain parents,                                                                    
and  it  was more  likely  exemptions  would be  in  certain                                                                    
families. He  stated that  the income  eligibility standards                                                                    
for children were  higher than adults. A  modest income that                                                                    
might   eliminate  an   adult  from   eligibility  may   not                                                                    
necessarily   eliminate  a   child  from   eligibility.  The                                                                    
department had  not felt  comfortable making  the assumption                                                                    
that the bill would reduce children's Medicaid coverage.                                                                        
                                                                                                                                
10:12:20 AM                                                                                                                   
                                                                                                                                
Senator Micciche  thought the legislation  had an  aspect of                                                                    
breaking a  cycle and helping  people realize  potential. He                                                                    
thought  that   the  fiscal  notes  engendered   an  ongoing                                                                    
dependence on Medicaid.  He thought there would  be a larger                                                                    
percentage of people that would  (through obtaining work) be                                                                    
successful  and   no  longer  need  Medicaid   services.  He                                                                    
realized  the  department  was being  conservative.  He  was                                                                    
resistant  to the  proposed new  positions.  He thought  the                                                                    
state  had  made it  too  easy.  He  thought the  state  put                                                                    
obstacles in the way of  potential success. He did not think                                                                    
the department  had given any  credit to the  probability of                                                                    
families going off Medicaid  because of achieving successful                                                                    
employment.                                                                                                                     
                                                                                                                                
Co-Chair MacKinnon asked for Mr. Sherwood's thoughts.                                                                           
                                                                                                                                
Mr. Sherwood  stated that there were  individuals coming and                                                                    
going from  Medicaid all  the time. He  thought it  was very                                                                    
difficult  to estimate  the impact  the bill  would have  in                                                                    
elevating  people off  of Medicaid  long term  versus simply                                                                    
ensuring people  stayed engaged in  the workforce.  He would                                                                    
not  debate  the concept  that  implementation  of the  bill                                                                    
would change things over time.  He questioned when the state                                                                    
would  see  the  impacts.  He  stated  that  the  department                                                                    
endeavored  to  make  reasonable assumptions  and  to  avoid                                                                    
making highly  speculative guesses about the  effects of new                                                                    
programs.                                                                                                                       
                                                                                                                                
Mr.  Sherwood  continued to  say  that  with regard  to  the                                                                    
positions,  most of  the eligibility  work required  ongoing                                                                    
monitoring of  the cases.  The department  had done  what it                                                                    
could to streamline eligibility,  but the bill required more                                                                    
contact  and  it  was  not  comparable  to  other  work  the                                                                    
department did.                                                                                                                 
                                                                                                                                
10:16:48 AM                                                                                                                   
                                                                                                                                
Vice-Chair Bishop  asked how many pages  and resultant staff                                                                    
time was required for an 1115 waiver.                                                                                           
                                                                                                                                
Mr. Sherwood  stated that the  waivers could vary  from very                                                                    
simple to  very complicated waivers with  hundreds of pages.                                                                    
He  considered  that  the  work  requirement  would  require                                                                    
submissions of  evidence to CMS that  appropriate exceptions                                                                    
and supports had been implemented.  All waivers were subject                                                                    
to  cost  neutrality.  He  cited  that  the  department  had                                                                    
included some modest  start-up costs, including expenditures                                                                    
for   an   actuary   to  help   with   the   cost-neutrality                                                                    
determination.  He  thought  the bill  implementation  would                                                                    
require policy  work and negotiations.  Alaska would  not be                                                                    
the first  state to  implement such a  bill, but  he thought                                                                    
every state had done it differently.                                                                                            
                                                                                                                                
Mr.  Sherwood  continued  discussing the  1115  waiver,  and                                                                    
relayed  that the  department was  currently working  on one                                                                    
for  behavioral health.  The waiver  was time  consuming and                                                                    
took   resources,   particularly   policy   resources.   The                                                                    
department expected  to support  the proposed change  with a                                                                    
minimal amount of additional resources.                                                                                         
                                                                                                                                
Vice-Chair Bishop referenced  the departmental analysis that                                                                    
quantified the number (on FN  2) and asked if the department                                                                    
had identified the top number of barriers to employment.                                                                        
                                                                                                                                
Ms. Windom  relayed that  the department  did not  have such                                                                    
information for  Medicaid recipients,  and did not  have the                                                                    
means to gather the data.                                                                                                       
                                                                                                                                
