Legislature(2019 - 2020)SENATE FINANCE 532

04/08/2019 09:00 AM FINANCE

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Audio Topic
09:01:15 AM Start
09:02:36 AM Medicaid Cost Containment
10:57:10 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Medicaid Cost Containment: TELECONFERENCED
- Department of Health & Social Services
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                       April 8, 2019                                                                                            
                         9:01 a.m.                                                                                              
                                                                                                                                
9:01:15 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  von  Imhof  called the  Senate  Finance  Committee                                                                    
meeting to order at 9:01 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Mike Shower                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Sana Efird, Administrative  Services Director, Department of                                                                    
Health  and  Social  Services,   Office  of  Management  and                                                                    
Budget;  Donna Stewart,  Deputy Commissioner,  Department of                                                                    
Health and  Social Services; Senator Cathy  Giessel; Senator                                                                    
Gary Stevens; Senator Mia Costello.                                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
^MEDICAID COST CONTAINMENT                                                                                                    
                                                                                                                                
9:02:36 AM                                                                                                                    
                                                                                                                                
SANA EFIRD, ADMINISTRATIVE  SERVICES DIRECTOR, DEPARTMENT OF                                                                    
HEALTH  AND  SOCIAL  SERVICES,   OFFICE  OF  MANAGEMENT  AND                                                                    
BUDGET,  discussed  the   presentation,  "State  of  Alaska,                                                                    
Office of Management and Budget" (copy on file).                                                                                
                                                                                                                                
9:02:47 AM                                                                                                                    
                                                                                                                                
Ms.  Efird  looked at  Slide  2,  "Medicaid Services  FY2020                                                                    
Operating Budget: Change Summary":                                                                                              
                                                                                                                                
     ?Implement Cost Containment Measures and Reform                                                                            
     Initiatives ($225,000.0 UGF, $450,000.0 Fed)                                                                               
     ?Eliminate Adult Dental Medicaid Benefit ($8,273.6                                                                         
     UGF, $18,730.9 Fed)                                                                                                        
    ?Collapse Medicaid Services to a Single Allocation                                                                          
          ?Efficiency Measure: Reduction in man-hours and                                                                       
          time to process payment                                                                                               
          ?Minimizes administrative burden related to                                                                           
          transfers of budget authority                                                                                         
          ?Reporting to the Legislature will remain                                                                             
          consistent                                                                                                            
                                                                                                                                
Ms.  Efrid  explained  that  the  slide  showed  the  FY  19                                                                    
management  plan   compared  with   the  governors    FY  20                                                                    
proposal. The difference was a  decrement of $714,061.9. She                                                                    
detailed the bullet points on Slide 2.                                                                                          
                                                                                                                                
9:06:09 AM                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof  understood  that the  purpose  of  the                                                                    
hearing  was  to update  the  governors   February 13,  2019                                                                    
budget proposal with more recent research and analysis.                                                                         
                                                                                                                                
9:06:14 AM                                                                                                                    
                                                                                                                                
Ms. Efird  responded that  the governors   proposal remained                                                                    
                         th                                                                                                     
the same from February 13.   She noted that the governor had                                                                    
proposed using the Statutory Budget  Reserve balance to help                                                                    
meet the  department meet the  reduction. She said  that the                                                                    
department would work to meet  the governor's total proposed                                                                    
reductions.                                                                                                                     
                                                                                                                                
9:07:40 AM                                                                                                                    
                                                                                                                                
Co-Chair  von Imhof  summarized  that  the department  would                                                                    
present today  what could  be delivered  in 2020,  without a                                                                    
supplemental  ask  in  FY  21, and  that  there  were  other                                                                    
aspects that  the department was  still working  on, meaning                                                                    
that  answers might  not be  available before  budget close-                                                                    
outs.                                                                                                                           
                                                                                                                                
9:08:28 AM                                                                                                                    
                                                                                                                                
Senator Micciche  said that  the state  had been  working on                                                                    
reductions in  Medicaid for years.  He said that  the actual                                                                    
proposed  reduction, after  using the  SBR, was  $77 million                                                                    
and  not $249  million. He  hoped that  real life  solutions                                                                    
could  be  discussed.  He lamented  the  complexity  of  the                                                                    
issue.                                                                                                                          
                                                                                                                                
9:10:04 AM                                                                                                                    
                                                                                                                                
Senator   Wielechowski   asked    how,   specifically,   the                                                                    
$714,061.0 in cuts would affect Alaskans.                                                                                       
                                                                                                                                
9:10:23 AM                                                                                                                    
                                                                                                                                
Ms.  Efird   said  that  the  proposal   would  answer  that                                                                    
questions.                                                                                                                      
                                                                                                                                
9:10:29 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  asserted  that  he did  not  see  any                                                                    
answers on future  slides but would be patient  and wait for                                                                    
an explanation.                                                                                                                 
                                                                                                                                
9:10:42 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  understood that the presentation  would be                                                                    
an  overview of  the governors   February proposal,  with no                                                                    
additional  analysis or  information. He  worried that  time                                                                    
was being wasted.                                                                                                               
                                                                                                                                
9:11:22 AM                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof  noted  that the  first  slide  of  the                                                                    
presentation contained information  released in February and                                                                    
recognized that there  were timing issues as  well as issues                                                                    
with  CMS  negotiations. She  said  that  the committee  was                                                                    
expecting further  impact analysis  of the budget  cuts. She                                                                    
hoped  that   the  department   could  highlight   what  was                                                                    
deliverable under the cuts, without  using the SBR, and what                                                                    
and  impact  analysis  would  be  using  the  decisions  put                                                                    
forward by the governor.                                                                                                        
                                                                                                                                
9:12:52 AM                                                                                                                    
                                                                                                                                
DONNA  STEWART, DEPUTY  COMMISSIONER,  DEPARTMENT OF  HEALTH                                                                    
AND SOCIAL  SERVICES, (DHSS) highlighted Slide  3, "Medicaid                                                                    
Program Adjustments":                                                                                                           
     Two-Phase Approach                                                                                                       
     Phase I: Cost Containment Efforts                                                                                          
     ?Implementation in SFY 2020                                                                                                
     ?Familiar strategies plus new approaches                                                                                   
                                                                                                                                
     Phase II: Evaluate New Federal Opportunities                                                                               
     ?New flexibilities released November 2018 may provide                                                                      
     opportunities to better address the health care needs                                                                      
     of the low-income and uninsured in Alaska                                                                                  
     ?Additional flexibilities to be released by May 15,                                                                        
     2019                                                                                                                       
     ?Implementation goal is for late SFY 2020 and SFY 2021                                                                     
                                                                                                                                
9:14:09 AM                                                                                                                    
                                                                                                                                
Ms. Stewart looked at Slide 4, "Phase 1: Medicaid Cost                                                                          
Containment":                                                                                                                   
                                                                                                                                
     Four Primary Levers for Reducing Medicaid Costs                                                                          
     ?Eligibility Adjustments                                                                                                   
     ?Rate Adjustments                                                                                                          
     ?Service/Utilization Adjustments                                                                                           
     ?Program/Administrative Adjustments                                                                                        
                                                                                                                                
9:14:27 AM                                                                                                                    
                                                                                                                                
Ms. Stewart addressed Slide 5, "Phase I: Medicaid Cost                                                                          
Containment  Eligibility Adjustments":                                                                                          
                                                                                                                                
     The Department is not recommending any adjustments to                                                                      
     Medicaid program eligibility                                                                                               
                                                                                                                                
9:14:58 AM                                                                                                                    
                                                                                                                                
Ms. Stewart looked at Slide 6, " Phase I: Cost Containment                                                                      
- Rate Adjustments":                                                                                                            
                                                                                                                                
     Principles for Approaching Rate Adjustments                                                                              
     ?Protect Primary Care                                                                                                      
     ?Protect Small Hospitals                                                                                                   
     ?Protect Access to Services                                                                                                
     ?Align Payment with Other Public Payers                                                                                    
                                                                                                                                
