Legislature(2015 - 2016)SENATE FINANCE 532
01/27/2016 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB78 | |
| SB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 78 | TELECONFERENCED | |
| SB 74 | |||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
January 27, 2016
9:03 a.m.
9:03:32 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:03 a.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Peter Micciche, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Valerie Davidson, Commissioner, Department of Health and
Social Services; Jon Sherwood, Deputy Commissioner,
Medicaid and Health Care Policy, Department of Health and
Social Services; Heather Shadduck, Staff, Senator Pete
Kelly.
PRESENT VIA TELECONFERENCE
SUMMARY
SB 74 MEDICAID REFORM/PFD/HSAS/ER USE/STUDIES
SB 74 was HEARD and HELD in committee for further
consideration.
SB 78 MEDICAL ASSISTANCE COVERAGE; REFORM
SB 78 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 78
"An Act relating to medical assistance reform
measures; relating to eligibility for medical
assistance coverage; relating to medical assistance
cost containment measures by the Department of Health
and Social Services; and providing for an effective
date."
9:04:23 AM
Co-Chair MacKinnon explained that the Medicaid reform bill
had been before the committee in the previous session. She
relayed that the CS currently before the committee carried
with it the support of the administration.
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES (DHSS), concurred.
Co-Chair Kelly MOVED to ADOPT proposed committee substitute
for SB 78(FIN), Work Draft 29-GS1055\H (Glover, 1/25/16).
There being NO OBJECTION, it was so ordered.
9:05:43 AM
Co-Chair MacKinnon referred to a letter dated January 25,
2016, from the Senate Finance Committee to the Department
of Health and Social Services, which contained the
following five questions (copy on file):
1. Is the Medicaid software system certified? If not,
when did we apply for certification and when will it
be certified?
2. In April you had identified 100 defects in the
software system. What defects remain? How many errors
are we still aware of? Who do the errors affect? Are
the defects critical, high, moderate, or low?
3. How quickly are applications being processed?
4. How quickly are providers being paid?
5. What is the legal status of our lawsuit with Xerox?
Have other states in legal challenges with Xerox
systems been certified? Has Xerox completed their
corrective action plan? Is there a financial award? If
so, how much are we requesting as compensation?
Co-Chair MacKinnon said that it was not the intent of the
committee to discuss policy issues contained in the
legislation, but to have a brief discussion about where the
state was in the reform process.
Commissioner Davidson stated that she was prepared to speak
to the 5 questions put forth by the committee.
Co-Chair MacKinnon hoped that the administration could
explain the specific changes in the current version of
legislation, and how each section of the bill would work to
address the issue of Medicaid reform in the state.
Commissioner Davidson testified that the state's Medicaid
program, in its current form, was not sustainable and that
reform was essential. She addressed question 1, submitted
by the committee:
Is the Medicaid software system certified? If not,
when did we apply for certification and when will it
be certified?
Commissioner Davidson explained that in December the
department had met with the Centers for Medicare and
Medicaid Services (CMS) (who provide system certification)
and their contractor. She shared that the next meeting with
CMS, and their contractor, was scheduled for February 1,
2016.
9:08:17 AM
Senator Dunleavy understood that the system was not
currently certified.
Commissioner Davidson replied in the affirmative.
9:08:32 AM
Co-Chair MacKinnon clarified that deeper discussions of the
questions contained in the letter would happen in
subcommittee. She highlighted that there had been a delay
in the certification process, but hoped the present
discussion on the matter would be brief.
Commissioner Davidson admitted that certification had been
delayed, and relayed that the department was working toward
certification.
9:09:32 AM
Commissioner Davidson addressed question 2:
In April you had identified 100 defects in the
software system. What defects remain? How many errors
are we still aware of? Who do the errors affect? Are
the defects critical, high, moderate, or low?
Commissioner Davidson enumerated that there were currently
121 defects in the system. She said that most of the
defects were new; as old defects were fixed, new defects
were created in the coding. She relayed that 1 critical
defect, 6 high defects, 111 moderate defects, and 3 low
defects had been discovered in the system. She said that
the defects were affecting 3 different service categories:
prior authorization for services - behavioral health prior
authorization for approved units of service, prior
authorization units of service for enhanced adult dental
services, and car coordination services for enrollees on
the Tax Equity and Fiscal Responsibility Act (TEFRA)
Waiver.