Co-Chair MacKinnon considered  striking the employee request                                                                    
from the  fiscal note, and  directing the  administration to                                                                    
work with LWFD. She was not  sure how to proceed with regard                                                                    
to the  requested positions. She thought  the department had                                                                    
plenty of  PCNs. She thought  that the Office  of Children's                                                                    
Services  had  approximately  60 vacancies,  a  majority  of                                                                    
which  did  not  have  associated  funding.  She  asked  for                                                                    
committee   feedback  on   the  matter   of  the   positions                                                                    
requested.                                                                                                                      
                                                                                                                                
10:20:36 AM                                                                                                                   
                                                                                                                                
Senator  Micciche supported  Co-Chair  MacKinnon's idea.  He                                                                    
thought  the  department had  a  desire  for more  employees                                                                    
based on a  variety of reasons. He emphasized  that the cost                                                                    
of Medicaid had  to be managed. He supported  a creative way                                                                    
to deal with  the work requirement that  did not necessitate                                                                    
49 new employees.                                                                                                               
                                                                                                                                
Co-Chair  Hoffman asked  how the  positions being  discussed                                                                    
fit into the  fact that the proposed  work requirement would                                                                    
necessitate   finding  jobs   for  20,000   individuals.  He                                                                    
observed that  the jobs  in the state  were on  the decline,                                                                    
and people were leaving the  state. He discussed the decline                                                                    
of  the   national  unemployment  rate,  while   the  Alaska                                                                    
unemployment rate  was substantially higher. He  thought the                                                                    
plan to address  getting 22,000 jobs was  very ambitious. He                                                                    
wanted to  ponder the interplay  of job  attainment, success                                                                    
of  the  program,  and  suggested   listening  to  LWFD  for                                                                    
feedback.                                                                                                                       
                                                                                                                                
Vice-Chair  Bishop did  not disagree  in totality  with what                                                                    
Co-Chair   MacKinnon  had   suggested.  He   questioned  the                                                                    
barriers to employment  and thought there needed  to be more                                                                    
assessment  of  the  22,000   individuals  in  question.  He                                                                    
suggested that  he would  like to  see the  commissioners of                                                                    
DHSS and LWFD provide opinions on the matter.                                                                                   
                                                                                                                                
Senator  Micciche  thought  Alaska's unemployment  rate  was                                                                    
generally higher  than that of  the Lower 48, save  for when                                                                    
the Lower 48  was in a deep recession. He  reminded that the                                                                    
bill did not  reference a requirement to work,  but rather a                                                                    
requirement  to  contribute.  He   thought  money  spent  on                                                                    
healthy  adults  and families  was  taken  from seniors  and                                                                    
people with  disabilities. He thought  if the  same spending                                                                    
was  directed  toward  creating opportunities  and  teaching                                                                    
work  ethic would  be important.  He agreed  that the  state                                                                    
needed to look  for opportunities. He was  willing to invest                                                                    
in developing people's skills for success.                                                                                      
                                                                                                                                
10:25:38 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon reiterated  that  it was  her intent  to                                                                    
zero out the  requested positions, but not the  funding - in                                                                    
order to  contract out with  a non-profit or  a governmental                                                                    
receipt exchange with LWFD in  order to provide work support                                                                    
services. She thought the issue  was that the department was                                                                    
standing up a  whole unit to handle  employment, while there                                                                    
were  skills in  LWFD.  She  referenced the  loss  of a  job                                                                    
center  in  Eagle  River. She  stated  that  the  employment                                                                    
services  technicians ranged  from $85,000  to $115,000  per                                                                    
person to  help an individual  find a job. She  thought that                                                                    
the task could  be done better with a  private non-profit or                                                                    
an intergovernmental  agreement. She  wanted to know  if the                                                                    
committee supported eliminating the added positions.                                                                            
                                                                                                                                
Senator  von  Imhof  reiterated Senator  Micciche's  comment                                                                    
that there were always  volunteer opportunities. She thought                                                                    
the  bill   was  permissible  to  volunteer   activity.  She                                                                    
pondered  outsourcing. She  referenced Ms.  Windom's comment                                                                    
about  a  requirement  for   state  employees  to  determine                                                                    
Medicaid   eligibility.  She   thought   other  states   had                                                                    
outsourced part  of Medicaid eligibility  and she  was going                                                                    
to research the option for non-state employees.                                                                                 
                                                                                                                                