9:15:20 AM                                                                                                                    
                                                                                                                                
Ms. Stewart addressed Slide 7,  "Phase I: Cost Containment                                                                      
Rate and  Payment Adjustments." The  adjustment would  be in                                                                    
the  following  areas  and  would   result  in  a  total  of                                                                    
$100,865.4:                                                                                                                     
                                                                                                                                
   5 Percent Rate Reduction                                                                                                   
     • Inpatient/Outpatient PPS hospital services                                                                               
          o Critical Access Hospitals exempt                                                                                    
     • Specialty Physician services                                                                                             
          o Primary care/obstetrics/pediatrics exempt                                                                           
     • All other providers                                                                                                      
          o No reduction to Federally Qualified Health                                                                          
             Centers (FQHC)                                                                                                     
                                                                                                                                
   Withhold Inflation                                                                                                         
   Hospital Diagnosis-Related Groups (DRG)                                                                                    
   Acuity Based Nursing Facility Rate                                                                                         
   Cost-Based End Stage Renal Disease (ESRD)                                                                                  
   Pharmacy Adjustments                                                                                                       
                                                                                                                                
9:17:00 AM                                                                                                                    
                                                                                                                                
Senator Olson asked whether the  DRG adjustment would affect                                                                    
rural hospitals.                                                                                                                
                                                                                                                                
9:17:04 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  replied that the  Indian Health  Services (IHS)                                                                    
hospitals  that received  the federal  encounter rate  would                                                                    
not be subject to the DRG adjustments.                                                                                          
                                                                                                                                
9:17:45 AM                                                                                                                    
                                                                                                                                
Ms. Stewart continued to discuss Slide 7.                                                                                       
                                                                                                                                
9:18:31 AM                                                                                                                    
                                                                                                                                
Co-Chair  von Imhof  appreciated  the  proposed attempts  to                                                                    
decrease  spending. She  expressed  concern  with the  first                                                                    
four listed  adjustments. She thought that  the adjustments,                                                                    
when  combined,  jobs  would  be  lost.  She  hoped  that  a                                                                    
proforma  could  be  done  to   analyze  how  the  different                                                                    
adjustments  interplayed  and  the  impact  on  services  to                                                                    
patients.                                                                                                                       
                                                                                                                                
9:20:49 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  expressed concern for the  impacts the                                                                    
rate reductions. He wondered  whether the administration had                                                                    
heard any concerns from providers.                                                                                              
                                                                                                                                
9:21:19 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart  responded  that several  provider  groups  had                                                                    
commented  on  the  rate  reductions.   She  said  that  the                                                                    
department had faced a difficult  choice as it moved forward                                                                    
to  address  the  reductions   proposed  in  the  governors                                                                     
budget. The  department had  made the  choice to  not effect                                                                    
eligibility but  had to map  out a strategy for  meeting the                                                                    
reductions. She asserted  that care had been  taken to apply                                                                    
the rate  adjustments evenly and equitably  across providers                                                                    
types,  while protecting  primary care  and critical  access                                                                    
hospitals.                                                                                                                      
                                                                                                                                
9:22:09 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski understood  that pains  were taken  to                                                                    
not effect eligibility.  He surmised that if  the rates were                                                                    
cut   to  a   point  where   providers  could   not  provide                                                                    
healthcare,   that   impacted   people's  ability   to   get                                                                    
healthcare. He asked what effect  the proposed reductions to                                                                    
providers would have on patients access to healthcare.                                                                          
                                                                                                                                
9:22:33 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart  said that  she  had  a  slide further  in  the                                                                    
presentation that would address the question.                                                                                   
                                                                                                                                
9:22:49 AM                                                                                                                    
                                                                                                                                
Co-Chair von  Imhof thought  that it was  one thing  to make                                                                    
isolated  cuts and  another thing  to provide  for potential                                                                    
places  of reduction  without  understanding the  collective                                                                    
impact on a facility.                                                                                                           
                                                                                                                                
9:23:14 AM                                                                                                                    
                                                                                                                                
Ms. Stewart looked at Slide 8, "Phase I: Cost Containment                                                                       
Rate  and  Payment  Adjustments."   The  slide  showed  some                                                                    
changes in Medicaid Hospital payments  in FY 2015 through FY                                                                    
2019.  She  noted  the  increase   in  overall  funding  for                                                                    
hospitals  from FY  2015 through  FY 2018.  She pointed  out                                                                    
that the Medicaid expansion  population was first introduced                                                                    
in  2016. She  highlighted the  first  half of  FY 2019  and                                                                    
stated that  the total  expended for the  first 6  months of                                                                    
the fiscal  year was more than  total expended in all  of FY                                                                    
2015. She argued that the costs  would double by FY 2020, if                                                                    
the trend continued.                                                                                                            
                                                                                                                                
9:24:51 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  thought that  the  charts  would be  more                                                                    
helpful if  they contained the  percentage change  form year                                                                    
to  year.  He  surmised   that  total  funds  had  increased                                                                    
approximately  18 percent  per  year.  He requested  further                                                                    
elaboration  on  the  growth mechanisms  and  the  rates  of                                                                    
change.                                                                                                                         
                                                                                                                                
9:25:51 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart  said  that  the  next  slide  would  highlight                                                                    
changes that had occurred with prior rate adjustments.                                                                          
                                                                                                                                
9:25:59 AM                                                                                                                    
                                                                                                                                
Ms. Stewart highlighted Slide 9,  "Phase I: Cost Containment                                                                    
 Rate and Payment Adjustments.":                                                                                                
                                                                                                                                
     Medicaid Hospital Rate Adjustments SFYs 2015-2019                                                                        
                                                                                                                              
     Due to carryforward of hospital  payments at the end of                                                                    
     SFY 2018, SFY  2019 includes $37.8 million  in SFY 2018                                                                    
     expenditures.  Total services  for  SFY2018 adjusts  to                                                                    
     $483 million,  and paid services for  SFY 2019 services                                                                    
     adjusts to $259.3  million. SFY 2019 Trend  is based on                                                                    
     volume of services and will not yet be adjusted.                                                                           
                                                                                                                                
     Inpatient Hospital - Prior Rate Adjustments                                                                              
          ? 2019    Rate  reduction, rebasing  and inflation                                                                    
          adjustments  in  2018   restored  (facility  rates                                                                    
          restored  to  2017  levels;  inflation  added  for                                                                    
          2019)                                                                                                                 
          ? 2018      5% inpatient rate reduction, all                                                                          
          facilities; withhold inflation; no rate rebasing                                                                      
          ? 2017  Withhold inflation, all facilities                                                                            
          ? 2016  Withhold inflation, all facilities                                                                            
                                                                                                                                
     Outpatient Hospital - Prior Rate Adjustments                                                                             
          ? 2019  Rate reduction from 2018 restored                                                                             
          ? 2018     5% outpatient rate reduction, all                                                                          
          facilities                                                                                                            
9:28:04 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  thought that  the slide was  confusing. He                                                                    
believed that  the trendlines could be  better expressed. He                                                                    
wanted  the  public  to  be   shown  where  the  growth  was                                                                    
occurring  and  why some  reductions  could  be made,  while                                                                    
others  could  not.  He contended  that  the  committee  was                                                                    
disinterested  in   flimflam   budget that  would  knowingly                                                                    
lead  to  supplementals.  He  warned   that  it  was  highly                                                                    
unlikely  that  the  committee   would  decide  to  use  the                                                                    
statutory budget reserve (SBR) to fund the agency.                                                                              
                                                                                                                                
9:30:27 AM                                                                                                                    
                                                                                                                                
Senator   Micciche  agreed   with   the  previous   speakers                                                                    
concerns. He felt that Medicaid  was mismanaged. He spoke of                                                                    
$187  million in  IHS   leakage  in  2018.  He wondered  why                                                                    
eligibility  and  aggressive management  of  overutilization                                                                    
had  not been  addressed. He  believed that  eligibility and                                                                    
utilization  management  was  the  only  way  to  achieve  a                                                                    
significant reduction in Medicaid spending.                                                                                     
                                                                                                                                
