Legislature(1995 - 1996)

04/24/1996 09:02 AM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         April 24, 1996                                        
                           9:02 a.m.                                           
  MEMBERS PRESENT                                                              
 Senator Lyda Green, Chairman                                                  
 Senator Loren Leman, Vice-Chairman                                            
 Senator Mike Miller                                                           
 Senator Judy Salo                                                             
  MEMBERS ABSENT                                                               
 Senator Johnny Ellis                                                          
  COMMITTEE CALENDAR                                                           
 -- CONFIRMATION HEARING:  Irvin A. Rothrock, M.D., Governor's                 
    Appointee to State Medical Board                                           
 HOUSE CONCURRENT RESOLUTION NO. 27 am                                         
 Relating to prevention of teenage pregnancy by implementation of              
 the Sugar Baby project.                                                       
 HOUSE BILL NO. 515 am                                                         
 "An Act repealing a restriction on the use of youth residential               
 services grants that prohibits use of the grants for capital                  
 assets; and providing for an effective date."                                 
 CS FOR HOUSE BILL NO. 393(FIN)                                                
 "An Act relating to managed care for recipients of medical                    
 assistance; and providing for an effective date."                             
  PREVIOUS SENATE COMMITTEE ACTION                                             
 HCR 27 - See Senate Health, Education & Social Services minutes               
          dated 4/19/96.                                                       
 HB 515 - No previous action to record.                                        
 HB 393 - See Senate Health, Education & Social Services minutes               
          dated 4/19/96.                                                       
  WITNESS REGISTER                                                             
 Irvin A. Rothrock, M.D.                                                       
 Fairbanks Psychiatric & Neurological Clinic                                   
 1919 Lathrop St., Drawer 30                                                   
 Fairbanks, AK 99701                                                           
 Representative Con Bunde                                                      
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Prime Sponsor of HCR 27                                
 Kyle Johansen, Staff to Representative                                        
   Bill Williams                                                               
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information on behalf of sponsor of            
                      HB 515                                                   
 Pat Clasby                                                                    
 Alaska Association of Homes for Children                                      
 319 Seward St., #10                                                           
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Testified in support of HB 515                         
 James Steele                                                                  
 P.O. Box 874275                                                               
 Wasilla, AK 99687                                                             
  POSITION STATEMENT:   Supports HB 515                                        
 Jack Duckworth                                                                
 Residential Youth Care, Inc.                                                  
 2514 First Ave.                                                               
 Ketchikan, AK 99901                                                           
  POSITION STATEMENT:   Testified in support of HB 515                         
 Representative Norman Rokeberg                                                
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Prime Sponsor of HB 393                                
 Commissioner Karen Perdue                                                     
 Department of Health & Social Services                                        
 P.O. Box 110601                                                               
 Juneau, AK 99811-0601                                                         
  POSITION STATEMENT:   Has some concerns with HB 393                          
 Bob Labbe, Director                                                           
 Division of Medical Assistance                                                
 Department of Health & Social Services                                        
 P.O. Box 110660                                                               
 Juneau, AK 99811-0660                                                         
  POSITION STATEMENT:   Reviewed suggested changes to HB 393                   
  ACTION NARRATIVE                                                             
 TAPE 96-34, SIDE A                                                            
 Number 001                                                                    
 CHAIRMAN GREEN called the Senate Health, Education and Social                 
 Services (HESS) Committee to order at 9:07 a.m.   She stated the              
 first order of business would be a confirmation hearing on the                
 Governor's appointee to the State Medical Board, Dr. Rothrock.                
