Legislature(2003 - 2004)

03/12/2003 01:32 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE HEALTH, EDUCATION AND SOCIAL SERVICES                                                                        
                       STANDING COMMITTEE                                                                                     
                         March 12, 2003                                                                                         
                           1:32 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Fred Dyson, Chair                                                                                                       
Senator Lyda Green, Vice Chair                                                                                                  
Senator Gary Wilken                                                                                                             
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Gretchen Guess                                                                                                          
COMMITTEE CALENDAR                                                                                                            
Overview:    Department   of    Health   and    Social   Services                                                               
Reorganization by Mr. Bob Labbe and Ms. Karleen Jackson, Deputy                                                                 
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 41                                                                                       
"An Act relating to medical care and crimes relating to medical                                                                 
care, including medical care and crimes relating to the medical                                                                 
assistance program."                                                                                                            
     MOVED CSSSSB 41(HES) OUT OF COMMITTEE                                                                                      
PREVIOUS ACTION                                                                                                               
SB 41 - See HESS minutes dated 2/26/03.                                                                                         
WITNESS REGISTER                                                                                                              
Ms. Cathy Giessel                                                                                                               
Alaska Nurse Practitioner                                                                                                       
12701 Ridgewood                                                                                                                 
Anchorage AK 99801                                                                                                              
POSITION STATEMENT: Supported SB 41.                                                                                          
ACTION NARRATIVE                                                                                                              
TAPE 03-10, SIDE A                                                                                                            
CHAIR FRED DYSON  called the Senate Health,  Education and Social                                                             
Services  Standing  Committee  meeting  to  order  at  1:32  p.m.                                                               
Present  were  Senators  Dyson,   Wilken,  Green  and  Davis.  He                                                               
announced  the  committee  would  have  the  department  overview                                                               
Overview  Presentation: Reorganization  of the  Alaska Department                                                           
of Health & Social Services                                                                                                 
MS. KARLEEN  JACKSON and MR.  BOB LABBE, Deputy  Commissioners of                                                               
the Department  of Health and  Social Services (DHSS),  began the                                                               
presentation of  the reorganization of their  department in order                                                               
to  provide  better  customer service  and  to  better  integrate                                                               
service delivery  within their current  programs. Other  goals of                                                               
this restructuring are:  enhanced quality of life  for the people                                                               
DHSS serves;  efficient coordination  and management  of multiple                                                               
health  and   human  services  programs;  maximum   benefit  from                                                               
existing  resources   and  reduce  burdensome   regulations;  and                                                               
innovation, flexibility,  and accountability  at all  levels. The                                                               
highlights of  this activity  are: internal  consolidations, name                                                               
and  function  changes for  four  Divisions;  the creation  of  a                                                               
department-wide  program review  function; the  addition of  five                                                               
programs   from    the   Departments   of    Administration   and                                                               
Education/Early  Development;  and  the decentralization  of  the                                                               
administration of  the Medicaid Program which  aligns its program                                                               
functions to other appropriate Divisions.                                                                                       
The  Office  of  the  Commissioner   will  also  be  reorganized,                                                               
expanding staff  to include three  Deputy Commissioners.  Two new                                                               
offices  will  be  utilized, using  existing  positions.  A  rate                                                               
review function  will be initiated  to centralize the  setting of                                                               
rates paid  for all  services. The new  Office of  Program Review                                                               
(OPR)   will  ensure   that  DHSS   programs  accomplish   goals.                                                               
Specifically,  OPR will  help Divisions  find  ways to  refinance                                                               
programs,  reduce  General  Fund expenditures,  maximize  federal                                                               
funding,   enhance   program    integrity,   promote   government                                                               
relations,  integrate  Faith-Based   and  community  initiatives,                                                               
facilitate interdepartmental  coordination, and  improve customer                                                               
The  Office of  Children's  Services will  provide  a new,  well-                                                               
rounded  system to  help families  keep their  children safe  and                                                               
healthy. Child  health programs  are moved  from the  Division of                                                               
Public  Health  (DPH).  This  office   will  also  implement  the                                                               
Performance  Improvement  Plan  initiated  by  the  2002  Federal                                                               
Review. Behavioral Rehab Services are  moved from the Division of                                                               