9:32:13 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  replied that it  had been a  conscious decision                                                                    
by  the  administration  not  to  address  eligibility.  She                                                                    
discussed the two-phase approach that  had been taken by the                                                                    
administration; the first was to  address what could be done                                                                    
in 2020,  the second  phase would  be to  explore additional                                                                    
flexibilities  that   would  be  coming  from   the  federal                                                                    
government.  She said  that discussions  on eligibility  and                                                                    
utilization would  happen in the  future. She  stressed that                                                                    
the goal  was to  address healthcare  coverage for  all low-                                                                    
income  Alaskans  and  not  only   those  eligible  for  the                                                                    
Medicaid program.                                                                                                               
                                                                                                                                
9:32:49 AM                                                                                                                    
                                                                                                                                
Senator  Micciche  said that  he  supported  the effort.  He                                                                    
countered   that  the   FY  2020   budget  reductions   were                                                                    
unattainable. He  agreed that there were  processes in place                                                                    
that  could reduce  the  Medicaid spend  over  time, but  he                                                                    
argued   that   the   committees   responsibility   was   to                                                                    
communicate transparently  with the public that  the lack of                                                                    
support for  the reductions was because  the reductions were                                                                    
not attainable in FY 2020.                                                                                                      
                                                                                                                                
9:34:00 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked  for a debrief for the  public on why                                                                    
the committee did not have control  over a large part of the                                                                    
budget, and why some of  the items being requested could not                                                                    
be delivered.  He said  that the  committee would  taken any                                                                    
reduction that  was remotely reasonable to  get the Medicaid                                                                    
budget  under control,  but  that  a lot  of  the issue  was                                                                    
driven by federal policy.                                                                                                       
                                                                                                                                
9:36:01 AM                                                                                                                    
                                                                                                                                
Co-Chair  von Imhof  spoke to  Slide  4. She  said that  how                                                                    
patients  utilized  the  system   should  be  examined.  She                                                                    
thought  that   better  coordinated  care   would  alleviate                                                                    
emergency  room visits.  She  stated  that the  coordination                                                                    
would require  data, trend  tracking, and  cooperation among                                                                    
healthcare providers. She recognized  that the work would be                                                                    
challenging and time  consuming but would be  worth the work                                                                    
to  address  costs   without  degrading  overall  population                                                                    
health in the state.                                                                                                            
                                                                                                                                
9:37:32 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart  agreed. She  said  that  the department  would                                                                    
appropriately  evaluate  and put  into  place  a system  for                                                                    
healthcare  coverage   for  all  low-income   Alaskans.  She                                                                    
asserted that  the governors  cuts  were ambitious  and that                                                                    
the  Centers for  Medicare and  Medicaid Services  (CMS) had                                                                    
been slow in provided necessary information to the state.                                                                       
                                                                                                                                
9:38:48 AM                                                                                                                    
                                                                                                                                
Senator  Bishop  commented  that the  federal  flexibilities                                                                    
should  be   implemented  before   making  large   cuts.  He                                                                    
expressed concern  that premiums  to individual  rate payers                                                                    
could increase.                                                                                                                 
                                                                                                                                
9:40:58 AM                                                                                                                    
                                                                                                                                
Senator Olson pointed to Slides  8 and 9. He understood that                                                                    
the majority  of the increase  was due to federal  funds and                                                                    
because of Medicaid expansion.                                                                                                  
                                                                                                                                
9:41:22 AM                                                                                                                    
                                                                                                                                
Ms. Stewart agreed.  She said that most of  the federal fund                                                                    
increase was due  to the 2016 Medicaid  expansion. She added                                                                    
that tribal reclaiming dollars had  increased as part of the                                                                    
federal funding.                                                                                                                
                                                                                                                                
9:42:07 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  wondered how  many more  Alaskans were                                                                    
eligible in 2019, than in 2015.                                                                                                 
                                                                                                                                
9:42:35 AM                                                                                                                    
                                                                                                                                
Ms. Efird replied approximately 46,000.                                                                                         
                                                                                                                                
9:42:42 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski understood  that 46,000  Alaskans were                                                                    
eligible for Medicare, at the cost of $34 million.                                                                              
                                                                                                                                
9:42:49 AM                                                                                                                    
                                                                                                                                
Ms. Efird  corrected that the  figure was  approximately $24                                                                    
million.                                                                                                                        
                                                                                                                                
Senator Wielechowski  surmised that $24 million  was matched                                                                    
by $300 million in federal funds.                                                                                               
                                                                                                                                
Ms. Efird said that the figure  was closer to $1 billion for                                                                    
the Medicaid expansion.                                                                                                         
                                                                                                                                
9:42:56 AM                                                                                                                    
                                                                                                                                
Co-Chair von  Imhof thought that provider  payments could be                                                                    
decreased by 5 percent but  that would not address the issue                                                                    
of utilization.  The same population would  still be seeking                                                                    
treatment, and that  treatment would have to be  paid for by                                                                    
the state.                                                                                                                      
                                                                                                                                
9:44:07 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  asked the  presenter  to  explain to  the                                                                    
public why the state had to pay the Medicaid expenses.                                                                          
                                                                                                                                
9:44:27 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart shared  that  when the  state  decided to  move                                                                    
forward  with the  Medicaid program  it had  entered into  a                                                                    
contract with  the federal government  through CMS.  For all                                                                    
federally required services the  state would be obligated to                                                                    
assure  that   the  services  were  delivered   to  eligible                                                                    
recipients. The  expansion of 2016  increased they  types of                                                                    
benefits  that   were  provided  and  a   relaxing  of  some                                                                    
utilization rules.  She said that  the expansion  brought in                                                                    
more federal funding.                                                                                                           
                                                                                                                                
9:45:38 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  reiterated that  the committee  lacked the                                                                    
ability  to control  the budget  because of  its contractual                                                                    
obligation with  the federal government.  He asked  how long                                                                    
the  state   had  been  under  contract   with  the  federal                                                                    
government.                                                                                                                     
                                                                                                                                
9:46:43 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  said she would  get back to the  committee with                                                                    
the  information. She  noted that  she had  seen state  plan                                                                    
amendments as far back as the 1970s.                                                                                            
                                                                                                                                
9:47:00 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  said he did  not need a specific  date. He                                                                    
stressed  that  the  state had  been  under  obligation  for                                                                    
Medicaid for  decades and  could not be  blamed on  the last                                                                    
several governors or legislatures. He  said that, due to the                                                                    
relationship with  the federal  government, this  portion of                                                                    
the budget had been out of state control for decades.                                                                           
                                                                                                                                
9:47:34 AM                                                                                                                    
                                                                                                                                
Senator Bishop  believed that the  Medicaid was  signed into                                                                    
law in the 1960s by President Lyndon Johnson.                                                                                   
                                                                                                                                
9:47:44 AM                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof  relayed  that  many  states  had  gone                                                                    
through a  managed care  model, whereas  Alaska was  still a                                                                    
fee  for service.  She wondered  whether Alaska  could phase                                                                    
into a managed care model.                                                                                                      
                                                                                                                                
9:48:00 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  related that SB  74 included a  requirement for                                                                    
care  coordination  demonstration  projects. She  said  that                                                                    
there were four different types  of projects that could move                                                                    
forward, one  of which was  for managed care. She  said that                                                                    
as the request  for proposals (RFP) went out  there had been                                                                    
an opportunity for any potential  insurers to submit a model                                                                    
for managed  care in the  state. She  said that a  model had                                                                    
been submitted  and discussions  were ongoing.  She asserted                                                                    
that  the department  would stay  abreast  of all  potential                                                                    
flexibilities.                                                                                                                  
                                                                                                                                