9:10:57 AM
Co-Chair Kelly queried the definition of "defect" as it
applied to the software system.
Commissioner Davidson explained that the defect
classification was based on the level of impact it had on
the payment system. She noted that there had been defects
in the old legacy system previously used by the state. She
asserted that no software system would be 100 percent
defect-free. She shared that the goal was to minimize the
defect number.
9:12:04 AM
Co-Chair Kelly understood that a defect was essentially a
glitch that misdirected data in the system.
Commissioner Davidson answered in the affirmative. She
reiterated that the defects considered critical, or high,
were those that impacted payments to providers for services
rendered.
9:12:43 AM
Co-Chair Kelly asked for the definition of a "unit of
service".
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained
that a unit of service varied according to the type of
service. Typically, professional services were listed under
numerous procedure codes; submitted claims identified the
service provided, and the number of service units provided.
9:14:01 AM
Co-Chair MacKinnon noted that a written hard copy of the
answers to the questions that the committee had submitted
to the department was anticipated.
Commissioner Davidson addressed question 3:
How quickly are applications being processed?
Commissioner Davidson relayed that that the department
processed 8,107 Medicaid application in December 2016, over
20 percent of which were processed within a week of
submission. He furthered that 62 percent were 60 days old,
or less; 38 percent were over 60 days old.
9:14:58 AM
Commissioner Davidson addressed question 4:
How quickly are providers being paid?
Commissioner Davidson responded that provided were paid in
the same week that claims were submitted, or the week
after, with the exception of the 3 defects previously
mentioned. She stated that the department paid an average
of 107,000 claims per week worth approximately $30 million.
She spoke to repayment of advance payments that the
department made to providers when the system was
particularly dysfunctional. She said that providers had
repaid a total of $81.6 million, and the state had
approximately $83.7 million in outstanding payments.
Provider repayments were ongoing.
9:16:25 AM
Co-Chair MacKinnon asserted that the state had extended
advance payments totaling $164 million.
Commissioner Davidson concurred.
9:16:43 AM
Senator Hoffman queried the total dollar amount for the
number of claims that were 60 days overdue.
Commissioner Davidson clarified that it was the
applications for eligibility that had been overdue, not the
payments. She offered to provide the information regarding
the payments.
9:17:11 AM
Commissioner Davidson addressed question 5:
What is the legal status of our lawsuit with Xerox?
Have other states in legal challenges with Xerox
systems been certified? Has Xerox completed their
corrective action plan? Is there a financial award? If
so, how much are we requesting as compensation?
Commissioner Davidson explained that case before the Office
of Administrative Hearings was currently suspended. She
said that a mediation with Xerox was scheduled for February
9, 2016. She stated that compensation would be a topic of
discussion during the mediation. She relayed that some
providers had filed their own class-action suits against
Xerox. She said that the department was unaware of other
states engaged in litigation with Xerox over their MMIS
System. She shared that North Dakota and New Hampshire had
certified systems in 2015, but Alaska's system was
different because Alaska was a fee-for-service state. She
highlighted that Xerox had 5 items remaining on their
corrective action plan that needed to be completed:
· an Edit 8040
· TEFRA care coordination services claim processing
· MRO14 Report (Medicaid cost reporting)
· National Correct Coding Initiative Report
· Mass Adjustment Reprocessing
9:21:30 AM
Vice-Chair Micciche spoke to the assumption how much the
department would be required to run and populate the
system, prior to moving to the Xerox MMIS system. He
queried the level of labor insensitivity prior to going
live.
Commissioner Davidson stated that the early implementation
was much more labor intensive than anticipated. She
contended the new system was more efficient than the old
legacy system, and there had been an increase in the total
amount of total average weekly claims paid.
9:23:02 AM
Co-Chair MacKinnon reminded the committee that the bill
would be moving to subcommittee and that policy inquiries
should presently be limited.
Co-Chair MacKinnon expressed concern that using an
uncertified system put Alaska at risk. She wondered how far
back in time claims could be submitted to the federal
government.
9:24:11 AM
Senator Olson observed that due to systemic defects, the
number of providers available for Medicare patients was
dwindling. He wondered whether Medicaid expansion had
affected the number of providers.