Senator von  Imhof did not  feel comfortable  moving forward                                                                    
and  striking  the  entire  fiscal  note.  She  contemplated                                                                    
rebuilding  the  fiscal note.  She  felt  she did  not  have                                                                    
enough  information  to   respond  to  Co-Chair  MacKinnon's                                                                    
request for committee support in changing the fiscal note.                                                                      
                                                                                                                                
Vice-Chair  Bishop thought  Co-Chair MacKinnon  had asserted                                                                    
that  she  wanted  to  cut   positions  and  not  funds.  He                                                                    
considered that LWFD should work  with DHSS to determine the                                                                    
skill sets  and employability  of the 22,000  individuals in                                                                    
question.  He thought  employment  was  more important  than                                                                    
volunteering.                                                                                                                   
                                                                                                                                
10:29:48 AM                                                                                                                   
                                                                                                                                
Senator  Micciche supported  the reduction  of employees  in                                                                    
the  fiscal  note as  suggested  by  Co-Chair MacKinnon.  He                                                                    
wanted to see  a lower fiscal impact on FN  2. He thought it                                                                    
was important to address obstacles  in CMS. He wanted to see                                                                    
creativity  from the  department  in  using outside  sources                                                                    
whenever possible.                                                                                                              
                                                                                                                                
Co-Chair  Hoffman  asked  if  Mr.  Sherwood  felt  that  the                                                                    
department  could   comply  with  the  legislation   if  the                                                                    
positions were removed.                                                                                                         
                                                                                                                                
Mr.  Sherwood  stated that  the  question  was difficult  to                                                                    
answer,  as the  department  could only  proceed through  an                                                                    
1115 demonstration  waiver that had  to be approved  by CMS.                                                                    
He continued that CMS had  laid down strict guidelines about                                                                    
waiver approval, and the policy  was written with litigation                                                                    
defense  in mind.  He considered  that there  were a  lot of                                                                    
requirements imposed upon states  to move forward, to ensure                                                                    
that  individuals  subject  to  the  work  requirements  had                                                                    
adequate protection.  He was unsure if  the department could                                                                    
get a  waiver approved  without the requested  positions. He                                                                    
thought  it might  be possible  to get  the waiver  approved                                                                    
with less  than the requested positions  but reiterated that                                                                    
there was uncertainty. The  fiscal note reflected reasonable                                                                    
certainty in moving forward to  meet the requirements of CMS                                                                    
policy.                                                                                                                         
                                                                                                                                
10:32:23 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman asked  if the state should  go about trying                                                                    
to  address the  problem  in  a different  way  or give  the                                                                    
legislation  the   best  possible  chance  by   funding  the                                                                    
positions to get the job done.                                                                                                  
                                                                                                                                
Co-Chair MacKinnon thought the  committee wanted success and                                                                    
she  thought the  fiscal note  overstated the  needs of  the                                                                    
department. She discussed growth  in Medicaid expansion, and                                                                    
what  she considered  a lack  of GF  dollars to  support the                                                                    
expansion. She did not think  that the legislature needed to                                                                    
hand  out 49  positions  when there  were  positions on  the                                                                    
books without  funding. She thought providing  the funds for                                                                    
the  positions without  funding was  a way  to move  forward                                                                    
successfully  without   having  to  create  new   PCNs.  She                                                                    
pondered the  number of  PCNs that  existed with  no funding                                                                    
attached.                                                                                                                       
                                                                                                                                
Co-Chair  Hoffman looked  at page  2 of  FN 2,  which stated                                                                    
that 20  hours of work was  required to get an  1115 waiver.                                                                    
He did not believe that 240,000  hours to get the waiver was                                                                    
not substantial and not required.                                                                                               
                                                                                                                                
10:35:39 AM                                                                                                                   
                                                                                                                                
Senator  Micciche   asserted  that  the   individuals  being                                                                    
discussed   were  wonderful   people.  He   thought  certain                                                                    
individuals would  always need Medicaid services.  He wanted                                                                    
to make the  bill successful but did not  want to supplement                                                                    
other areas of DHSS in order to do so.                                                                                          
                                                                                                                                