9:49:20 AM                                                                                                                    
                                                                                                                                
Senator  Wilson asked  for a  timeframe of  the RFP  and the                                                                    
possibility of managed care.                                                                                                    
                                                                                                                                
9:50:10 AM                                                                                                                    
                                                                                                                                
Ms. Stewart said  that there were two types  of managed care                                                                    
that could  move forward and  the department needed  to make                                                                    
sure that  the model  that moved forward  was the  right one                                                                    
for the state.                                                                                                                  
                                                                                                                                
9:50:54 AM                                                                                                                    
                                                                                                                                
Senator Wilson asked how long the process would take.                                                                           
                                                                                                                                
9:50:57 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart  asked whether  he  meant  a timeline  for  the                                                                    
implementation  of a  plan a  manage care  model or  for the                                                                    
review of the RFP.                                                                                                              
                                                                                                                                
9:51:12 AM                                                                                                                    
                                                                                                                                
Senator Wilson said he would like to know both.                                                                                 
                                                                                                                                
9:51:15 AM                                                                                                                    
                                                                                                                                
Ms. Stewart shared  that the completion of  the model review                                                                    
should be  done by the  end of  the fiscal year.  If another                                                                    
model was necessary,  it would be considered  part of phase-                                                                    
two and would take longer.                                                                                                      
                                                                                                                                
9:51:47 AM                                                                                                                    
                                                                                                                                
Senator  Micciche said  that Medicaid  was  not designed  to                                                                    
become  the economy  of many  parts  of the  state, but  had                                                                    
become  just  that, and  had  brought  about people  with  a                                                                    
resistance  to change.  He asked  whether there  were people                                                                    
within the  department who  were significantly  resistant to                                                                    
evaluating  real life  solutions  reducing the  cost to  the                                                                    
state. He declared that he  supported quality healthcare for                                                                    
the people of Alaska but  that the mismanagement was getting                                                                    
out of hand.                                                                                                                    
                                                                                                                                
9:53:33 AM                                                                                                                    
                                                                                                                                
Ms.  Stewart   believed  that   the  new   commissioner  was                                                                    
assembling a team that would  be willing to make the desired                                                                    
changes within the program.                                                                                                     
                                                                                                                                
9:54:52 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski asked  whether the  administration had                                                                    
applied for a Medicaid Block Grant Waiver.                                                                                      
                                                                                                                                
9:55:04 AM                                                                                                                    
                                                                                                                                
Ms. Stewart replied in the negative.                                                                                            
                                                                                                                                
9:55:25 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  discussed Slide 10, "Phase  I: Cost Containment                                                                    
   Rate and  Payment Adjustments."  The slide  showed a  bar                                                                    
graph  that  charted  the average  Medicaid  utilization  of                                                                    
impatient days from 2015 to 2017.                                                                                               
                                                                                                                                
9:56:05 AM                                                                                                                    
                                                                                                                                
Ms. Stewart looked  at Slide 11, "Phase  I: Cost Containment                                                                    
  Rate  and Payment Adjustments."  The slide showed  two bar                                                                    
graphs that compared inpatient  hospital expenditures for FY                                                                    
2015 through  2019 to  outpatient hospital  expenditures for                                                                    
the same fiscal years.                                                                                                          
                                                                                                                                
9:56:21 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  addressed Slide 12, "Phase  I: Cost Containment                                                                    
  Rate and Payment Adjustments":                                                                                                
                                                                                                                                
    Hospitals Not Affected by Proposed Rate Adjustments                                                                       
                                                                                                                                
          ?Cordova Community Medical Center                                                                                     
          ?Norton Sound Regional Hospital                                                                                       
          ?Peace Health Ketchikan                                                                                               
          ?Petersburg Medical Center                                                                                            
          ?Providence Kodiak Medical Center                                                                                     
          ?Providence Seward Medical Center                                                                                     
          ?Providence Valdez Medical Center                                                                                     
          ?Samuel Simmons Memorial                                                                                              
          ?Sitka Community Hospital                                                                                             
          ?South Peninsula Hospital                                                                                             
          ?Wrangell Medical Center                                                                                              
          ?Hospitals paid Indian Health Service inpatient                                                                       
          encounter rate                                                                                                        
                                                                                                                                
9:56:53 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman looked  at Slide  11. He  asked where  the                                                                    
department  hoped the  numbers would  land for  FY 2020.  He                                                                    
requested more detail on the dates for FY 2019.                                                                                 
                                                                                                                                
9:57:44 AM                                                                                                                    
                                                                                                                                
Ms. Stewart  said that the  department had applied  the rate                                                                    
reduction as  evenly as possible  across all  provider types                                                                    
and did  not have a number  they were trying to  achieve for                                                                    
their  budget. The  department did  not have  a number  they                                                                    
were aiming  for in FY 2020.  She furthered that the  if the                                                                    
state  continued on  trend  for  the next  6  months of  the                                                                    
current fiscal year the numbers were expected to increase.                                                                      
                                                                                                                                
9:59:08 AM                                                                                                                    
                                                                                                                                
Co-Chair   Stedman  categorized   the  graph   as  a   liner                                                                    
interpretation, or extrapolation, of  the first 6 months. He                                                                    
assumed that the re4alitonship was  linear between the first                                                                    
and last 6 months.                                                                                                              
                                                                                                                                
9:59:24 AM                                                                                                                    
                                                                                                                                
Ms. Stewart said  that the chart was based on  the last four                                                                    
years of historical data and  included the highs and lows of                                                                    
the  peak  time  when  services  were  utilized  within  the                                                                    
hospitals. She said  it was not taking a  line and extending                                                                    
it out but  applied a factor for what was  believed would be                                                                    
the utilization in those particular months.                                                                                     
                                                                                                                                
9:59:57 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman said that it  would be helpful to hear from                                                                    
the department what their expectations  were for FY 2020. He                                                                    
thought  a target  could  be useful,  rather  than simply  a                                                                    
standard reduction mechanism.                                                                                                   
                                                                                                                                
10:00:40 AM                                                                                                                   
                                                                                                                                
Co-Chair  von  Imhof believed  that  the  attachment to  the                                                                    
presentation,   Phase  One Cost  Containment  Implementation                                                                    
Schedule could shed some light later in the meeting.                                                                            
                                                                                                                                
10:00:59 AM                                                                                                                   
                                                                                                                                
Senator Bishop looked  at Slide 12, he  wondered whether the                                                                    
all the  hospitals had been  contacted to assure  they would                                                                    
not be affected by the proposed rate adjustments.                                                                               
                                                                                                                                
10:01:13 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  replied that because they  were critical access                                                                    
hospitals, they would  not be subject to the  5 percent rate                                                                    
reduction or the withhold of inflation.                                                                                         
                                                                                                                                
10:01:18 AM                                                                                                                   
                                                                                                                                
Senator  Bishop said  he  would follow  up  with the  listed                                                                    
hospitals.                                                                                                                      
                                                                                                                                
10:01:54 AM                                                                                                                   
                                                                                                                                
Senator Wilson asked  how many hospitals fell  under the IHS                                                                    
umbrella.                                                                                                                       
                                                                                                                                
10:02:10 AM                                                                                                                   
                                                                                                                                
Ms. Stewart replied that if  the hospital was paid under the                                                                    
federal encounter rate  the rates could not  be adjusted for                                                                    
those facilities.                                                                                                               
                                                                                                                                
10:02:33 AM                                                                                                                   
                                                                                                                                
Senator Wilson  understood that this was  for IHS facilities                                                                    
only.                                                                                                                           
                                                                                                                                
10:02:44 AM                                                                                                                   
                                                                                                                                
Ms. Stewart agreed.                                                                                                             
                                                                                                                                
10:02:49 AM                                                                                                                   
Senator Olson  assumed the list of  unaffected hospitals was                                                                    
complete.                                                                                                                       
                                                                                                                                