Commissioner Davidson responded that in Alaska, Medicaid
paid more than Medicare; the department had not seen
providers discontinuing their participation in Medicaid.
She said a "refresh" of Medicaid providers had been
conducted by the department in 2015; providers had been
asked to re-enroll as Medicaid providers because there were
Medicaid providers in the old system who were no longer
providing services.
9:25:50 AM
Senator Dunleavy asked what the current version of the bill
was meant to accomplish.
Commissioner Davidson asserted that the department took
reform very seriously, and many of the changes that had
been incorporated into the committee substitute were new
reform opportunities that had been identified over the
interim. She added that research had included looking to
other states for guidance and taking advantage of the best
ideas.
Senator Dunleavy asked what the bill would cost the state,
and did the department hope to recoup monies as a result of
the reforms.
Co-Chair MacKinnon asked Commissioner Davidson to contain
remarks to a high-level overview, and restated that the
policy discussions would occur in subcommittee.
Commissioner Davidson stated that the department would
provide fiscal notes for more detail, but did expect reform
opportunities to provide better services for less cost.
9:27:48 AM
Commissioner Davidson relayed that the department had
identified reform efforts already existing and ongoing in
the department in 2015, including the "over-utilizer" of
emergency services. She furthered that pharmacy reform and
utilization control initiatives had been priorities. She
stated that additional reforms had been included in the
original bill introduced by the governor. Ove the interim,
the department had undertaken an effort to bring national
health policy expertise and actuarial analysis to the
process. She shared that the resulting report of the work
by the department and Agnew Beck Consulting had been
released and could be found at:
dhss.alaska.gov/HealthyAlaska/Pages/Medicaid_
Redesign.aspx.
Commissioner Davidson stated that the bill focused on, and
created, an Alaska Medicaid False Claims Act, which
mirrored the federal statute and provided financial
incentives for individual Alaskans who brought fraud to the
attention of the Attorney General. This would allow the
state to recover losses from fraud and overpayments. She
relayed that the bill proposed a number of reform
opportunities that had not been included in pervious bill
versions, such as, primary care initiatives, and increased
1115 Waiver opportunities. She stressed that not investing
in a decent behavioral health system impacted the state in
three different ways: increased incarceration, increased
child-maltreatment rates, and increased emergency room
overutilization. She continued that the bill would create
the public/private opportunity to address the non-urgent
use of emergency room departments, and the opportunity to
work with the tribal health system in order to maximize 100
percent federal match opportunities. One of those
opportunities included finalizing a national policy change
issued by Secretary Burwell, of the United States
Department of Health and Human Services, in which it had
been proposed to allow states like Alaska to recoup travel
and accommodation services, under certain conditions, at
100 percent federal match. Another opportunity was to
expand referred services from a tribal organization to a
service not provided in the tribal system to be considered
for a 100 percent federal match.
9:32:45 AM
Senator Hoffman asked whether the increased travel
reimbursement included Medivac support in rural Alaska.
Commissioner Davis replied in the affirmative.
9:33:06 AM
Co-Chair MacKinnon asked Mr. Sherwood to address the
sectional analysis.
9:33:52 AM
Mr. Sherwood discussed the sectional analysis for CSSB
78(FIN):
Section 1 Adopts intent language related to the
need to redesign the state's Medicaid program to
provide financial sustainability, and sets out goals
for redesign of the program.
Section 2 Adopts AS 09.10.075, which establishes time
limits in which a person may or may not bring an
action under new sections AS 09.58.010-09.58.950, the
Alaska Medicaid False Claims Act, and a statute of
limitations. An action may be brought within six years
of when the act or omission was committed, or three
years after the date when the act or omission was
known or reasonably should have been known by the
attorney general and department, but no action may be
brought for a violation more than ten years after the
date of violation.
Section 3 Amends AS 09.10.120(a) to include reference
to new subsection AS 09.10.075, creating an exception
for Medicaid fraud action time limits.