Medical  Assistance  (DMA)  to   better  serve  children  needing                                                               
community-based residential  services. The key functions  of this                                                               
office that  were formerly  in the Division  of Family  and Youth                                                               
Services  (DFYS)  include  child protection  services,  adoption,                                                               
foster care, and family services.                                                                                               
                SB  41-MEDICAID COSTS AND CRIMES                                                                            
CHAIR  DYSON announced  SB  41  to be  up  for consideration.  He                                                               
called an at-ease from 2:37-2:38 p.m.                                                                                           
SENATOR WILKEN  moved to adopt  the sponsor substitute to  SB 41,                                                               
version  23-LS0204\I,  dated  3/12, as  their  working  document.                                                               
There were no objections and it was so ordered.                                                                                 
SENATOR GREEN, sponsor, said their  work had produced a number of                                                               
changes  and  almost  everyone  agrees  that  it  works  for  the                                                               
department as well as provides  the protection and assurance that                                                               
medical assistance will be given the highest and best use.                                                                      
She reviewed a  sectional analysis that each member  had in their                                                               
packets. She  said that  section 2  is particularly  important to                                                               
her in  that the Department  of Health and Social  Services would                                                               
undertake  a complete  review of  outstanding  claims of  medical                                                               
assistance   providers  charged   with  misconduct   involving  a                                                               
controlled  substance.  If  there are  outstanding  claims,  they                                                               
would be on that review.                                                                                                        
Section  3  adds new  sections  to  AS 47.05.  regarding  medical                                                               
assistance  fraud. It  sets out  the provisions  by which  annual                                                               
audits will  be maintained  and conducted.  The number  of audits                                                               
required  annually   shall  be  .75%  of   all  enrolled  medical                                                               
assistance  providers, but  may not  be  fewer than  75 and  must                                                               
include both  on-site and desk  audits and  must be a  variety of                                                               
provider types.                                                                                                                 
SENATOR GREEN said these audits  would cover doctors and dentists                                                               
from the largest hospital to  the smallest provider. All entities                                                               
will  have  the  potential  of being  audited.  It  outlines  the                                                               
description  of a  successful contractor.  It  is important  that                                                               
there  be  certain  characteristics  and  qualifications  of  the                                                               
auditor  so  legislators  could  feel  confident  that  they  are                                                               
competent enough to conduct the full audit.                                                                                     
Section  (b)  requires  the department  to  begin  administrative                                                               
proceedings to  recoup identified overpayments within  90 days of                                                               
receiving  each audit  report and  requires  the commissioner  to                                                               
provide copies of  all audit reports to the  attorney general for                                                               
purposes  of screening  for criminal  violations. Subsection  (c)                                                               
has  legislative   intent  that  the  state   share  a  recovered                                                               
overpayment or account for it  separately, a portion of which may                                                               
be appropriated to the department to pay for the annual audits.                                                                 
SENATOR  GREEN  said they  want  to  make  sure that  the  audits                                                               
continue on  a regular basis  and the legislature is  required to                                                               
review  the request  for payment  for the  audit. Subsection  (d)                                                               
allows  for audit  and inspections  of the  records of  a medical                                                               
assistance provider that are pertinent  to providing service to a                                                               
medical assistance recipient. Subsection  (e) says the department                                                               
is not prohibited  from performing other audits  that are allowed                                                               
or required under other laws.                                                                                                   
SENATOR GREEN  said that  AS 47.05.210,  page 3,  establishes new                                                               
criminal statutes with  penalties ranging from class  B felony to                                                               
class B  misdemeanor. AS 47.05.220  has notice of charges  by the                                                               
attorney general  that a medical  assistance provider  is charged                                                               
with  fraud.  AS  47.05.230  allows   charges  to  be  aggregated                                                               
depending  on  the  amounts involved.  AS  47.05.240  allows  the                                                               
commissioner  of DHSS  to exclude  a medical  assistance provider                                                               
from participating in  the program if they had  been convicted of                                                               
medical  assistance fraud  or misconduct  involving a  controlled                                                               
substance.  It  includes  persons  convicted  under  both  Alaska                                                               
statutes,  U.S. court  or a  court of  another state  for similar                                                               
crimes.  The  exclusion may  be  up  to  10 years  following  the                                                               
unconditional discharge. AS 47.07.010  defines the purpose of the                                                               
medical  assistance  program  for   needy  persons.  All  records                                                               
pertinent  to   providing  services  to  a   medical  assistant's                                                               