10:02:52 AM                                                                                                                   
                                                                                                                                
Ms.  Stewart  replied  yes. She  clarified  that  the  final                                                                    
bullet had not been itemized.                                                                                                   
                                                                                                                                
10:03:10 AM                                                                                                                   
                                                                                                                                
Senator Olson  assumed that Maniilaq Health  Center would be                                                                    
affected by the reduction.                                                                                                      
                                                                                                                                
10:03:18 AM                                                                                                                   
                                                                                                                                
Ms. Stewart said that Maniilaq  was a federal encounter rate                                                                    
and would not be affected.                                                                                                      
                                                                                                                                
10:03:21 AM                                                                                                                   
                                                                                                                                
Senator  Olson asked  about  the  Southeast Alaska  Regional                                                                    
Health Consortium (SEARHC) facility in Sitka.                                                                                   
                                                                                                                                
10:03:24 AM                                                                                                                   
                                                                                                                                
Ms. Stewart replied that if  an IHS facility determined that                                                                    
they  would be  under  the perspective  payment system,  and                                                                    
were  not also  a critical  access hospital,  they would  be                                                                    
subject to the adjustments. She  shared that the hospital in                                                                    
Sitka was  a critical access  hospital and had chosen  to be                                                                    
under  the  perspective  payment  system and  would  not  be                                                                    
subject to the reductions.                                                                                                      
                                                                                                                                
10:04:22 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  queried the status of  the Sitka Community                                                                    
Hospitals  being merged  into  SEARHC. He  thought that  the                                                                    
merger would change the numeric.                                                                                                
                                                                                                                                
10:04:55 AM                                                                                                                   
                                                                                                                                
Ms.   Stewart  highlighted   Slide   13,   "Phase  I:   Cost                                                                    
Containment  Rate and Payment Adjustments":                                                                                     
                                                                                                                                
     Recap Rate and Payment Adjustment Notes                                                                                  
          ?Withhold Inflation                                                                                                   
          ?Applies   to   all   providers   granted   annual                                                                    
          inflation  except  hospitals with  small  facility                                                                    
          agreements                                                                                                            
          ?Inflation withheld 2016, 2017 and 2018                                                                               
     Implement Hospital Diagnosis Related Groups "DRG"                                                                        
     Payment System                                                                                                           
          ?Will not apply to critical access hospitals                                                                          
              percent  inpatient/outpatient  rate  reduction                                                                    
          will end when DRGs go live                                                                                            
          ?January 1, 2020 implementation                                                                                       
     Implement Acuity Based Skilled Nursing Facility Rates                                                                    
          ?System similar  to Medicare  Resource Utilization                                                                    
          Groups (RUGs)                                                                                                         
          ?January 1, 2020 implementation                                                                                       
     Move to Cost-Based Rates for End Stage Renal Disease                                                                     
     (ESRD) Clinics                                                                                                           
          ?Ready for implementation                                                                                             
          ?Additional   discussions    with   providers   on                                                                    
          innovative payment model                                                                                              
          ?Current   ESRD  rates   are  233   percent  above                                                                    
          Medicare  rates; revised  rates remain  22 percent                                                                    
          higher than Medicare                                                                                                  
     Pharmacy Adjustment                                                                                                      
          ?Position  the program  to  react  more nimbly  to                                                                    
          drug price changes                                                                                                    
          ?January 1, 2020 implementation                                                                                       
                                                                                                                                
Ms. Stewart addressed Slide 14, "Phase I: Cost Containment                                                                      
  Rate and Payment Adjustments":                                                                                                
                                                                                                                                
     Access and Provider Rates                                                                                                
     ?All rate adjustments must be approved through the                                                                         
     Centers for Medicare and Medicaid Services (CMS) State                                                                     
     Plan Amendment (SPA) process                                                                                               
                                                                                                                                
     ?CMS also requires states to submit "Access Monitoring                                                                     
     Review Plans"                                                                                                              
          ?Effect of  rate adjustments meeting  or exceeding                                                                    
          5% are monitored for three  years to ensure access                                                                    
          is not impacted by the adjustments                                                                                    
          ?Recipient  and provider  enrollment by  location,                                                                    
          as  well as  utilization information  is submitted                                                                    
          to CMS annually for monitoring purposes                                                                               
               ?Baseline    information    submitted    when                                                                    
               adjustments move forward                                                                                         
    ?Alaska Medicaid 2017 Access Monitoring Review Plan                                                                         
                                                                                                                                
10:06:54 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman spoke  to  Slide 13.  He  noted the  final                                                                    
bullet point. He asked whether  the Office of Management and                                                                    
Budget (OMB)  was going to  adjust the  requested reductions                                                                    
to reflect the mid-year fiscal year implementation.                                                                             
                                                                                                                                
10:08:01 AM                                                                                                                   
                                                                                                                                
Co-Chair  von  Imhof  surmised  that  the  estimate  by  the                                                                    
department   considered    the   6-month    savings   versus                                                                    
extrapolating it to an annual savings.                                                                                          
                                                                                                                                
10:08:16 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  replied in the  affirmative. She noted  the DRG                                                                    
2020 implementation; the 5  percent inpatient and outpatient                                                                    
rate reductions would  end when the DRGs went  live, as well                                                                    
as  the  hold of  inflation.  She  said  that once  the  new                                                                    
payment  model  began,  those  two items  would  not  be  in                                                                    
effect.                                                                                                                         
                                                                                                                                
10:09:01 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  hoped  to hear  from  OMB  whether  their                                                                    
numbers were the same as the department.                                                                                        
                                                                                                                                
10:09:21 AM                                                                                                                   
                                                                                                                                
Ms. Efird  said that  the departments   numbers for  Phase 1                                                                    
had been  considered by  OMB. She  said it  was the  Phase 2                                                                    
reductions that were still  under consideration. She related                                                                    
that  the date  of implementation  for each  of the  Phase 1                                                                    
initiatives had  been considered in calculating  the savings                                                                    
that would occur in FY 2020.                                                                                                    
                                                                                                                                
10:10:14 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  asked  whether  the  aggregate  reduction                                                                    
target  number  would  change. He  said  that  the  targeted                                                                    
implementation  date of  January 1,  2020 could  be factored                                                                    
into the  subcommittee budget. He  wondered whether  OMB was                                                                    
considering the  remaining 6  months of  the fiscal  year or                                                                    
using the original targeted reduction amounts.                                                                                  
                                                                                                                                
10:10:51 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof interjected that  the next several slides                                                                    
detailed Phase 1. She said  that a more detailed summary was                                                                    
in member packets titled,  State  of Alaska Medicaid Program                                                                    
Phase 1  Cost Containment Implementation Schedule   (copy on                                                                    
file). She  said that the summary  suggested decreases, that                                                                    
the committee assumed were  manageable and deliverable, were                                                                    
less  than  what  appeared  on  Slide  2.  She  shared  that                                                                    
upcoming slides would offer more details.                                                                                       
                                                                                                                                
10:11:51 AM                                                                                                                   
                                                                                                                                
Senator Shower  asked whether  the department  believed that                                                                    
the   $714.061.0  in   reductions  could   be  realistically                                                                    
achieved.                                                                                                                       
                                                                                                                                
10:12:15 AM                                                                                                                   
                                                                                                                                
Ms. Efird replied  that the department had been  asked to do                                                                    
everything  as aggressively  as possible  to meet  the total                                                                    
reduction shown  on Slide  2. She  added that  some elements                                                                    
were  out of  the  department's control;  approval would  be                                                                    
needed form  CMS, which  was why  the governor  had included                                                                    
the SBR  language. The governor had  directed the department                                                                    
to aggressively  pursue, and achieve,  as many  cost savings                                                                    
in FY 2020 as possible.                                                                                                         
                                                                                                                                
10:13:10 AM                                                                                                                   
                                                                                                                                
Senator Shower  reiterated his question. He  argued that the                                                                    
numbers   in    the   proposed   governors     budget   were                                                                    
unattainable. He worried that he was being duped.                                                                               
                                                                                                                                
