Legislature(1999 - 2000)

02/23/2000 01:35 PM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
      SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE                                                                    
                        February 23, 2000                                                                                       
                            1:35 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Mike Miller, Chairman                                                                                                   
Senator Pete Kelly, Vice-Chairman                                                                                               
Senator Gary Wilken                                                                                                             
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Senator Drue Pearce                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 256                                                                                                             
"An Act relating to regulation of managed health care and allowing                                                              
physicians to collectively negotiate with a health care insurer                                                                 
that has substantial market power."                                                                                             
          -MOVED CSSB 256 (HES) OUT OF COMMITTEE                                                                                
                                                                                                                                
SENATE BILL NO. 228                                                                                                             
"An Act relating to the financing of construction and major                                                                     
maintenance of public school facilities; authorizing the                                                                        
commissioner of revenue to sell the right to receive a portion of                                                               
the anticipated revenue from a certain tobacco litigation                                                                       
settlement to the Alaska Housing Finance Corporation; authorizing                                                               
the issuance of bonds by the Alaska Housing Finance Corporation                                                                 
with proceeds to finance public school construction and major                                                                   
maintenance grants; providing for the creation of subsidiary                                                                    
corporations of the Alaska Housing Finance Corporation for the                                                                  
purpose of financing or facilitating the financing of public school                                                             
construction and major maintenance grants; relating to the annual                                                               
public school construction and major maintenance grant application                                                              
and approval process; providing for allocation of additional                                                                    
reimbursement of public school construction debt; and providing for                                                             
an effective date."                                                                                                             
     -HEARD AND HELD                                                                                                            
                                                                                                                                
SENATE BILL NO. 224                                                                                                             
"An Act relating to the confidentiality of investigations, court                                                                
hearings, and court and public agency information in child in need                                                              
of aid matters; relating to immunity regarding disclosure of                                                                    
information in child in need of aid matters; amending Rules 3 and                                                               
22, Alaska Rules of Child in Need of Aid; and providing for an                                                                  
effective date."                                                                                                                
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 228 - No previous Senate action.                                                                                             
                                                                                                                                
SB 256 -  See HESS minutes dated 2/21/00.                                                                                       
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Jerry Reinwand                                                                                                                  
Blue Cross Blue Shield of Alaska                                                                                                
2 Marine Way, No.219                                                                                                            
Juneau, AK  99801                                                                                                               
POSITION STATEMENT: Commented on SB 256                                                                                         
                                                                                                                                
Mr. Jeff Davis                                                                                                                  
Blue Cross Blue Shield of Alaska                                                                                                
2550 Denali St., Suite 600                                                                                                      
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Commented on SB 256                                                                                        
                                                                                                                                
Mr. Jim Jordan, Executive Director                                                                                              
Alaska State Medical Association                                                                                                
4107 Laurel Street                                                                                                              
Anchorage, AK  99508                                                                                                            
POSITION STATEMENT:  Supports SB 191                                                                                            
                                                                                                                                
Mr. Mike Haugen, Executive Director                                                                                             
Alaska Physicians and Surgeons, Inc.                                                                                            
4120 Laurel Street, Suite 206                                                                                                   
Anchorage, AK  99508                                                                                                            
POSITION STATEMENT:  Supports SB 256                                                                                            
                                                                                                                                
Karen Rehfeld, Director                                                                                                         
Education Support Services                                                                                                      
Department of Education                                                                                                         
801 W 10th St., Suite 200                                                                                                       
Juneau, AK  99801-1894                                                                                                          
POSITION STATEMENT:  Presented and supports SB 228                                                                              
                                                                                                                                
Jim Baldwin                                                                                                                     
Assistant Attorney General                                                                                                      
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT:  Answered questions about SB 228                                                                            
                                                                                                                                
Ms. Pat Weaver                                                                                                                  
PO Box 877518                                                                                                                   
Wasilla, AK  99687                                                                                                              
POSITION STATEMENT:  Supports SB 228                                                                                            
                                                                                                                                
Mr. Bob Dickens                                                                                                                 
Bering Straits School District                                                                                                  
Box 225                                                                                                                         
Unalakleet, AK  99684-0000                                                                                                      
POSITION STATEMENT:  Supports SB 228                                                                                            
                                                                                                                                
Marge Hays, Chair                                                                                                               
Older Alaskans Commission                                                                                                       
PO Box 2876                                                                                                                     
Soldotna, AK  99669                                                                                                             
POSITION STATEMENT:  Gave an update on the Older Alaskans                                                                       
Commission                                                                                                                      
                                                                                                                                