Section 4 Adopts AS 09.58, which establishes Alaska
Medicaid False Claim and Reporting Act (AFMCA). This
section includes several subsections related to
liability for certain acts and omissions, civil
actions, rights of participants in such actions,
awards allowed, actions that are not allowed, limits
state liability, and outlines whistleblower
protections. This section identifies the fraudulent or
false acts that can be committed by a Medicaid
provider, a corporation, partnership or individual, or
recipient in effort to defraud the State. This section
also outlines provisions by which a recipient or
provider may reduce the amount of liability from
actual damages.
This section also allows a private citizen to
pursue a false claim action in the superior court,
outlines the provision by which they may file a suit
or an extension of time in which to bring an action,
and the responsibilities and time-line in which the
attorney general must investigate and respond to the
claim. This section also identifies the options
available to private persons, should the attorney
general dismiss the case due to lack of evidence,
including pursuing the suit of their own accord.
Throughout the process, this section states that the
attorney general holds the rights to intervene,
settle, dismiss the case, request investigation
assistance from the department and bring civil action
in superior court.
This section further allows the attorney general to
issue subpoenas to compel records in connection with
an investigation, and outlines the courts' authority
to issue an order to comply and punishments if the
Medicaid provider or recipient(s) fail or refuse to
comply with the courts order. Further, by this section
the attorney general may elect to interview and file
or amend a new complaint based on conduct,
transactions or acts set out in the complaint.
Further, this section provides protections for
the private person acting as a whistleblower and limit
the liability of the state and outlines time limits
for bringing action.
Finally, this section includes department
regulatory authority, identifies the limits of
punitive damages, and provides definitions related to
this section.
Section 5 Amends AS 37.05.146(c) to include a new
paragraph (88) adding monetary recoveries from the
Alaska Medicaid False Claims Act to the program and
non-general fund program receipts definitions.
Section 6 Amends AS 40.25.120, a conforming amendment
to include new AS.09.58.010 to existing public records
statutes.
Section 7 Amends AS 47.05.010 to include a
requirement that DHSS develop a health care delivery
model that encourages wellness and disease prevention.
Section 8 Amends AS 47.05.200, Medicaid Audits
statute, changes the number of program audits to no
less than fifty per year and adding that the state
shall attempt to minimize concurrent state or federal
audits.
Section 9 Adopts AS 47.05.200 that the Department may
assess interest and penalties on overpayments,
calculating interest using existing statutory rates.
Section 10 Adopts AS 47.05.235, which applies
the duty of enrolled Medicaid providers to conduct one
annual review, identify overpayment and report
findings to the department within ten business days,
and create a repayment agreement with the state.
Section 11 Adopts AS 47.05.250, which authorizes
the department to develop regulations to impose civil
fines and sets limits on the amount of the fines.
Adopts AS 47.05.260, which authorizes the
department, after application to the court and a
finding of probable cause, to seize certain real or
personal property of a medical assistance provider who
has committed or is committing medical assistance
fraud, to offset the cost of the alleged fraud. The
court may authorize seizure of real or personal
property to cover the cost of the alleged fraud.
This section provides a list of possible real or
personal properties, including bank accounts,
automobiles, boats, airplanes, stocks and bonds, and
inventory.
This section, upon issuance of the court order of
seizure, prohibits the owners of property from
disposing of the property, with a provision of good
faith in the event property is sold without written
permission of the court.
This section further authorizes the forfeiture of any
seized property if the Medicaid provider is eventually
convicted of medical assistance fraud. This section
provides instructions to the state to sell or return
properties, and depositing funds from disposal of
seized properties.
This section also allows for the action of forfeiture
to be joined with any alternative civil or criminal
action for damages.
9:39:57 AM
Mr. Sherwood continued with the sectional analysis:
Section 12 Amends AS 47.07.036 by adding new
subsections (d) - (f) to outline cost containment and
reform measures DHSS must undertake, including seeking
demonstration waivers related to innovative service
delivery models, applying for other options under the
Social Security Act to obtain or increase federal
match, and improving telemedicine for Medicaid
recipients. This section also requires DHSS to apply
for an 1115 waiver for a demonstration project for one
or more groups of Medicaid recipients in one or more
geographic area. The demonstration project may
include managed care organizations, community care
organizations, patient-centered medical homes, or
other innovative payment models.
Section 13 Amends 47.07.900 (4), Medicaid
Administration definitions, by removing the grantee
status requirement for outpatient community mental
health clinics serving Medicaid patients.