 IRVIN A. ROTHROCK, M.D., speaking to the committee via                        
 teleconference from Fairbanks, stated he had no specific questions            
 or comments to present to the committee, but he would respond to              
 questions from them.                                                          
 There being no questions from committee members, CHAIRMAN GREEN               
 thanked Dr. Rothrock for availing himself for the hearing, and she            
 stated a letter would be sent to the Senate President stating the             
 committee had held a confirmation hearing on his appointment to the           
 State Medical Board.                                                          
 Number 032                                                                    
       HCR 27 am TEEN PREGNANCY EDUCATION:SUGAR BABY                       
 CHAIRMAN GREEN introduced HCR 27 am as the next order of business.            
 REPRESENTATIVE CON BUNDE, prime sponsor of HCR 27, explained the              
 essence of the program is that the young people who take part in it           
 have to pack around a 10-pound package of sugar for a week and                
 treat as if it were a live baby.  After a week of constant care of            
 the "sugar baby," it dawns on these seventh and eighth graders that           
 packing around a 10-pound bag of sugar is a real pain, but packing            
 around a 10-pound human being for several years would be a far                
 greater challenge.  He said it has worked to encourage young people           
 to think about the responsibility that they take on when they                 
 become pregnant as teenagers.                                                 
 Representative Bunde believes young people have to be far more                
 aware of the consequences of their behavior, and the ultimate goal            
 is to encourage abstinence because that is the only 100 percent               
 guarantee of preventing pregnancy.                                            
 Representative Bunde pointed out that when he was growing up and              
 was a teenager, the notion of a teenage pregnancy was scandalous.             
 There was a great public condemnation of teen pregnancy; it was               
 socially unacceptable, so there was a push not to get pregnant for            
 a lot of reasons.  He said many of those pressures have gone away,            
 and this project is an attempt to put more pressure back on the               
 teenagers, not from a condemnation point of view, but just from the           
 practical realities of what it must be like to have to care for an            
 infant day in and day out.                                                    
 Number 116                                                                    
 CHAIRMAN GREEN asked if this curriculum was developed at Mears                
 Junior High School in Anchorage.  REPRESENTATIVE BUNDE responded              
 that it was not; it is a program that has been around for a long              
 time and Mears simply adopted it.                                             
 Number 140                                                                    
 There being no further testimony on HCR 27, CHAIRMAN GREEN asked              
 for the pleasure of the committee.                                            
 SENATOR LEMAN moved HCR 27 am be passed out of committee with                 
 individual recommendations.  Hearing no objection, it was so                  
             HB 515 am USE OF YOUTH SERVICES GRANTS                           
 CHAIRMAN GREEN introduced HB 515 am as the next order of business.            
 Number 161                                                                    
 KYLE JOHANSEN, staff to Representative Bill Williams who is the               
 prime sponsor of HB 515, read the following sponsor statement into            
 the record:                                                                   
 "House Bill 515 allows the recipient of an operating grant for                
 residential services to use grant money to pay for the purchase of            
 a building, vehicle or other assets.  Residential services are                
 defined in statute as "24-hour care and supervision of minors in              
 residential child care facilities that are commonly known as group            
 homes or institutions" (AS 47.40.091).                                        
 Currently, recipients of these grants may not use the grant money             
 to purchase buildings, vehicles or other assets.  They may,                   
 however, use the money for rent and lease payments.  Today,                   
 recipients pay rent/lease payments year after year with no chance             
 of building equity.  The residential youth home in Ketchikan has              
 spent over $200,000 in rent over the last six years.  They could              
 own their facility today had it not been for the present statute.             
 By changing this statute, these residential centers can, in many              
 cases, lower monthly payments and eventually own their own asset.             
 In the long run this will lessen their dependency on the state and            
 allow more money for the programs that help our troubled youth.               
 During these times of fiscal responsibility, we need to get the               
 most out of every dollar the state spends.  I believe this                    
 legislation will give these homes flexibility toward bettering                
 their programs.  I urge you to support this legislation."                     
 Number 196                                                                    
 SENATOR SALO expressed her strong support for the legislation.                