recipient  must  be  available   for  inspection,  not  just  the                                                               
financial  records.  At  one  point   it  listed  only  the  word                                                               
SENATOR WILKEN asked what is  meant by "statewide sample" on page                                                               
2, line 23 and 24.                                                                                                              
MS. TRACI CARPENTER,  Staff to Senator Green,  replied that there                                                               
are approximately 10,000 enrolled medical assistance providers.                                                                 
SENATOR WILKEN asked  if there would always be at  least 75 under                                                               
audit and a maximum of .75%, which would be 100.                                                                                
MS. CARPENTER indicated that was correct.                                                                                       
CHAIR DYSON asked if someone is  convicted of this kind of fraud,                                                               
is there an automatic action against their medical license.                                                                     
SENATOR GREEN replied that she  didn't think that was necessarily                                                               
the case.                                                                                                                       
MR. LABBE said he wasn't sure either.                                                                                           
CHAIR  DYSON  said he  understood  that  most welfare  fraud  was                                                               
perpetrated  by  applicants  and  that most  Medicaid  fraud  was                                                               
perpetrated by providers.                                                                                                       
SENATOR  GREEN said  people  wanted to  make  sure this  language                                                               
applies  to medical  service  providers, so  that  they could  be                                                               
prosecuted under this statute.                                                                                                  
MS.  CATHY   GIESSEL,  Alaska  Nurse   Practitioner  Association,                                                               
wholeheartedly  endorsed SB  41. However,  they have  one concern                                                               
with some  terms that  appear in the  bill. The  term "physician"                                                               
has been used and she thought  it was important to recognize that                                                               
AS  47.07. says  there  are numerous  categories  of health  care                                                               
providers,  not  just  physicians.   There  are  dentists,  nurse                                                               
practitioners,  chiropractors, etc.  Several places  in the  bill                                                               
the terms  medical practice, medical care  and medical profession                                                               
are  used. It  sounds as  thought the  bill is  directed only  to                                                               
physicians and she  recommended that on page 1, line  14; page 2,                                                               
lines 1  and 2;  and page  7, line 17,  that instead  of "medical                                                               
care or medical  provider" the terms "health care  or health care                                                               
provider" be  substituted. That would  encompass all  the various                                                               
providers who provide services to Medicaid recipients.                                                                          
She  said this  bill directs  attention to  controlled substances                                                               
and  the DHSS  last  year put  out a  policy  that restricts  the                                                               
health care providers from the  amount of oxycodone products they                                                               
can  prescribe  each  month  to  Medicaid  recipients.  So,  some                                                               
controls are already in place.                                                                                                  
SENATOR GREEN  moved an amendment  on page  1, line 14  to delete                                                               
"medical" and  insert "healthcare"; on  page 2, line 1  to delete                                                               
"medical"  and insert  "health";  on  page 2,  line  2 to  delete                                                               
"medical" and  insert health  care"; and  on page  7, line  17 to                                                               
delete "medical"  and insert "health".  There were  no objections                                                               
and it was so ordered.                                                                                                          
MR. LINDSTROM supported the new  language. He said he didn't know                                                               
what  the fiscal  note would  be, but  could probably  get a  one                                                               
within 24 hours.  The fiscal note for their  original bill, which                                                               
they  assumed would  be  200 audits  a year,  and  that was  $2.9                                                               
million. He estimated  that this bill would be less  than half of                                                               
CHAIR DYSON  said he  heard that  investigations in  other states                                                               
for Medicaid  fraud have produced  more revenue than the  cost of                                                               
the audits and he hoped that would  be true here and taper off as                                                               
the word got  around. He asked what could be  done with the money                                                               
that is recovered.                                                                                                              
SENATOR  GREEN   replied  that   it  would   require  legislative                                                               
approval, but  the intent would  be for it  to go to  the general                                                               
fund and to be set aside for the audits.                                                                                        
MR.  LINDSTROM  added that  in  the  previous fiscal  note,  they                                                               
estimated  recoveries  beginning  in  FY05  of  approximately  $4                                                               
million  with  $3 million  in  expenditures  and increasing  over                                                               
SENATOR GREEN noted that many  other states have these provisions                                                               
in place already.                                                                                                               
SENATOR WILKEN moved to pass  CSSSSB 41 (HES) from committee with                                                               
individual recommendations  and pending  fiscal note.  There were                                                               
no objections and it was so ordered.                                                                                            
CHAIR DYSON adjourned the meeting at 3:07 p.m.                                                                                  

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