Section 14 Amends AS 47.07.900 (17) by removing
the grantee/contractor status requirement from drug
and alcohol treatment centers and outpatient community
mental health clinics. This change, and the one in the
previous section, allows mental health and drug
treatment service providers who do not receive grants
from the department to become enrolled Medicaid
providers and deliver services to Medicaid recipients.
Section 15 Adds a new section to outline court
rule amendments as a result of enactment of "section
2, 3, and 4 " (AMFCA) of this Act.
Section 16 Requires DHSS to collaborate with
Alaska Tribal health organizations and the U.S. DHHS
to implement new federal policy regarding 100% federal
funding for services provided to Medicaid-eligible
American Indian and Alaska Native individuals.
Section 17 Requires DHSS to implement the primary
care case management system authorized under AS
47.07.030(d). The purpose of this new system is to
increase Medicaid enrollees' use of primary and
preventive care, while decreasing the use of specialty
care and hospital emergency department services.
Section 18 Requires DHSS to develop a plan to
strengthen the health information infrastructure,
including health data analytics capability, to support
transformation of the health system in Alaska.
Section 19 Authorizes DHSS to support one or more
private initiatives designed to reduce nonurgent use
of emergency departments by Medicaid recipients.
Section 20 Authorizes DHSS to contract with one or
more accountable care organizations to demonstrate the
use of local, provider-led coordinated care entities
that agree to monitor care across multiple care
settings, and that will be accountable to DHSS for the
overall cost and quality of care. DHSS is authorized
to participate in public-private partnerships with
other purchasers of health care services, and is
required to implement an evaluation plan to measure
the success of this demonstration project.
Section 21 Instructs DHSS to immediately amend the
Medicaid state plan to be consistent with this Act,
and submit the amendments to the federal government
for approval.
Section 22 Authorizes DHSS to adopt regulations to
implement provisions of this Act.
Section 23 Provides that Section 4 is effective
conditional on Section 15 receiving a two-thirds
majority vote. The new sections of law creating the
civil Medicaid false claims act do not take effect
unless the indirect court rule change sections of the
bill receive the necessary two-thirds vote.
Section 24 Provides that Section 22 is effective
immediately under AS 01.10.070(c).
Section 25 Provides that, except for Section 22,
the provisions of this Act take effect on July 1,
2016.
9:44:08 AM
Senator Hoffman asked about Section 14, and wondered how it
changed the current system and care for individuals on the
FASD spectrum.
Mr. Sherwood explained that the principal effect the
section would bring more substance abuse treatment
providers into the Medicaid system. He suggested that it
would make substance abuse treatment more readily
available, with shorter wait times.
Senator Hoffman asked whether the legislation offered any
other preventative measures.
Mr. Sherwood referred to Section 7 of the bill, which
addressed the duties of the department, which required the
department to develop a health care delivery model and
encourage wellness and disease prevention.
Co-Chair MacKinnon directed attention to Page 13, line 16
of the legislation.
9:47:10 AM
Commissioner Davidson stated that one critical component
included in the Agnew-Beck report was a demonstration
project that would be allowed under the proposed
legislation for accountable care organization demonstration
projects. She said that accountable care organizations were
a way to be able to manage the care of a defined
population.
9:49:08 AM
Senator Olson wondered how many groups provided input in
the crafting of the legislation.
Commissioner Davidson responded that the Agnew-Beck report
listed all of the participants in the Appendix and included
tribal health providers. She added that the webinars that
had been provided were available on the department's
website.
Senator Olson asked why the provider would be penalized for
overpayments as well as an interest payment.
9:51:27 AM
Co-Chair MacKinnon articulated that she was going to send
both Medicaid reform bills to a subcommittee consisting of
the following lawmakers:
Co-Chair MacKinnon, Chair
Co-Chair Kelly
Vice-Chair Micciche
Senator Olson
Senator Cathy Giessel
Co-Chair MacKinnon said that Senator Olson and Senator
Giessel both had expertise in the medical field that would
supply additional insight into the bills. She requested
that Senator Olson submit his previous question to the
department in written form.
9:54:26 AM
Vice-Chair Micciche wanted 2 questions on the record, but
did not need them to be answered.
Co-Chair MacKinnon asserted that the subcommittee was
created with geographic and regional sensitivities in mind.