10:14:27 AM                                                                                                                   
                                                                                                                                
Ms.  Efird responded  that the  department could  not answer                                                                    
the question  until it received additional  information from                                                                    
CMS.  She  reiterated  that  it remained  to  be  seen  what                                                                    
flexibilities would be allowed to  be pursued by states. She                                                                    
hoped that the information would be available by May 2019.                                                                      
                                                                                                                                
10:16:13 AM                                                                                                                   
                                                                                                                                
Senator  Wilson understood  that the  state was  waiting for                                                                    
information  from CMS,  which meant  that the  proposed rate                                                                    
reductions would not  take affect in the FY  2020 budget. He                                                                    
thought that  use of the  SBR was an unacceptable  plan when                                                                    
the  hope was  to have  a budget  that contained  the actual                                                                    
reductions that  could be  implemented by  July 1,  2019. He                                                                    
requested a  plan that detailed the  actual realized numbers                                                                    
that could be implemented by  July 1, 2019. Additionally, he                                                                    
wanted a  modified budget plan  from OMB, without  using the                                                                    
SBR.                                                                                                                            
                                                                                                                                
10:17:44 AM                                                                                                                   
                                                                                                                                
Co-Chair von  Imhof believed that  the problem was  with the                                                                    
timing of the implementation of Phase Two.                                                                                      
                                                                                                                                
10:18:01 AM                                                                                                                   
                                                                                                                                
Ms. Stewart agreed.  She said that the lack  of the approval                                                                    
of a state plan by CMS by  July 1, 2019, could mean that the                                                                    
department  would  not be  able  to  move forward  with  the                                                                    
proposed rate adjustments. She said  that the department had                                                                    
until September  30, 2019, to  have the state  plan approved                                                                    
by CMS in  order for a July 1 implementation  date. The plan                                                                    
was  to submit  the  amendments as  quickly  as possible  in                                                                    
order to  make sure  the rates became  effective on  July 1.                                                                    
She   reiterated  that   the   information   from  CMS   was                                                                    
forthcoming   and  that   the   goal  for   Phase  Two   was                                                                    
implementation at  the end  of FY  2020 and  for FY  2021 as                                                                    
well.                                                                                                                           
                                                                                                                                
10:20:31 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  referred to  the cuts  on Slide  2. He                                                                    
wanted  to   know  the  impact   of  the  overall   cuts  on                                                                    
recipients.                                                                                                                     
                                                                                                                                
10:21:33 AM                                                                                                                   
                                                                                                                                
Ms.  Efird  said  that  the   department  did  not  want  to                                                                    
speculate on  the impacts before the  additional information                                                                    
was received from  CMS. She stated that there was  no way of                                                                    
knowing  what the  impact of  Phase Two  would be  until the                                                                    
state received that information.                                                                                                
                                                                                                                                
10:22:04 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  asked if  the department  expected the                                                                    
committee  to  approve  the budget  with  the  overall  $714                                                                    
million  in cuts,  without  being able  to  tell the  public                                                                    
where  the $527  million in  cuts  would be  made after  the                                                                    
implementation  of Phase  2. He  asked whether  this request                                                                    
was a change from the governors original budget proposal.                                                                       
                                                                                                                                
10:22:17 AM                                                                                                                   
                                                                                                                                
Ms.  Efird  said  that  the governor  had  not  changed  his                                                                    
proposed budget.                                                                                                                
                                                                                                                                
10:22:23 AM                                                                                                                   
                                                                                                                                
Senator   Wielechowski  asked   whether  details   could  be                                                                    
provided  that  explained where  the  $527  million in  cuts                                                                    
would be reflected.                                                                                                             
                                                                                                                                
10:22:48 AM                                                                                                                   
                                                                                                                                
Ms.  Efird replied  that the  department  would provide  the                                                                    
information as soon as possible.                                                                                                
                                                                                                                                
10:23:07 AM                                                                                                                   
                                                                                                                                
Senator  Micciche felt  that no  one in  the administration,                                                                    
that knew  anything about Medicaid,  believed that  the $714                                                                    
million in  cuts was attainable.  He asserted that  a budget                                                                    
needed to  be funded for  FY 2020, which  required real-life                                                                    
data. He  asked what  the department was  doing to  buoy the                                                                    
market of  healthcare in  Alaska; were  cost base  rates for                                                                    
services in other states being considered.                                                                                      
                                                                                                                                
10:24:58 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  replied that several different  provider groups                                                                    
were being investigated.  She noted that any  change is rate                                                                    
would be  controversial; the state would  explore additional                                                                    
options but would  need to evaluate the  possible affects to                                                                    
providers and recipients.                                                                                                       
                                                                                                                                
10:26:00 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof  pointed out the there  was a discrepancy                                                                    
between the numbers  on Slide 2 and Slide  20. She clarified                                                                    
that  Slides  14  through   20  described  cost  containment                                                                    
efforts currently underway by  the department. She commended                                                                    
the committee  for illuminating the  gap; she  believed that                                                                    
moving forward,  the committee would need  to decide whether                                                                    
they  wanted to  budget blindly  in anticipation  of certain                                                                    
events  occurring  on  or before  September  30,  2019.  She                                                                    
requested that  the remainder of  the presentation  focus on                                                                    
the actual  deliverables that  the department  thought could                                                                    
be delivered for FY 2020.                                                                                                       
                                                                                                                                
10:27:10 AM                                                                                                                   
                                                                                                                                
Ms. Stewart stated that Slide 14 had been covered.                                                                              
                                                                                                                                
10:27:25 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  discussed Slide 15, "Phase  I: Cost Containment                                                                    
  Service/Utilization  Adjustments." The  first item  was to                                                                    
adjust  the number  of eligible  visits  per individual  for                                                                    
physical, occupational,  and speech therapy to  12 visits of                                                                    
each type of  service, per year. The limit  would pertain to                                                                    
adults  only,  therapy  visits  for  children  was  not  yet                                                                    
allowed. If  a provider  believed that an  individual needed                                                                    
additional services  to get to  100 percent  capacity, those                                                                    
additional services may be authorized.  The next item was to                                                                    
expand  the   Lock-In   program,  so  that  recipients  that                                                                    
appeared to  be  shopping around  for  pharmaceuticals would                                                                    
be put in  a care management program and  locked into either                                                                    
a specified  primary care provider  or a pharmacy  that best                                                                    
met their  needs. The  third item was  to implement  a nurse                                                                    
hotline  to  address  getting individuals  into  appropriate                                                                    
care in a timely manner.  The final item was the elimination                                                                    
of Adult Preventative  Dental, which was a line  item in the                                                                    
governors   budget   and  a  service  within   the  Medicaid                                                                    
program.                                                                                                                        
                                                                                                                                
10:30:03 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski  looked at Slide 14  and reiterated his                                                                    
question  about the  impacts of  the cuts  on providers  and                                                                    
patients  access to  healthcare. He  wondered whether  there                                                                    
would  be  any impact  analysis  done  before the  plan  was                                                                    
implemented.                                                                                                                    
                                                                                                                                
Ms. Stewart  replied that a  lookback at the history  of the                                                                    
services and  the corresponding beneficiaries  and providers                                                                    
would be evaluated.                                                                                                             
                                                                                                                                
10:31:04 AM                                                                                                                   
                                                                                                                                
Senator  Wielechowski  asked  whether  the  department  felt                                                                    
comfortable  that  there  would  be no  impact  to  patients                                                                    
access  to  providers  if  the  $714  million  in  cuts  was                                                                    
approved by the committee.                                                                                                      
                                                                                                                                
10:31:15 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  said that the  way the that the  department had                                                                    
approached  the reductions  to  services  was the  Two-phase                                                                    
approach. She reiterated that Phase  One contained the items                                                                    
in   FY  2020   that  the   department  believed   could  be                                                                    
accomplished. She  did not believe  that providers  would be                                                                    
lost through those  adjustments. In Phase Two  would be more                                                                    
of  a  restructuring  and  transformation  of  the  Medicaid                                                                    
program and it was hoped  that any changes would be positive                                                                    
and not negative.                                                                                                               
                                                                                                                                