Jane Demmert, Executive Director                                                                                                
Older Alaskans Commission                                                                                                       
Department of Administration                                                                                                    
PO Box 110209                                                                                                                   
Juneau, AK  99811-0209                                                                                                          
POSITION STATEMENT:  Gave an update on the Older Alaskans                                                                       
Commission                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-7, SIDE A                                                                                                               
Number 001                                                                                                                      
                                                                                                                                
CHAIRMAN MILLER called the Senate Health, Education and Social                                                                  
Services (HESS) Committee to order at 1:35 p.m.  Present were                                                                   
Senators Pete Kelly, Wilken, Elton and Miller.  Chairman Miller                                                                 
announced the committee would take testimony on bills until 2:30,                                                               
at which time the Older Alaskans Commission will give a                                                                         
presentation.  The first order of business to come before the                                                                   
committee was SB 256.                                                                                                           
                                                                                                                                
        SB 256-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE                                                                        
                                                                                                                                
SENATOR WILKEN moved to adopt the proposed committee substitute for                                                             
SB 256 (Version G) as the working document of the committee.  There                                                             
being no objection, the motion carried.                                                                                         
                                                                                                                                
JEFF DAVIS, Executive Director of Blue Cross Blue Shield of Alaska,                                                             
made the following comments.  From Blue Cross's perspective, the                                                                
intent of SB 256 is to address inequities in bargaining power                                                                   
between physicians and insurers - however, Blue Cross's experience                                                              
suggests that inequities are not the case in Alaska.  Blue Cross                                                                
began talking with Alaskan physicians in 1989 about potential                                                                   
agreements.  Approximately 1,750 licensed physicians practice in                                                                
Alaska.  After 11 years of work, Blue Cross has agreements with                                                                 
approximately 700 physicians, which shows that Blue Cross does not                                                              
have extraordinary market power in Alaska.  Aetna, the largest                                                                  
insurer in the State, has made repeated attempts to negotiate                                                                   
contracts with physicians and, according to an Aetna source, as of                                                              
yesterday Aetna has contracts with approximately 100 physicians.                                                                
Blue Cross understands that, amongst the other insurers in the                                                                  
State, some may have a handful of contracts but most have none at                                                               
all.                                                                                                                            
                                                                                                                                
MR. DAVIS repeated that Blue Cross does not have extraordinary                                                                  
market power in Alaska because it has been unable to convince any                                                               
physicians in many specialties to join. He pointed out that Blue                                                                
Cross has made numerous attempts to make easier interactions                                                                    
between physicians and Blue Cross members.  Many physicians prefer                                                              
to collect full payment upfront from the patient.  Physicians                                                                   
agreed to bill Blue Cross directly and, in exchange, Blue Cross                                                                 
agreed to pay physicians directly.  Many members appreciate that                                                                
part of the agreement.  Physicians also agreed to be credentialled                                                              
by Blue Cross.  That process is done using national committee for                                                               
quality assurance criteria.  The point of the credentialling                                                                    
process is to give Blue Cross members additional confidence in the                                                              
physicians who are part of the network.  Physicians also agreed to                                                              
cooperate with Blue Cross's care management program.  That program                                                              
focuses on the appropriate setting of care for a particular member.                                                             
                                                                                                                                
MR. DAVIS noted that physicians also agreed to refer members to                                                                 
network providers, a point that was discussed by the committee at                                                               
a previous hearing.  He provided verbatim language from a standard                                                              
Blue Cross contract which speaks only to hospitals and reads:                                                                   
                                                                                                                                
     The provider agrees to arrange for admission of preferred                                                                  
     enrollees only to preferred hospitals provided that one is                                                                 
     available locally and, in the professional judgement of the                                                                
     provider, admission to that preferred hospital will adequately                                                             
     provide the enrollee's medical care needs.                                                                                 
                                                                                                                                
MR. DAVIS said the decision as to where the patient's needs will                                                                
best be met is left to the physician.                                                                                           
                                                                                                                                
MR. DAVIS stated the contracts also contain a 30 day termination                                                                
clause for the protection of both parties.  If at any time a                                                                    
physician says the agreement is not working, the physician can                                                                  
terminate the agreement, and vice versa.  In his five years of                                                                  
experience, only one physician terminated because he did not want                                                               
to fill out the credentialling paperwork.                                                                                       
                                                                                                                                
MR. DAVIS noted that Blue Cross is regulated by the Division of                                                                 
Insurance with respect to how it determines usual, customary and                                                                
reasonable fees.  Alaska statute requires Blue Cross to use Alaska                                                              
data, adjust the data by region, and review it every six months.                                                                
When Blue Cross looks at the data, it looks at each procedure code,                                                             
known as a CPT 4 code.  All charges in the 12 month sample are                                                                  
examined to determine, what physicians in Alaska have charged and                                                               
where the 90th percentile lies.  The contract says that if the                                                                  
physician's charge is less than the 90th percentile, then the                                                                   
entire charge is covered.  If the charge is above the 90th                                                                      
percentile, the physician agrees to accept the 90th percentile and                                                              
the member will not be billed for the additional amount.  The                                                                   
contract results in members being protected from amounts over the                                                               
usual, customary and reasonable fee.                                                                                            
                                                                                                                                