She added that the subcommittee would meet at 1:30pm on
Monday, Wednesday, and Friday into the future.
9:55:48 AM
Vice-Chair Micciche commented that the department was the
second highest cost-driver in the state, and shared that he
was very focused on false claims. He believed that it was a
fairness issue for all Alaskans. He asked about the statute
of limitations for the reporting of false claims. He asked
for further explanation of Sections 2 and 3. He asked about
the change of the word "relator" to "person", and whether
the definition included state employees.
9:57:37 AM
Co-Chair MacKinnon referred to Section 4, and asked about
the difference between "false" and "fraud". She asked about
Section 8, and wondered if the state would have a
memorandum of understanding (MOU) with the federal
government to receive federal audit finding results. She
spoke to Section 13, and queried the role of the grantee.
9:58:41 AM
Co-Chair MacKinnon directed the public to
www.akleg.gov/BASIS for meeting documents. She referred to
the sectional analysis and a memo from Legislative Legal.
She announced that all legislative staff was welcome to
attend the SB 78 subcommittee meetings.
SB 78 was HEARD and HELD in committee for further
consideration.
9:59:54 AM
AT EASE
10:01:29 AM
RECONVENED
SENATE BILL NO. 74
"An Act relating to permanent fund dividends; relating
to a medical assistance reform program; establishing a
personal health savings account program for medical
assistance recipients; relating to the duties of the
Department of Health and Social Services; establishing
medical assistance demonstration projects; and
relating to a study by the Department of Health and
Social Services."
10:01:41 AM
Co-Chair Kelly stated that Medicaid had become
unsustainable in its current form and needed to be
reformed. He noted that his office had hired a private
contractor to draft a Medicaid reform bill over the
interim, the result of which was SB 74. He relayed that the
heart of the bill was the case management system, otherwise
called managed care, and added that Alaska was one of only
12 systems that did not have a case management system. He
relayed that through a case management system the state
could regulate emergency facility use, make sure that
people were using cheaper, generic prescription drugs as
much as possible, restrict travel for care, and to keep
recipients from engaging in self-referral to specialists
when primary care physicians were sufficient. He said that
the bill contained a feasibility study that would direct
the administration toward privatization. He added that the
bill contained language on fraud prevention and recovery.
10:06:38 AM
Co-Chair MacKinnon pointed out to the committee that there
were individuals available online for questions.
10:07:22 AM
HEATHER SHADDUCK, STAFF, SENATOR PETE KELLY, began the
sectional analysis.
10:08:20 AM
AT EASE
10:11:55 AM
RECONVENED
Ms. Shadduck continued discussing the Sectional Analysis
for CSSB 74:
Section 1: Allows the Department of Health and
Social Services (DHSS) to enter into a contract
through the competitive bidding process under the
State Procurement Code for durable medical
equipment or specific medical services provided
in the Medicaid program.
Section 2: Requires the department to establish a
computerized eligibility verification system to
verify eligibility and to deter waste and fraud.
It also requires DHSS enter into a competitively
bid contract with a third-party vendor for the
eligibility verification system.
Section 3: Adds new sections establishing civil
penalties for false claims for medical assistance
and authorizing the Department of Health and
Social Services (the department) to assess civil
penalties against medical assistance providers.
Section 4: Requires DHSS to design, adopt, and
implement a medical assistance (Medicaid) reform
program. Requires the department to prepare and
submit a report about reforms, savings, and costs
related to the Medicaid program. Provides for a
definition of "telemedicine."
Ms. Shadduck discussed the sub-sections related
to Section 4:
(1) referrals to community and social support
services, including career and education
training services available through the
Department of Labor and
Workforce Development under AS 23.15, the
University of Alaska, or other sources;
(2) distribution of an explanation of medical
assistance benefits to recipients for health
care services received under the program;
(3) expanding the use of telemedicine for primary
care, behavioral health, and urgent care;
(4) enhancing fraud prevention, detection, and
enforcement;
(5) reducing the cost of behavioral health,
senior, and disabilities services provided to
recipients of medical assistance under the
state's home and community-based services waiver
under AS 47.07.045;
(6) pharmacy initiatives;
(7) enhanced care management;
(8) redesigning the payment process by
implementing fee agreements that include
(A) premium payments for centers of
excellence;
(B) penalties for hospital-acquired
infections, readmissions, and outcome
failures;
(C) bundled payments for specific episodes
of care; and
(D) global payments for contracted payers,
primary care managers, and case managers
for a recipient or for care related to a
specific diagnosis;
(9) stakeholder involvement in setting annual
targets for quality and cost-effectiveness;
(10) to the extent consistent with federal law,
reducing travel costs by requiring a recipient
to obtain medical services in the recipient's
home community, to the extent appropriate
services are available in the recipient's home
community.
