Legislature(2019 - 2020)SENATE FINANCE 532
04/08/2019 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Medicaid Cost Containment | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | 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 |