 Number 204                                                                    
 PAT CLASBY, representing the Alaska Association of Homes for                  
 Children, said their association comprises 17 private nonprofits              
 that provide residential care and other youth services throughout             
 the state.  Much of the use of these facilities is based on the               
 lease payments that's found both in the statute and regulations of            
 the department.  These providers are trying to provide services in            
 a more cost-effective manner in the face of budget constraints, and           
 this bill would provide the opportunity to do business in a wiser             
 Number 225                                                                    
 SENATOR SALO asked if, in addition to being able to allow the grant           
 monies to be spent on a mortgage type payment, would it also then             
 be possible for them to use the grant monies for maintenance                  
 projects.  PAT CLASBY replied it is her understanding that this               
 bill would be removing that part of the statute that does not allow           
 these facilities to provide capital expenditures.  They could then            
 make minor renovations, improvements, etc., as long as it was                 
 within their grant budget.                                                    
 Number 263                                                                    
 JAMES STEELE of Wasilla, testifying from the Mat-Su LIO in support            
 of HB 515, said in many cases this bill will allow providers of               
 residential child care to ower monthly payments and eventually own            
 their own facility.  It will allow and provide a level of                     
 flexibility of control basically to use state dollars to the                  
 benefit of the children served, the agencies providing the services           
 and to the people of Alaska.  It also provides more stability for             
 the children that are being served.  He noted the bill is specific            
 only to grants for residential services, as well as having a zero             
 dollar fiscal impact.                                                         
 Number 295                                                                    
 JACK DUCKWORTH, representing Residential Youth Care in Ketchikan              
 and testifying from the Ketchikan LIO, said there is a tremendous             
 amount of cost to get these residential facilities on line to meet            
 state fire codes, etc.  If a landlord decides to sell the facility,           
 it would not just be a matter of going to a new place and signing             
 a new lease; it would also mean the additional costs of putting in            
 sprinkler systems, fire alarm systems and updating the facility to            
 make sure it meets the needs of the children.                                 
 Mr. Duckworth advised that the Residential Youth Care program in              
 Ketchikan has been in existence for over six years and they have              
 spent over $200,000 for lease payments.  They have two programs,              
 and the lease payments for one of their programs totals $20,000 a             
 year and the lease payments for the other program total $25,200 a             
 year.  The monthly lease payments total $2,100, and they have                 
 estimated that if they could buy the building, it would lower their           
 monthly payments by approximately $400, so not only would they be             
 lowering their monthly expenses, they would be building up an                 
 equity in the facilities as well.                                             
 Number 323                                                                    
 There being no further testimony on HB 515 am, CHAIRMAN GREEN asked           
 for the pleasure of the committee.                                            
 SENATOR SALO moved HB 515 am be passed out of committee with                  
 individual recommendations.  Hearing no objection, it was so                  
 Number 331                                                                    
        CSHB 393(FIN) MANAGED CARE PROGRAM FOR MEDICAID                       
 CHAIRMAN GREEN brought CSHB 393(FIN) before the committee as the              
 final order of business.                                                      
 REPRESENTATIVE NORMAN ROKEBERG, prime sponsor of HB 393, said the             
 legislation requests the Department of Health & Social Services to            
 submit draft legislation, through the Governor, to establish funded           
 programs for managed for Medicaid recipients in the state of                  
 Alaska.  The intent of the legislation is to expedite and give                
 direction to the implementation of managed care and to involve the            
 legislature, the provider community and the public in this process.           
 Representative Rokeberg pointed out that this is a major change in            
 the public policy of this state, and it is important to remember              
 that Medicaid is the second largest component of the state's                  
 budget, after education.  He stressed the importance to get cost              
 containment and control of this growing budget area, which has                
 increased 13.9 percent each year for the past five years.                     
 Representative Rokeberg believes it is inevitable that there will             
 be block grants, whether it is the Medicaid per capita or the                 
 National Governors Association proposal that will be adopted by               
 Congress and, ultimately, approved by whoever is in the presidency.           