(b) The department shall identify the areas
of the state where improvements in access to
telemedicine would be most effective in
reducing the costs of medical assistance and
improving access to health care services for
medical assistance recipients. The
department shall make efforts to improve
access to telemedicine for recipients in
those locations. The department may enter
into agreements with Indian
Health Service providers, if necessary, to
improve access by medical assistance
recipients to telemedicine facilities and
equipment.
(c) On or before October 15 of each year,
the Department of Health and Social Services
shall prepare a report and submit the report
to the senate secretary and the chief clerk
of the House of Representatives and notify
the legislature that the report is
available. The report must include
(1) realized cost savings related to
reform efforts under this section;
(2) realized cost savings related to
medical assistance reform efforts
undertaken by the department other than
the reform efforts described in this
Act;
(3) a statement of whether the
Department of Health and Social
Services has met annual targets for
quality and cost-effectiveness;
(4) recommendations for legislative or
budgetary changes related to medical
assistance reforms during the next
fiscal year;
(5) changes in federal laws that the
department expects will result in a
cost or savings to the state of more
than $1,000,000;
(6) a description of any medical
assistance grants, options, or waivers
the department applied for in the
previous fiscal year;
(7) the results of demonstration
projects the department has
implemented;
(8) legal and technological barriers to
the expanded use of telemedicine,
improvements in the use of telemedicine
in the state, and recommendations for
changes or investments that would allow
cost-effective expansion of
telemedicine;
(9) the percentage decrease in costs of
travel for medical assistance
recipients compared to the previous
fiscal year;
(10) the percentage decrease in the
number of medical assistance recipients
identified as frequent users of
emergency departments compared to the
previous fiscal year;
(11) the percentage increase or
decrease in the number of hospital
readmissions within 30 days after a
hospital stay for medical assistance
recipients compared to the previous
fiscal year;
(12) the percentage increase or
decrease in average state general fund
spending for each medical assistance
recipient compared to the previous
fiscal year;
(13) the percentage increase or
decrease in uncompensated care costs
incurred by medical assistance
providers compared to the percentage
change in private health insurance
premiums for individual and small group
health insurance;
(14) the cost, in state and federal
funds, for providing optional services
under AS 47.07.030(b).
(d) In this section, "telemedicine" means
the practice of health care delivery,
evaluation, diagnosis, consultation, or
treatment, using the transfer of medical
data through audio, visual, or data
communications that are performed over two
or more locations between providers who are
physically separated from the recipient or
from each other.
Section 5: Requires the legislature to approve
any new additional groups added to the Medicaid
program on or after March 23, 2010.
Section 6: Requires the department to design and
implement a demonstration project to reduce
nonurgent use of emergency departments by
Medicaid recipients.
Ms. Shadduck spoke to subsection 5 of Section 6:
(5) a process for assisting frequent users with plans
of care and for assisting patients in making
appointments with primary care providers within 96
hours after an emergency department visit;
10:20:49 AM
Ms. Shadduck continued with the sectional analysis:
Section 7: Requires the department and the attorney general
to annually prepare a report regarding fraud prevention,
abuse, prosecution, and vulnerabilities in the Medicaid
program.
Section 8: Requires the department to develop one or more
managed care or case management demonstration projects
through a contract with a third party. The managed care
program would be for individuals enrolled in all Medicaid
programs.
Ms. Shadduck spoke to the subsections in Section 8:
(b) The department shall enter into contracts with one
or more third-party primary care case managers,
managed care organizations, prepaid ambulatory health
plans, or prepaid inpatient health plans to implement
the project established under this section. The
contract must provide for a fee based on a per capita
expense that is fair and economical. The department or
administrator shall develop a comprehensive system of
prior authorizations for payment of services under the
project. However, prior authorization may not be
required for mental health or primary care services.