10:32:01 AM                                                                                                                   
                                                                                                                                
Senator Bishop  requested that the department  work with his                                                                    
office on the elimination of Adult Preventative Dental.                                                                         
                                                                                                                                
10:32:25 AM                                                                                                                   
                                                                                                                                
Ms.   Stewart  highlighted   Slide   16,   "Phase  I:   Cost                                                                    
Containment  Service/Utilization Adjustments":                                                                                  
                                                                                                                                
     Recap Service/Utilization Adjustments                                                                                    
          ?Limit Physical Therapy, Occupational Therapy and                                                                   
          Speech Therapy Visits                                                                                               
                Each therapy will be limited to 12 visits                                                                       
               per year                                                                                                         
               ?Additional visits may be granted with prior                                                                     
               approval                                                                                                         
               ?Limits will not apply to children                                                                               
              ?Implementation October 1, 2019                                                                                   
          ?Expand "Lock-In" Program                                                                                           
                 lso known as Medicaid Care Management                                                                          
               program                                                                                                          
               ?Estimate of 3,200 additional individuals                                                                        
               will be added to the program in 2020                                                                             
          ?Implement 24-hour Nurse Hotline                                                                                    
               ?Provide recipients with resource to discuss                                                                     
               health issues                                                                                                    
               ?Reduce excess utilization by connecting                                                                         
               recipients with appropriate level of care                                                                        
              ?Implementation January 1, 2020                                                                                   
          ?Eliminate Adult Dental                                                                                             
               ?Optional service                                                                                                
               ?Adult emergency dental services remain                                                                          
               covered                                                                                                          
                                                                                                                                
10:32:33 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  addressed Slide 17, "Phase  I: Cost Containment                                                                    
  Administrative/Program  Changes." The  adjustments totaled                                                                    
a cut of $48,609.7, in the following areas:                                                                                     
                                                                                                                                
     • Reduced Timely Filing Allowance                                                                                          
     • Streamline Cost of Care Collection                                                                                       
     • Reclaiming Medicare Part B Premium                                                                                       
     • Tribal Reclaiming  All Services                                                                                          
     • Tribal Reclaiming Medicare Part A/B Premium                                                                              
     • Transportation Efficiencies                                                                                              
     • Transition Behavioral Health Grants                                                                                      
     • Electronic Visit Verification                                                                                            
     • Transition Services to 1915(k)                                                                                           
                                                                                                                                
Ms.   Stewart  provided   additional   details  about   each                                                                    
adjustment.                                                                                                                     
                                                                                                                                
10:36:15 AM                                                                                                                   
                                                                                                                                
Senator Wilson asked about  the Transition Behavioral Health                                                                    
Grants. He understood that when  the Medicaid expansion took                                                                    
place behavioral  health grants  were decreased,  between $8                                                                    
million  and $12  million,  in the  hope  that the  Medicaid                                                                    
billables would match  the decreased grants. He  said he had                                                                    
asked the  department to show where  community mental health                                                                    
providers had  been able to  bill Medicaid for  amounts like                                                                    
their  behavior health  grants and  had been  told that  the                                                                    
information was  unavailable until end  of 2018. He  said he                                                                    
had asked the  question again, post 2018, and  was told that                                                                    
there was  no way  to determine  that the  Medicaid dollars,                                                                    
under  the 1115  waiver, would  match the  behavioral health                                                                    
grants. He felt that this  was a simple data base comparison                                                                    
and expressed concern that the information was unavailable.                                                                     
                                                                                                                                
10:38:18 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  responded that  she was  not familiar  with the                                                                    
history of  behavioral health issues. She  relayed that most                                                                    
of the services  currently being funded by  the grants would                                                                    
become  Medicaid services  once the  1115 waiver  moved into                                                                    
effect, which would take time.  She did not know whether all                                                                    
providers were enrolled in the  Medicaid program yet because                                                                    
the second part  of the 1115 waiver had not  yet passed. The                                                                    
only  portion  that  had  been  approved  to  date  was  the                                                                    
Substance Use  Disorder portion, so there  was a possibility                                                                    
that the  infrastructure had not  yet been developed  to get                                                                    
the information to Senator Wilson.                                                                                              
                                                                                                                                
10:39:40 AM                                                                                                                   
                                                                                                                                
Senator  Wilson understood  that  the  people receiving  the                                                                    
behavioral  health  services  under   the  grants  were  not                                                                    
Medicaid eligible.  He wondered  how Medicaid would  pay for                                                                    
the services,  formerly covered by the  grants, for patients                                                                    
who did not qualify for Medicaid.                                                                                               
                                                                                                                                
10:40:07 AM                                                                                                                   
                                                                                                                                
Ms. Stewart said  that the first portion of  the waiver that                                                                    
was approved  in November  2019 was  for different  types of                                                                    
Substance Use  Disorder services  that had not  been covered                                                                    
by  the  Medicaid  program   prior.  Individuals  that  were                                                                    
Medicaid  eligible were  not  able to  get  access to  those                                                                    
services  except through  the grant  program. She  said that                                                                    
because  of the  change,  the services  had become  Medicaid                                                                    
eligible  services  and   individuals  could  receive  those                                                                    
services under Medicaid. She expected  that Phase Two of the                                                                    
1115 waiver would add more  services that were not currently                                                                    
under Medicaid.                                                                                                                 
                                                                                                                                
10:41:27 AM                                                                                                                   
                                                                                                                                
Senator  Olson spoke  to Slide  17 and  asked what  services                                                                    
would be  reduced as a  result of the $12  million reduction                                                                    
in Transitional Behavioral Health Grants.                                                                                       
                                                                                                                                
Ms.  Efird  believed  that there  would  be  collection  for                                                                    
federal  dollars  in  the Medicaid  budget.  She  felt  that                                                                    
federal  dollars coming  in thorough  the 1115  waiver would                                                                    
make up for the reduction.                                                                                                      
                                                                                                                                
10:42:34 AM                                                                                                                   
                                                                                                                                
Senator  Olson asked  what would  be cut  or reduced  if the                                                                    
federal dollars did not materialize.                                                                                            
                                                                                                                                
10:42:39 AM                                                                                                                   
Ms. Efird replied  that nothing would be  cut. She furthered                                                                    
that  if   the  department  did  not   have  enough  federal                                                                    
authority to accept the  funds, additional funding authority                                                                    
could  be requested  from the  Legislative Budget  and Audit                                                                    
Committee.                                                                                                                      
                                                                                                                                
10:43:03 AM                                                                                                                   
                                                                                                                                
Co-Chair  von  Imhof  expressed concern  in  the  timing  of                                                                    
decreasing $12 million in grants  before the 1115 waiver was                                                                    
fully approved.                                                                                                                 
                                                                                                                                
10:43:25 AM                                                                                                                   
                                                                                                                                
Ms.   Stewart  highlighted   Slide   18,   "Phase  I:   Cost                                                                    
Containment  Administrative/Program Adjustments":                                                                               
                                                                                                                                
     Recap Administrative/Program Adjustments                                                                                 
                                                                                                                              
          ?Reduce Timely Filing                                                                                               
               ?Adjusts  the  time  a provider  may  file  a                                                                    
             claim from 12 months to 6 months                                                                                   
               ?Will   reduce   false   claims   and   claim                                                                    
               submission errors                                                                                                
               ?October 1, 2019                                                                                                 
           Streamline Collection of Cost of Care Amounts                                                                      
               ?Improve collection of required amounts                                                                          
         ?Reclaiming for Medicare Part B Premiums                                                                             
               ?Program  can claim  100% match  for Medicare                                                                    
               Part B premiums paid for those 120-138% FPL                                                                      
          Increase Tribal Reclaiming All Services                                                                             
               ?Identify   additional    opportunities   for                                                                    
               tribal  reclaiming with  total increase  from                                                                    
               $84 million to $104 million per year                                                                             
           Tribal Reclaiming -Medicaid Part A/B Premium                                                                       
               ?Program  can claim  100% match  for Medicare                                                                    
               Part  B premiums  paid  on  behalf of  Alaska                                                                    
               Natives 120-138%  FPL  will work with  CMS to                                                                    
               claim all payments made 0-138% FPL                                                                               
                                                                                                                                