 He said the state needs to be prepared to take block grants and               
 have a system in place for health care delivery that accounts for             
 that.  In addition, it needs to be done in a cost-effective,                  
 quality manner.                                                               
 Representative Rokeberg noted there are 43 states that have some              
 form of managed care for Medicaid, and Alaska has an opportunity to           
 learn from the examples of these other states.  The department has            
 awarded a contract to the Fox Corporation of Arizona to study other           
 states' models and to propose plans for development of managed care           
 in Alaska.  Presently, the department is developing a managed care            
 program that has worked in other states called the Primary Care               
 Case Management (PCCM) program, which assigns the patient a                   
 specific physician or care provider, however, this primary care               
 doctor could direct the patients to other specialists, etc.                   
 Representative Rokeberg said HB 393 has the support of the                    
 Department of Health & Social Services, the Alaska State Hospital             
 & Nursing Home Association, the Tanana Chiefs Conference and the              
 Alaska State Medical Association.                                             
 Number 396                                                                    
 SENATOR SALO asked what will happen as a result of passage of this            
 bill that will not happen otherwise.  REPRESENTATIVE ROKEBERG                 
 replied that it is the intention to specifically require that the             
 department set up a pilot program in two areas of the state, which            
 would include a rural portion of the state, as well as assuring               
 that the legislature is included in the loop of this determination            
 of public policy.  He added it is not his intention to inhibit the            
 development of this program, but he believes it is incumbent upon             
 the legislature to ensure that the people who are going to be                 
 affected by this be part of the process.                                      
 SENATOR SALO asked Representative Rokeberg why he thinks the Alaska           
 State Medical Association supports this legislation.                          
 REPRESENTATIVE ROKEBERG replied that after AMA first reviewed the             
 legislation, they gave it kind of a tepid endorsement, but just               
 before the bill went to the House floor, AMA wrote a letter, which            
 was a much warmer endorsement of the bill, as well as suggesting              
 that when considering the final legislation, to take into account             
 the concept of "any willing provider."  He reiterated the                     
 importance of giving the department some direction to make sure               
 that the program is implemented in such a way that the public of              
 this state will accept it and agree to it.                                    
 Number 441                                                                    
 BOB LABBE, Director, Division of Medical Assistance, Department of            
 Health & Social Services, said the department has been meeting with           
 Representative Rokeberg since the bill was first introduced in                
 order to work together on the development of the bill.  As the                
 department understood the bill, it was to direct them to develop              
 some pilot projects, a process that they begun.  They have hired a            
 contractor that's helping educate the staff on various managed care           
 models and they are working with the contractor on some recommended           
 approaches for Alaska that would take into account the vast                   
 geography, the rural and Native sector, as well as the urban areas.           
 Mr. Labbe said a problem they have encountered and that needs to be           
 clarified is the requirement that the department would have to come           
 back for legislation to implement managed care pilots.  They                  
 believe they already have adequate authority and direction from an            
 earlier session to begin doing this,  which is why they have the              
 contract and are looking at it.  Because of budget constraints, the           
 department feels it needs to be more aggressive in looking at                 
 options to control costs, and there is the concern that as they               
 move forward, if it is necessary to come back to get permission to            
 move ahead, that opportunity will be lost.  Their view is that                
 modification of the bill should require only to bring legislation             
 back if it is necessary to implement what they are doing.                     
 Mr. Labbe also pointed out that since the term "managed care" is              
 not defined in the legislation, there is concern that any activity            
 they take on could be construed to be a managed care activity and             
 be prohibited, and the department has drafted some language to be             
 considered to address that concern.                                           
 Number 485                                                                    
 KAREN PERDUE, Commissioner, Department of Health & Social Services,           
 said one of the reasons she recruited Mr. Labbe is that he comes              
 from Oregon where he was the chief Medicaid person who helped them            
 develop a very consumer sensitive managed care program.  She added            
 she is only interested in doing managed care if it both manages               
 costs prudently and it meets the needs of consumers and providers.            