Co-Chair MacKinnon asked if Ms.  Windom had stated that TANF                                                                    
had a work requirement.                                                                                                         
                                                                                                                                
Ms. Windom  stated that an  ATAP recipient  must participate                                                                    
in work  programs, and  there was a  lifetime limit  for the                                                                    
benefit. In  some areas, the department  contracted the work                                                                    
program  out; in  Anchorage the  state contracted  with Nine                                                                    
Star for about $3 million per  year to serve 1,500 cases per                                                                    
month. She  could not define  how long case  managers worked                                                                    
with   each  client   because  it   widely  varied   between                                                                    
individuals.                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  estimated that  if there were  the 1,500                                                                    
consumers  per   month  as  was   discussed,  it   would  be                                                                    
equivalent to over 15,000 individuals per year.                                                                                 
                                                                                                                                
Ms. Windom agreed.                                                                                                              
                                                                                                                                
Co-Chair  MacKinnon  considered   the  potential  number  of                                                                    
individuals  being  served  by   ATAP  as  compared  to  the                                                                    
potential  number  if the  bill  was  passed. She  discussed                                                                    
tracking issues with  consumers that went on and  off of the                                                                    
system.                                                                                                                         
                                                                                                                                
Co-Chair MacKinnon  recognized that  Senator Stevens  was in                                                                    
attendance. She  relayed that the committee  was considering                                                                    
FN 2 and she had  suggested striking the requested positions                                                                    
from the fiscal  note in interest of looking  at a different                                                                    
outsourcing method.                                                                                                             
                                                                                                                                
Co-Chair  MacKinnon asked  about the  credibility of  the $6                                                                    
million capital request and referenced  the Analysis on page                                                                    
5 of the fiscal note:                                                                                                           
                                                                                                                                
     Capital Budget:                                                                                                            
     $6,120.0 (10% GF Match, 90% Fed)                                                                                           
     Changes  to the  eligibility computer  system, Alaska's                                                                    
     Resource for  Integrated Eligibility Services,  will be                                                                    
     required  to  include  information on  compliance  with                                                                    
     work requirements  and to support denial  or closure of                                                                    
     cases due to non-compliance.                                                                                               
                                                                                                                                
     In order  to implement work requirements  for Medicaid,                                                                    
     ARIES must  be reprogrammed  to add fields  to indicate                                                                    
     if  a recipient  is exempt  from the  work requirement,                                                                    
     how    they're    participating   (along    with    how                                                                    
     participation  was  verified),  allow  for  the  actual                                                                    
     disqualification, and  new notices  must be  added. The                                                                    
     division  will  also  be  required   to  create  a  new                                                                    
     interface with the Case  Management System. This system                                                                    
     is used  to track work activities  and issue supportive                                                                    
     service payments for ATAP recipients                                                                                       
                                                                                                                                
10:39:40 AM                                                                                                                   
                                                                                                                                
Ms.  Windom  stated  that  the   department  had  a  program                                                                    
management  office that  was tasked  with updating  areas of                                                                    
the  agency. The  office had  estimated the  cost to  update                                                                    
Alaska's  Resource   for  Integrated   Eligibility  Services                                                                    
(ARIES)  to  include  work   requirements.  She  offered  to                                                                    
provide more  information as to  how the office  had arrived                                                                    
at the amount of capital request for the system update.                                                                         
                                                                                                                                
Co-Chair  MacKinnon asked  if the  eligibility determination                                                                    
as proposed by  the bill could be run  through ATAP's system                                                                    
and then interface with the Medicaid system.                                                                                    
                                                                                                                                
Ms.  Windom stated  that  there was  a  separate system  for                                                                    
tracking work status  of ATAP clients. She  thought it would                                                                    
likely  be possible  to utilize  for  tracking the  proposed                                                                    
work  requirements  for  Medicaid  recipients;  however,  an                                                                    
interface  would   have  to  be  developed.   She  discussed                                                                    
features  of  ARIES that  would  require  system changes  to                                                                    
implement the bill if passed.                                                                                                   
                                                                                                                                
Co-Chair MacKinnon  wondered why  the ATAP report  could not                                                                    
be used for individual clients of Medicaid.                                                                                     
                                                                                                                                
Ms. Windom stated that the  ARIES system was rules-based and                                                                    
automated. There  was no way  to solely use the  ATAP report                                                                    
to implement other features of Medicaid.                                                                                        
                                                                                                                                