MR. DAVIS explained that Blue Cross identifies physicians who it                                                                
wants to have a discussion with in several ways: through member                                                                 
requests, because of a gap identified in the network, or because                                                                
physicians contact Blue Cross.  Blue Cross usually makes contact by                                                             
phone or in person. Blue Cross recently went through a push to                                                                  
recruit.  Since last October, Blue Cross has contacted about 140                                                                
physicians.  Of those, 33 declined immediately, 91 requested more                                                               
information and are engaged in ongoing discussions with Blue Cross,                                                             
and 15 have reached agreements.                                                                                                 
                                                                                                                                
Regarding concerns raised about the federal employee program at the                                                             
last meeting, MR. DAVIS said of the 105,000 Blue Cross members,                                                                 
35,000 are federal employees.  The rules for the federal employee                                                               
program are set by the federal office of personnel management in                                                                
Baltimore.                                                                                                                      
                                                                                                                                
SENATOR WILKEN asked if Blue Cross has a "hole" and has no contract                                                             
with a surgeon, how much Blue Cross reimburses.                                                                                 
                                                                                                                                
MR. DAVIS said the terms of payment are dictated by the member's                                                                
contract with Blue Cross.  The member's contract could say that                                                                 
Blue Cross may pay 80 percent up to the allowable limit.  The                                                                   
difference is if there is a contract, the member is not responsible                                                             
for the amount over.  If there is no contract, the balance is                                                                   
between the member and the physician.                                                                                           
                                                                                                                                
SENATOR ELTON asked if Bartlett Memorial Hospital is a preferred                                                                
hospital.                                                                                                                       
                                                                                                                                
MR. DAVIS said it is.                                                                                                           
                                                                                                                                
JERRY REINWAND, a lobbyist for Blue Cross, commented that Blue                                                                  
Cross has been unable to analyze what costs, if any, SB 191 will                                                                
have on subscribers.  Blue Cross is concerned about the rise in the                                                             
medical consumer price index versus other consumer price indexes.                                                               
Any changes that have the potential to impact the price of health                                                               
care are of concern to Blue Cross.  At Monday's meeting, a                                                                      
testifier made the statement that physicians are having a very                                                                  
difficult time with insurers, a statement which Blue Cross finds                                                                
befuddling.                                                                                                                     
                                                                                                                                
MR. JIM JORDAN, Executive Director of the Alaska State Medical                                                                  
Association, explained the amendments made in the proposed                                                                      
committee substitute.  First, the scope of the bill was increased                                                               
to go beyond insurance plans.   That change was made through the                                                                
inclusion of intent language and by changing "health care insurer"                                                              
to "health benefit plan."  Two other changes were made.  Blue Cross                                                             
was concerned that only when negotiations involve fee related items                                                             
does the mechanism kick in whereby the criteria for the substantial                                                             
market share has to have been met by the insurer.  Blue Cross is                                                                
concerned about how the number of folks covered will be determined.                                                             
That can take a great deal of work by a state agency.  One of the                                                               
amendments provides for a rebuttable presumption so that when a                                                                 
group of physicians, represented by an authorized third party,                                                                  
requests of the Commissioner of the Department of Labor that the                                                                
process begin, the other party would be notified and given an                                                                   
opportunity to rebut that presumption if it chooses to do so.  The                                                              
last change adds a new section on page 10, AS 23.50.040, that                                                                   
allows a health benefit plan to initiate the negotiation process by                                                             
making a request of the Commissioner when the health benefit plan                                                               
wishes to discuss fee related items with a group of physicians when                                                             
they do not have a substantial market share.   This allows health                                                               
benefit plans to initiate the process and voluntarily ask the                                                                   
commissioner to provide oversight and allow negotiations under the                                                              
state action doctrine exceptions.                                                                                               
                                                                                                                                
SENATOR ELTON asked if physicians will be able to collectively                                                                  
negotiate fees with the state about the state's self insurance                                                                  
plan.                                                                                                                           
                                                                                                                                
MR. JORDAN said it will and said he discussed that topic at length                                                              
with the drafter who created the mechanism.                                                                                     
                                                                                                                                
SENATOR ELTON asked about the fiscal note.                                                                                      
                                                                                                                                
CHAIRMAN MILLER pointed out the bill will be reviewed by the Senate                                                             
Finance Committee.                                                                                                              
                                                                                                                                