 Commissioner Perdue also expressed her concern with the provision             
 in the bill requiring the department to come back to the                      
 legislature and ask for permission, if needed.  She believes the              
 department has got clear direction from the legislature that they             
 need to start these pilots.  These pilots will only be done on a              
 voluntary basis with the providers in those communities, and there            
 are federal processes in place for the department to protect                  
 Number 496                                                                    
 SENATOR SALO commented she didn't know whether or not involvement             
 in the process by the legislature was necessary, but she thinks it            
 is important that the legislature receive a report on the pilot               
 projects, and she wondered if there was a way that could be                   
 addressed in the legislation.                                                 
 Number 505                                                                    
 BOB LABBE, directed attention to the department's proposed                    
 amendment, which after the term "draft legislation" inserts the               
 words "if necessary" so that the department would only bring back             
 draft legislation if it were necessary.  The second change would              
 clarify that nothing in the bill would prevent the department from            
 acting to effectively manage costs through case management and                
 costs containment measures that are within the department's                   
 statutory authorization in order to assure the operation of the               
 program within the FY 97 budget.                                              
 Mr. Labbe said the legislation requires that the department submit            
 draft legislation on the first day of the next legislative session,           
 but he does see that time frame being realistic.  The contractor              
 should have its report by the end of the June, but it will take               
 some time to decide where they would do this and who they would be            
 working with, etc.  However, he expressed the department's                    
 willingness to come in an give a report to the committees, even if            
 they are just in the planning process.  Also, right now their                 
 computer system cannot accommodate what would be considered managed           
 care without upgrades to the system.                                          
 Number 542                                                                    
 COMMISSIONER PERDUE said if they were doing a program design and              
 negotiating with a provider and then had to come back to the                  
 legislature to have a contract approved, it would be too cumbersome           
 for the department in terms of managing this program.  If it was              
 found they need legislation, that could be requested, but she                 
 believes that if it is not needed, it is a very cumbersome process.           
 She thought a report to the legislature on the progress of the                
 pilot projects was a good idea.                                               
 Number 553                                                                    
 REPRESENTATIVE ROKEBERG said he is sensitive to the Commissioner's            
 concerns, and it is not the intent of this bill to inhibit or                 
 hinder the department in any way.  His concern is that they proceed           
 rapidly and he doesn't want them to lose the momentum in moving               
 forward.  He has been looking at the proposed amendment and he has            
 some recommendations that he will make.  He suggested there are               
 anti trust issues that need to be looked at and a number of                   
 statutory issues that should be focused on to make sure the                   
 department has the statutory authority to proceed without being               
 inhibited in any way.                                                         
 Number 572                                                                    
 SENATOR SALO suggested a conceptual amendment to subsection (b)               
 that would delete the requirement for draft legislation and replace           
 it with a requirement that the Department of Health and Social                
 Services submit to the legislature, through the Health, Education             
 & Social Services committees, a report of a design for                        
 implementation of the proposed system.                                        
 REPRESENTATIVE ROKEBERG stated he would look at the conceptual                
 amendment as hostile to the intent of the bill.                               
 TAPE 96-34, SIDE B                                                            
 Number 010                                                                    
 COMMISSIONER PERDUE reiterated she believes an amendment is needed            
 because the current bill requires the department to come back for             
 legislation no matter what the situation is.                                  
 REPRESENTATIVE ROKEBERG reiterated his point that this is a major             
 change in public policy in this state and that is why the                     
 legislature needs to be involved.                                             
 Number 050                                                                    
 CHAIRMAN GREEN requested that the sponsor, the department and                 
 interested parties get together before the committee's next meeting           
 to see if the concerns expressed during the meeting can be worked             
 There being no further business to come before the committee, the             
 meeting was adjourned at 10:00 a.m.                                           

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