10:42:30 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  brought  up  FN  4,  which  included  a                                                                    
request for $20 million GF.  She asked for the department to                                                                    
discuss grants and benefits referenced in the fiscal note.                                                                      
                                                                                                                                
Ms. Windom  stated that the  department had  considered ATAP                                                                    
recipients  and  what  kind   of  supportive  services  were                                                                    
provided. On  average, the division  had spent  about $1,000                                                                    
per year per client for supportive services.                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  thought  the   numbers  were  high  and                                                                    
thought  there   was  opportunities  to  have   a  different                                                                    
department do the work.                                                                                                         
                                                                                                                                
Senator Micciche  supported a Medicaid work  requirement for                                                                    
healthy individuals. He supported  LWFD helping to train and                                                                    
place  individuals for  employment.  He  thought there  were                                                                    
ample volunteer opportunities in  even the most remote parts                                                                    
of the state. He thought it  was important to hear from LWFD                                                                    
regarding  the department's  role and  what a  comprehensive                                                                    
plan might look like.                                                                                                           
                                                                                                                                
Co-Chair  MacKinnon  asked  if the  department  had  further                                                                    
thoughts on the fiscal notes.                                                                                                   
                                                                                                                                
Mr. Sherwood answered in the negative.                                                                                          
                                                                                                                                
Co-Chair MacKinnon  thanked Mr. Sherwood and  Ms. Windom for                                                                    
their service.                                                                                                                  
                                                                                                                                
10:46:19 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman thought  all  legislators  wanted to  have                                                                    
citizens of the state contribute  to the economy and provide                                                                    
for  families.  He thought  there  was  a problem  with  the                                                                    
Medicaid  program,   which  expanded  and  cost   the  state                                                                    
millions of dollars.  He thought there was a  question as to                                                                    
whether the  state could continue  to provide  the services,                                                                    
which he  considered to be  in competition with  other state                                                                    
services. He  had great concern  about Medicaid  and thought                                                                    
reversing the trend could be contentious.                                                                                       
                                                                                                                                
Co-Chair MacKinnon  wanted to discuss the  fiscal notes more                                                                    
thoroughly at a  meeting later in the day, and  to hear from                                                                    
DOL. She wanted to under the  DHSS vacancy rate and how many                                                                    
positions did not have associated funding.                                                                                      
                                                                                                                                
Co-Chair Hoffman  thought it would  be interesting to  see a                                                                    
snapshot  of  unemployment  in   the  state  from  LWFD,  to                                                                    
consider  the employment  trends and  available jobs  in the                                                                    
current  economy. He  thought the  information  would be  an                                                                    
integral   part   of   resolving  the   question   of   work                                                                    
requirements.  He commented  that  government  played a  big                                                                    
role  in  the   economy  of  the  state,  as   well  as  the                                                                    
educational system.                                                                                                             
                                                                                                                                
Co-Chair MacKinnon  recognized acknowledgement from  LWFD in                                                                    
the gallery.                                                                                                                    
                                                                                                                                
10:49:54 AM                                                                                                                   
                                                                                                                                
Vice-Chair Bishop  thought that LWFD  would also be  able to                                                                    
provide   information   as   to  methodology   on   tracking                                                                    
unemployment. He  thought there was a  cohort of individuals                                                                    
that had completely ceased seeking employment.                                                                                  
                                                                                                                                
Co-Chair MacKinnon explained that  Vice-Chair Bishop was the                                                                    
former commissioner for LWFD.                                                                                                   
                                                                                                                                
Senator  Micciche  wondered how  the  state  could invest  a                                                                    
proportion  of the  $1.2 billion  invested in  DHSS to  help                                                                    
develop  employment   and  skills   rather  than   spend  it                                                                    
continuously   on  a   growing  population   of  individuals                                                                    
dependent  upon  Medicaid. He  wanted  to  learn more  about                                                                    
constraints on the 1115 waiver. He wanted to know where                                                                         
there was leeway to privatize as much as possible.                                                                              
                                                                                                                                
Co-Chair MacKinnon planned on bringing the bill up in the                                                                       
afternoon meeting.                                                                                                              
                                                                                                                                
SB 193 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
Co-Chair MacKinnon discussed the agenda for the afternoon.                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:52:23 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:52 a.m.                                                                                         
                                                                                                                                

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