(c) The department or a third-party administrator
shall designate health care providers or one or more
teams of health care providers to provide services
that are primary care and patient centered as
described by the department for purposes of a project
under this section. The department or a third-party
administrator shall enter into necessary provider and
fee agreements. For primary care case managers, the
fee agreement must include an incentive-based
management fee system. The fee agreements may not be
based on a fee for service but must be based on
performance measures, as determined by the department.
(d) A project under this section must include
additional cost-saving measures that include
innovations to
(1) reduce travel through the expanded use of
telemedicine for primary care, urgent care, and
behavioral health services; to the extent legal
barriers prevent the expanded use of
telemedicine, the department shall identify those
barriers;
(2) simplify administrative procedures for
providers, including streamlined audit, payment,
and stakeholder engagement procedures.
(e) In this section, "department" means the Department
of
Health and Social Services.
10:23:20 AM
Section 9: Requires the department to conduct a study
analyzing the feasibility of privatizing certain
services.
Ms. Shadduck explained that the studies would vary from
item to item; exploration into privatizing the Alaska
Psychiatric Institute was one plan, another was be to
privatize certain divisions of juvenile justice facilities,
and certain pioneer homes.
Section 10: Requires the department to amend the state
Medicaid plan and apply for any waivers necessary to
implement the projects and programs described in the
bill. Requires the Commissioner of Health and Social
Services to certify to the revisor of statutes federal
approval of specified measures.
Section 11: Allows the department to adopt regulations
necessary to implement the changes made by the Act.
The regulations may not take effect before the dates
the relevant provision of the Act takes effect.
Section 12: Conditional effects.
Sections 13 - 17: Provides for effective dates for
provisions that require waiver and state plan
amendment approvals from the United States Department
of Health and Human Services.
Section 18: Provides an immediate effective date for
sections 9 - 12.
10:25:29 AM
Senator Olson asked about Section 8. He asked whether any
private entities had expressed interest in taking over
healthcare facilities in the state.
Ms. Shadduck answered in the affirmative. She said that
there was a lot of interest and excitement from the private
sector.
Senator Olson wondered whether the interest was coming from
national corporations, as opposed to an Alaska based
private company.
Ms. Shadduck replied that the process was legally
prescribed. The study would simply reveal feasibility on
the matter. She assumed that privatization would follow
state procurement code.
10:27:19 AM
Vice-Chair Micciche observed the fiscal notes attached to
the bill reflected savings beginning in FY18.
Ms. Shadduck responded that the fiscal notes had been
prepared by the administration in 2015 and could not speak
to why savings would not begin until FY18.
10:28:15 AM
Co-Chair Kelly encouraged the scrutinizing of the bill in
subcommittee. He said that there had been recent
developments that would result in serious savings in 2017,
that would impact the FY18 budget process. He furthered
that the finance committee would move quickly and reserve
substantive policy debates for subcommittee. He asserted
that Medicaid was a huge cost driver for the state, which
suggested that the state was doing a poor job in providing
the service. He concluded that the legislation would
deliver savings and better care.
10:31:07 AM
Vice-Chair Micciche felt that the effort would take
teamwork.
10:31:59 AM
Senator Olson asked about Section 6. He wondered how the
bill addressed the problem of the prescription of narcotics
in the emergency room.
Ms. Shadduck replied that there was currently a
prescription drug database, which would continue to receive
funding under the bill.
10:33:36 AM
Co-Chair MacKinnon assigned SB 74 a subcommittee comprised
of:
Co-Chair MacKinnon
Co-Chair Kelly
Vice-Chair Micciche
Senator Olson
Senator Geissel
Co-Chair MacKinnon clarified that both SB 78 and SB 74 were
being referred to the same subcommittee. She asserted that
the subcommittee would examine valuable pieces and
components of each in order to come up with a single
recommendation for the committee to consider. She offered
that the timeline was expected to be one month.
SB 74 was HEARD and HELD in committee for further
consideration.
Co-Chair MacKinnon discussed housekeeping.
ADJOURNMENT
10:35:33 AM
The meeting was adjourned at 10:35 a.m.