SENATOR ELTON asked whether the 30 percent requirement on page 8                                                                
pertains to the physicians in a particular specialty and whether it                                                             
only kicks in if the health benefit plan has more than five percent                                                             
of the local market.                                                                                                            
                                                                                                                                
MR. JORDAN said not quite.  He indicated it means that an                                                                       
authorized third party may not represent more than 30 percent,                                                                  
however, an authorized party may represent more than 30 percent if                                                              
the health benefit plan has more than five percent of the market                                                                
share in a particular area.  The reason that provision was included                                                             
is because of concern for rural areas where there may be very few                                                               
physicians.                                                                                                                     
                                                                                                                                
SENATOR ELTON asked what the effect is of this provision on small                                                               
health care plans that do not have more than five percent of the                                                                
market share in a local community but where another health plan may                                                             
have more than five percent.  He expressed concern that a small                                                                 
insurer, who has less than five percent, may be driven out of the                                                               
market.                                                                                                                         
                                                                                                                                
MR. JORDAN said that is why the bill was changed to allow for                                                                   
voluntary participation.  There are circumstances in which a small                                                              
insurer may not have that market share but can ask for oversight                                                                
under AS 23.50.040 (page 10, lines 8-10).                                                                                       
                                                                                                                                
SENATOR ELTON said the bill essentially says a small health care                                                                
plan either conforms or disappears because the market threshhold                                                                
would be difficult for them to meet.                                                                                            
                                                                                                                                
MR. JORDAN said that is correct but he does not see how they would                                                              
disappear because they would be allowed to voluntarily enter into                                                               
negotiations.                                                                                                                   
                                                                                                                                
SENATOR WILKEN asked who authored the document entitled, "Response                                                              
to Comments by Gordon Evans" in committee members' packets.                                                                     
                                                                                                                                
MR. JORDAN said he wrote it.                                                                                                    
                                                                                                                                
MR. MIKE HAUGEN, representing Alaska Physicians and Surgeons,                                                                   
stated that, in his opinion, Blue Cross is not the issue.  The                                                                  
issue is freedom of communication between doctors to discuss                                                                    
patient protection and physician issues and managed care contracts.                                                             
Without the protections offered by this bill, physicians are                                                                    
effectively gagged from discussing terms of contracts among                                                                     
themselves, and not just the financial aspects.  If the contracts                                                               
were about the financial aspects only, they would be one-half page                                                              
long.  A typical contract is 15 to 20 pages.  While it is true that                                                             
Blue Cross has negotiated term changes with some of the 700                                                                     
contracts, many physicians have told him that because of Blue                                                                   
Cross's large footprint in Alaska, they have to sign the contract                                                               
as is because they cannot afford to lose that much business.  The                                                               
physicians in Fairbanks have incurred huge legal fees and had to                                                                
undergo one year of FTC scrutiny because of an anonymous complaint                                                              
phoned into the FTC.  Under the current messenger model it is too                                                               
easy for a party with an axe to grind to notify the FTC and claim                                                               
that doctors are trying to boycott or price fix.  SB 256 requires                                                               
state oversight to ensure that physicians are not boycotting or                                                                 
price fixing.  Again, the process is voluntary on everyone's part.                                                              
                                                                                                                                
SENATOR PETE KELLY moved CSSB 256(HESS) with its accompanying                                                                   
fiscal note to the next committee of referral.                                                                                  
                                                                                                                                
SENATOR ELTON objected and said that intellectually, he does not                                                                
have a problem with people getting together and bargaining as a                                                                 
group and that he will vote to move it on but he is very interested                                                             
to see what the Finance Committee finds.                                                                                        
                                                                                                                                
SENATOR KELLY thought Senator Elton's concerns are valid and will                                                               
create a change, but he remarked the entire health care industry is                                                             
changing by quantum leaps.  Alaska's doctors are quite isolated and                                                             
many of them are attached to a few health care plans, so they are                                                               
at a disadvantage to city doctors in other states.  Other states                                                                
are choosing to go with this model as well.                                                                                     
                                                                                                                                
CHAIRMAN MILLER agreed that both comments are valid and that the                                                                
legislature needs to know what all of the ramifications of the bill                                                             
will be.  He noted that since less than 80 days are left in this                                                                
session, it is time to move the bill on so that some of the                                                                     
questions can be answered by the Finance Committee.                                                                             
                                                                                                                                
CHAIRMAN MILLER announced that with no further objection, CSSB
256(HES) moved from committee.                                                                                                  
                                                                                                                                