10:43:39 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  addressed Slide 19, "Phase  I: Cost Containment                                                                    
  Administrative/Program Adjustments":                                                                                          
                                                                                                                                
     ?Transportation Efficiencies                                                                                             
          ?Pay    provider   posted    rates   for    ground                                                                    
          transportation                                                                                                        
          ?More closely audit requests for non-emergency                                                                        
          air transportation and accommodations                                                                                 
          ?Increase use of bus passes as appropriate                                                                            
          ?Implementation October 1, 2019                                                                                       
     ?Transition Behavioral Health Grants                                                                                     
          ?Services currently funded by grant dollars will                                                                      
         transition to Medicaid under 1115 waiver                                                                               
          ?Grants reduced from $51 million to $39 million                                                                       
      Electronic Visit Verification                                                                                           
          ?Improve verification of services delivered under                                                                     
         Home and Community Based Services waivers                                                                              
          ?Reduce excess hours billed                                                                                           
          ?Implementation January 1, 2020                                                                                       
      Transition Additional Services to 1915(k)                                                                               
          ?No change to service delivery                                                                                        
          ?Eligible for higher FMAP                                                                                             
          ?Implementation January 1, 2020                                                                                       
                                                                                                                                
10:43:45 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  discussed Slide 20, "Phase  I: Cost Containment                                                                    
  Total  Adjustments." The slide  showed the  numbers, under                                                                    
Phase 1,  that the  department believed  was possible  in FY                                                                    
2020. The adjustment totaled $186,979.6.                                                                                        
                                                                                                                                
Co-Chair von Imhof said that  the $249 million decrease from                                                                    
Slide 2 left a $146  million gap when considering the $102.9                                                                    
million on slide 20. She  noted that there was an additional                                                                    
federal gap  and the  committee would  need to  grapple with                                                                    
both. She  highlighted previous questions  on the  effect of                                                                    
the cuts on access to healthcare.                                                                                               
                                                                                                                                
10:46:26 AM                                                                                                                   
                                                                                                                                
Senator Micciche thought that the  committee had to focus on                                                                    
the  $186 million  in total  fund reductions,  which was  25                                                                    
percent  of the  governors   total budget  cuts. He  thought                                                                    
that  the  number  was  attainable.   He  asserted  that  he                                                                    
supported making Medicaid as  streamlined and cost effective                                                                    
as possible.                                                                                                                    
                                                                                                                                
10:47:24 AM                                                                                                                   
                                                                                                                                
Senator  Wilson  requested a  cost  comparison  of what  the                                                                    
state  paid  to  providers  compared  to  other  states  and                                                                    
whether a small co-pay had been considered.                                                                                     
                                                                                                                                
10:48:26 AM                                                                                                                   
                                                                                                                                
Ms.   Stewart  replied   that   she   could  provide   those                                                                    
comparisons. She  said that the state  was currently allowed                                                                    
to implement  co-pays for  beneficiaries and  were currently                                                                    
using  some.  She said  that  further  information could  be                                                                    
provide to the committee. She noted  that there was a cap at                                                                    
the  federal  level for  how  much  could  be charged  to  a                                                                    
Medicaid  beneficiary  for  any   cost  sharing  within  the                                                                    
program.                                                                                                                        
                                                                                                                                
10:50:25 AM                                                                                                                   
                                                                                                                                
Senator  Wielechowski asked  whether there  was any  concern                                                                    
about the cut  to Adult Preventative Dental and  if it could                                                                    
increase costs of emergency dental services.                                                                                    
                                                                                                                                
10:50:43 AM                                                                                                                   
                                                                                                                                
Ms.  Stewart responded  that emergency  dental was  the most                                                                    
access of  the dental services;  while it was  believed that                                                                    
there  would  be  an increase  in  emergency  services,  the                                                                    
number was already quite high.                                                                                                  
                                                                                                                                
10:51:19 AM                                                                                                                   
                                                                                                                                
Senator  Wielechowski asked  whether  the  numbers had  been                                                                    
modeled. He thought that  cutting preventative services that                                                                    
eventually ended up in emergency  services did not seem like                                                                    
a cost savings.                                                                                                                 
                                                                                                                                
10:51:45 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  replied that there  had been no  modeling done.                                                                    
She said  that given the particular  population, the largest                                                                    
number  of services  being received  through dental  was not                                                                    
preventative, but  emergency dental services. She  said that                                                                    
staff was  not available  to do modeling  of the  numbers on                                                                    
adult dental.                                                                                                                   
                                                                                                                                
10:52:43 AM                                                                                                                   
                                                                                                                                
Senator Bishop argued that preventative  care was the way to                                                                    
go; spending money  on the front end would  save spending on                                                                    
the backend.                                                                                                                    
                                                                                                                                
10:53:14 AM                                                                                                                   
                                                                                                                                
Senator Olson asked  whether Phase Two pertained  to the use                                                                    
of block grants.                                                                                                                
                                                                                                                                
10:53:25 AM                                                                                                                   
                                                                                                                                
Ms.  Stewart  replied  that  a suite  of  options  would  be                                                                    
available  to the  state,  block grants  would  only be  one                                                                    
option.                                                                                                                         
                                                                                                                                
10:53:33 AM                                                                                                                   
                                                                                                                                
Senator Olson  queried the  plan for  when the  block grants                                                                    
ran out before the need for services.                                                                                           
                                                                                                                                
10:53:45 AM                                                                                                                   
                                                                                                                                
Ms. Stewart said that she  was not familiar with the program                                                                    
and could not answer the program.                                                                                               
                                                                                                                                
10:53:59 AM                                                                                                                   
                                                                                                                                
Senator  Olson thought  that either  the department  reduced                                                                    
services or asked the legislature for supplemental funding.                                                                     
                                                                                                                                
10:54:06 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  stated that she  did not know what  the options                                                                    
would look like.                                                                                                                
                                                                                                                                
10:54:18 AM                                                                                                                   
                                                                                                                                
Co-Chair von  Imhof remined the committee  that the question                                                                    
was hypothetical;  while block grants were  being bandied in                                                                    
the press, the parameters were still unknown.                                                                                   
                                                                                                                                
10:54:29 AM                                                                                                                   
                                                                                                                                
Senator Shower  spoke to  underfunding under  the Affordable                                                                    
Care  Act  (ACA).  He asked  whether  the  department  would                                                                    
demand  that  the  federal government  fully  fund  IHS  and                                                                    
veterans affairs.                                                                                                               
10:55:16 AM                                                                                                                   
                                                                                                                                
Ms. Stewart  replied that  the Medicaid  program paid  off a                                                                    
rate  set by  the federal  government for  services and  IHS                                                                    
would work  independently with  the federal  government. She                                                                    
said that  an issue  that has  been worked on  was to  get a                                                                    
process in place to replace  the laborious tribal reclaiming                                                                    
to get the 100 percent  reimbursement for services delivered                                                                    
to IHS individuals.                                                                                                             
                                                                                                                                
10:56:55 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof discussed housekeeping.                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:57:10 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:57 a.m.                                                                                         

Document Name Date/Time Subjects
040819 FY2020 Medicaid Services Presentation for SFIN Committee.pdf SFIN 4/8/2019 9:00:00 AM
Medicaid Services
040819 DHSS Cost Containment - Implementation Schedule.pdf SFIN 4/8/2019 9:00:00 AM
Medicaid Services