        SB 228-PUBLIC SCHOOL CONSTR/MAINTENANCE FUNDING                                                                         
                                                                                                                                
MS. KAREN REHFELD, Director of Education Support Services for the                                                               
Department of Education and Early Development, made the following                                                               
comments on behalf of Commissioner Cross.  SB 228 provides a                                                                    
funding mechanism for school construction and major maintenance                                                                 
projects over the next three years.  With over $1 billion                                                                       
investment in school facilities in this state, Alaska cannot afford                                                             
to neglect major maintenance needs or replacement of schools.  DOE                                                              
has consistently advocated for a long term stable source of funding                                                             
for school construction and maintenance projects.  SB 228 will                                                                  
address three goals.  First, it will provide adequate, safe places                                                              
to learn by clearing up the backlog of major maintenance projects                                                               
statewide. Second, it will address the needs of both urban and                                                                  
rural school districts with an emphasis on addressing major                                                                     
maintenance projects quickly to avoid more costly construction                                                                  
costs in the future.  Third, it will address the concerns brought                                                               
forward in the Kasayulie lawsuit.                                                                                               
                                                                                                                                
The package totals $510 million, including $360 million in grants                                                               
for school construction and major maintenance, and $150 million for                                                             
school debt reimbursement.  The projects included in the Governor's                                                             
package are funded in the order in which they are ranked on the                                                                 
department's priority list.  As proposed, all 86 projects on the                                                                
current major maintenance list and 40 of the 69 new construction                                                                
projects will be funded.  The current list would be frozen over the                                                             
next three years while these projects are underway.                                                                             
                                                                                                                                
MS. REHFELD continued.  The rationale behind the legislation is                                                                 
based on these goals, and sticking to the priority list and                                                                     
completing as many projects as possible over the next three years.                                                              
Adjustments to the amount of funding for particular projects and                                                                
the final listing will need to be made as a result of appeal                                                                    
decisions that are currently before a hearing officer as it relates                                                             
to the priority list.  The State Board of Education will be meeting                                                             
in March to finalize the school construction and major maintenance                                                              
list.  As the State continues to address the issues raised in the                                                               
Kasuylie case, there may be further modifications needed. Funding                                                               
for major maintenance and school construction projects is critical                                                              
in both rural and urban Alaska.  SB 228 goes a long way toward                                                                  
addressing those needs.                                                                                                         
                                                                                                                                
SENATOR ELTON asked if the State Board of Education will have the                                                               
opportunity to change the list before it is frozen when it meets in                                                             
March.                                                                                                                          
                                                                                                                                
MS. REHFELD explained school districts may appeal DOE's annual                                                                  
ranking decision as it was released in December.  Those appeals are                                                             
then reviewed by a hearing officer.  The hearing officer's decision                                                             
is taken to the State Board of Education who finalizes the list.                                                                
DOE plans to bring those changes back to the Legislature to                                                                     
incorporate into SB 228.                                                                                                        
                                                                                                                                
SENATOR ELTON asked if the only anticipated changes to the list                                                                 
will be those modifications made under the appeal process.                                                                      
                                                                                                                                
MS. REHFELD replied yes, any of the specifics of the funding of                                                                 
those projects as they are resolved by the hearing officer.                                                                     
                                                                                                                                
SENATOR WILKEN recalled that at the December Bond Reimbursement                                                                 
Committee meeting, the major construction list totalled $199                                                                    
million, and the major maintenance list totalled $49 million.  He                                                               
asked if that list was added to since December.                                                                                 
                                                                                                                                
MS. REHFELD said she did not recall the date of the December Bond                                                               
Reimbursement and Grant Review Committee meeting, but DOE issued a                                                              
list on December 15 that would have changed somewhat based on                                                                   
reconsideration of its November list.  By statute, DOE is required                                                              
to release its initial priority ranking by November 5.  School                                                                  
districts then have the opportunity to ask for reconsideration.  A                                                              
new list is published on December 15 and it is that list the school                                                             
districts would formally appeal.                                                                                                
                                                                                                                                
SENATOR WILKEN thought the Bond Reimbursement Committee met on                                                                  
December 9.  He asked Ms. Rehfeld the total of the school                                                                       
construction projects in SB 228.                                                                                                
                                                                                                                                
MS. REHFELD replied the bill authorizes $360 million for all of the                                                             
projects on the major maintenance list and a portion of the new                                                                 
construction list.                                                                                                              
                                                                                                                                
SENATOR WILKEN said he would check but he recalls a total of $250                                                               
million.  He asked Ms. Rehfeld to discuss the source of funds for                                                               
the projects in SB 228.                                                                                                         
                                                                                                                                
JIM BALDWIN, Assistant Attorney General, explained the bill                                                                     
contains two sources of funding for bonds that would be issued by                                                               
the Alaska Housing Finance Corporation (AHFC).  The first would be                                                              
the authority of the State to sell the right to receive a stream of                                                             
revenue generated by the tobacco settlement.  That amount is                                                                    
expected to be $260 million.  The additional $100 million would be                                                              
generated from the general obligation bond capacity of AHFC.  The                                                               
total in the bill equals $369 million because additional amounts                                                                
are needed for reserve funds and things of that nature in order to                                                              
make the bonds marketable.  This is within the agreement that was                                                               
entered into with the Legislature in 1998.  Another piece of                                                                    
legislation that will be tied to this will be the capital budget.                                                               
DOE expects the Legislature will then go forward and appropriate                                                                
for these particular projects in the capital budget.  Securing the                                                              
tobacco settlement stream is a device that has been used in other                                                               
jurisdictions.  It will be helpful to the State's position in the                                                               
Kasuylie case if a large amount of financing is devoted for rural                                                               
schools.  This type of financing device allows for more of a                                                                    
concentration on rural schools.                                                                                                 
                                                                                                                                
Another element of this bill provides for further authorization for                                                             
the bond reimbursement program - that part of the package totals                                                                
$150 million.                                                                                                                   
                                                                                                                                
SENATOR WILKEN suggested the Kasuylie case is not a reason for the                                                              
Legislature to be considering this legislation.  He asked if the                                                                
Administration is doing anything to change the system so that the                                                               
REAAs can help participate in the construction of their schools.                                                                
                                                                                                                                
MS. REHFELD said there is no proposal at this point that provides                                                               
for a bond capacity or some other mechanism for REAAs to                                                                        
participate.                                                                                                                    
                                                                                                                                
SENATOR WILKEN asked if SB 228 contains a provision to develop a                                                                
prototype school or school program.                                                                                             
                                                                                                                                
ASSISTANT ATTORNEY GENERAL BALDWIN said nothing in SB 228 expressly                                                             
provides for prototype schools but nothing prohibits them.                                                                      
                                                                                                                                
SENATOR WILKEN asked if DOE would object if such a provision was                                                                
added.                                                                                                                          
                                                                                                                                
ASSISTANT ATTORNEY GENERAL BALDWIN said from the perspective of the                                                             
lawsuit, he does not know whether that might complicate things.                                                                 
                                                                                                                                
TAPE 00-8, SIDE B                                                                                                               
                                                                                                                                
MS. REHFELD replied that has been an issue that the Bond                                                                        
Reimbursement and Grant Review Committee has been looking at and                                                                
she is not sure that it has actually come up with an approach that                                                              
captures all of the aspects of dealing with prototype schools.                                                                  
                                                                                                                                
CHAIRMAN MILLER indicated a number of schools on the project list                                                               
are within organized boroughs and asked if the amount included in                                                               
the bill is the state's approximately 70 percent share.                                                                         
                                                                                                                                
MS. REHFELD said if the Chairman is speaking specifically to the                                                                
grant projects that are included in the proposal, all school                                                                    
districts have a required participating share.                                                                                  
                                                                                                                                
CHAIRMAN MILLER asked if these projects are funded with 70 percent                                                              
by the State.                                                                                                                   
                                                                                                                                
MS. REHFELD said yes, or whatever the participation level is.                                                                   
                                                                                                                                
SENATOR ELTON asked Assistant Attorney General Baldwin whether he                                                               
feels reasonably assured that this approach will satisfy the                                                                    
plaintiffs.                                                                                                                     
                                                                                                                                
ASSISTANT ATTORNEY GENERAL BALDWIN said he is comfortable that the                                                              
amount of $360 million to address the projects included in the bill                                                             
is highly likely to resolve the problems in the claims in the case,                                                             
whether it be by settlement or whether it be by making the case                                                                 
moot.  He said he respects Senator Wilken's view on the Kasuylie                                                                
case, and that view is shared by the Governor, but in the                                                                       
discussions he has had with the plaintiffs, they are in general                                                                 
agreement on the dollar amount and on the projects.  There is an                                                                
ongoing discussion, however on how much will be spent on each                                                                   
project.                                                                                                                        
                                                                                                                                
SENATOR ELTON said he thought the amounts were settled and equalled                                                             
100 percent of the new construction and major maintenance.                                                                      
                                                                                                                                
MS. REHFELD said in the Governor's proposal, several of the                                                                     
projects from the December 15 meeting that were initially                                                                       
recommended to be phased are recommended to be fully funded.  To                                                                
the extent that one would be able to go farther down the list if                                                                
the projects were phased or, conversely, try to fully construct as                                                              
many projects as possible, that would affect how far down the list                                                              
one can go.  Because the proposal would freeze the list for three                                                               
years, DOE believes it is better to get as many projects completed                                                              
as possible during that three year period.  Under this proposal,                                                                
there would be nine projects in year three that would be phased.                                                                
After the first year, those projects would receive additional                                                                   
points toward ranking because the planning and design phase would                                                               
be complete.  The goal is to try and complete as many projects as                                                               
possible.                                                                                                                       
                                                                                                                                
MS. PAT WEAVER, a PTA member from Mat-Su, stated support for SB
228.    She supports funding the statewide projects from tobacco                                                                
settlement money, and she believes students need clean, safe water.                                                             
She also supports debt reimbursement of 70 percent. SB 228 is a "no                                                             
frills" bill.                                                                                                                   
                                                                                                                                
MR. BOB DICKENS, Bering Straits School District, commented that SB
228 is a long-awaited development in addressing the public school                                                               
construction in rural and urban Alaska.  The biggest problem he has                                                             
seen over the last seven or eight years is that there has been no                                                               
consistency in the funding, especially in rural Alaska.  SB 228 is                                                              
a big step in that direction.  In the long run, it will give rural                                                              
residents the hope they have been looking for during the past seven                                                             
or eight years.                                                                                                                 
                                                                                                                                
SENATOR WILKEN congratulated Mr. Dickens for keeping the school in                                                              
Golovin in first class shape.  He pointed out that the Bering                                                                   
Straits School District has three schools on the list.  He asked if                                                             
that school district would be amenable to having three prototype                                                                
schools constructed in those three villages.                                                                                    
                                                                                                                                
MR. DICKENS noted that five schools would be constructed in the                                                                 
Bering Straits School District over a three year period:  Golovin,                                                              
Elim, White Mountain, Koyuk, and Teller.  Regarding prototype                                                                   
schools, Bering Straits School District is more in favor of                                                                     
standardization of equipment and mechanical systems because each                                                                
location has a unique terrain.                                                                                                  
                                                                                                                                
CHAIRMAN MILLER thanked all participants for testifying on SB 228                                                               
and noted his intent to take more testimony next Wednesday and to                                                               
pass the bill from committee at that time.                                                                                      
Number 870                                                                                                                      
                                                                                                                                
MS. MARGE HAYES, Chair of the Older Alaskans Commission (OAC),                                                                  
introduced other participants and Commission members:  Alison                                                                   
Elgee, Don Hoover, Doris Bacus, Jesse Gardner, Dan Karmun, Bill                                                                 
Hermann, Ella Craig, Peggy Burgin, Kay Branch, and Bob Gregovich.                                                               
                                                                                                                                
MS. HAYES said the Commission's focus is the continuum of care for                                                              
elderly Alaskans.  Most seniors are remaining in Alaska instead of                                                              
leaving, plus most seniors are living longer, so the population is                                                              
growing.  A lack of services for that population impacts seniors                                                                
and their family members as well.  The least expensive way to go is                                                             
the home and community-based end of the continuum.  At a Common                                                                 
Ground Conference held in Anchorage recently, the goals expressed                                                               
by seniors are that they want to retain their independence,                                                                     
dignity, and to stay connected to their communities.                                                                            
                                                                                                                                
As the continuum of care goes up, assisted living homes provide                                                                 
more help.  They cost more than the cost of remaining in one's                                                                  
home, but are less expensive than living in a nursing home. She                                                                 
noted that half of the people sitting in the committee room will                                                                
end up with Alzheimer's Disease if they live to the age of 85.  The                                                             
OAC is trying to plan ahead and is collaborating as much as it can                                                              
with the other beneficiary groups of the Alaska Mental Health Trust                                                             
Authority (AMHTA).                                                                                                              
                                                                                                                                
MS. JANE DEMMERT, Executive Director of the OAC, reviewed the                                                                   
materials contained in a packet provided to committee members:                                                                  
OAC's current state plan, its last annual report and the agenda of                                                              
the current OAC meeting.                                                                                                        
                                                                                                                                
MS. DEMMERT gave a brief summary of information in the packet.  The                                                             
chart on page 3 shows that the projected population of Alaskan                                                                  
seniors in 25 years will be 125,000, a five-fold increase.  A chart                                                             
on page 4 shows the estimated prevalence of Alaskans affected by                                                                
Alzheimer's Disease and Related Dementia.  That population is                                                                   
estimated to number more than 15,000 in 25 years.  Prevalence                                                                   
estimates also show that nationally, 10-15 percent of older people                                                              
experience alcohol misuse.  The Division of Alcoholism  suspects                                                                
that the rate of late-stage alcoholism is doubled in Alaska.                                                                    
Medication misuse affects 1/3 of the senior population.                                                                         
Unfortunately, negative interplay between the chemistry of                                                                      
different medications can occur in people who take several                                                                      
medications.  Mental health issues also affect an estimated 15 to                                                               
25 percent of elderly Alaskans.  Proper support and treatment can                                                               
ameliorate depression and other more severe mental illnesses.                                                                   
                                                                                                                                
MS. DEMMERT pointed out that critical needs can compound for older                                                              
Alaskans, especially when they are affected by factors such as                                                                  
dementia, mental illness, substance abuse, and medical problems.                                                                
Intervening before difficult and challenging circumstances occur is                                                             
not only humane but cost effective.  Page 8 shows what services are                                                             
available and where there are gaps in those services.                                                                           
                                                                                                                                
Older Alaskans, their families, and the OAC share the common goal                                                               
of easing or remedying complications before they become acute and                                                               
cause extraordinary stress to the individual and family.  In so                                                                 
doing, a personal and family crisis is avoided, as is dislocation                                                               
of a family elder and often extraordinary expense.  Each week that                                                              
a person can stay in a lower cost assisted living facility instead                                                              
of a nursing home generates at the national level $100 to $600 per                                                              
week in savings.  The savings in Alaska would be more pronounced                                                                
because the nursing home costs are higher.  On a national level,                                                                
delaying nursing home placements for one month could result in a                                                                
savings of $1.12 billion per year.                                                                                              
                                                                                                                                
MS. DEMMERT said that caregiving is emotionally and physically                                                                  
demanding, although immensely rewarding.  One of the supports that                                                              
OAC has in some areas of the state, through grants to the                                                                       
Alzheimers Association and through senior centers, is counseling                                                                
and support groups for caregivers.  The isolation that can occur                                                                
for the caregiver and the patient can be deadly.  OAC is finding                                                                
that when an adult day service is available, the caregiver can be                                                               
employed elsewhere.  That helps the family economically and gives                                                               
the caregiver social interaction, while the adult day care is                                                                   
therapeutic for the patient.  Of all of the different kinds of care                                                             
the Legislature invests in, 40 to 70 percent is paid for by grants                                                              
that come through the State.  In addition, a tremendous amount of                                                               
the funding is being generated by local governments.                                                                            
                                                                                                                                
MS. DEMMERT pointed out that the Division of Senior Services                                                                    
operates two Medicaid waivers for home and community based care.                                                                
Based on a close review of Medicaid waiver data collected in FY 98,                                                             
it is estimated that almost $25 milllion was saved by providing                                                                 
home and community based care as opposed to nursing home care.                                                                  
Adult daycare programs exist in 11 communities in Alaska.                                                                       
Information and education services are in place in Anchorage,                                                                   
Fairbanks and Juneau through the Alaska Alzheimers' Association.                                                                
Care coordination services are avilable in some communities and                                                                 
regions to assess a person's social and medical needs, rather than                                                              
just the medical needs.  Often a person could remain at home if                                                                 
they can get help with something as simple as bathing, eating, or                                                               
getting up in the morning.                                                                                                      
                                                                                                                                
MS. DEMMERT informed committee members that worksessions were held                                                              
at the Common Ground Conference about what people hope to                                                                       
experience during their later years.   The hopes were simple, yet                                                               
profound.  Seniors hope to remain in their homes and community, to                                                              
stay connected, to be safe, to be healthy, to maintain financial                                                                
self-sufficiency, maintain independence, and to live with dignity.                                                              
Seniors need a strategic continuum of care that integrates                                                                      
nutrition, transportation, supportive services, housing, and home                                                               
and community-based care, including assisted living and nursing                                                                 
homes.                                                                                                                          
                                                                                                                                
MS. DEMMERT said legislators can make a difference by providing a                                                               
reasonable continuity of benefits.  HB 161, which prorates                                                                      
benefits, is truly unpredictable and could profoundly change the                                                                
possibilities of a person remaining self-sufficient.  Second, cuts                                                              
to public services provided through municipal revenue sharing                                                                   
impacts people who are vulnerable.  Property tax exemption is one                                                               
of the tools that allows seniors to live independently.  AHFC, in                                                               
relation to senior housing programs, is absolutely essential to                                                                 
meeting housing needs.  Last, SB 204 extends the sunset date for                                                                
the OAC.                                                                                                                        
                                                                                                                                
SENATOR WILKEN clarified that John Hatchen is the Vice Chair of the                                                             
Long Term Care Task Force and that Representative John Coghill is                                                               
a member.  He also informed Ms. Demmert that a group in Fairbanks,                                                              
named "Gaps in Care" is comprised of assisted living workers and                                                                
nurses who are trying to keep people in their homes and out of                                                                  
institutions.  He suggested that Ms. Demmert make contact with the                                                              
group.                                                                                                                          
                                                                                                                                
There being no further business to come before the committee,                                                                   
CHAIRMAN MILLER thanked participants and adjourned the meeting at                                                               
3:05 p.m.                                                                                                                       

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