Legislature(2009 - 2010)Anch LIO Rm 220
08/03/2010 09:00 AM Senate HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| Patient Protection and Affordable Care Act | |
| Denali Kid Care (sb 13) | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
August 3, 2010
9:02 a.m.
MEMBERS PRESENT
Senator Bettye Davis, Chair
Senator Joe Paskvan, Vice Chair
Senator Johnny Ellis
Senator Joe Thomas
Senator Fred Dyson
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Wes Keller
Representative Paul Seaton
Representative Sharon Cissna
COMMITTEE CALENDAR
PATIENT PROTECTION AND AFFORDABLE CARE ACT
- HEARD
DENALI KID CARE (SB 13)
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record.
WITNESS REGISTER
DEBORAH ERICKSON, Executive Director
Alaska Health Care Commission
POSITION STATEMENT: Spoke to workforce and public health
provisions related to the Patient Protection and Affordable Care
Act.
JUDITH BENDERSKY, Health Program Manager
Medicare Information Office
Division of Senior and Disability Services
Department of Health and Social Services (DHSS)
Anchorage, AK
POSITION STATEMENT: Provided information about Medicare as it
related to the Patient Protection and Affordable Care Act.
LINDA HALL, Director
Division of Insurance
Anchorage, AK
POSITION STATEMENT: Provided information about insurance as it
relates to the Patient Protection and Affordable Care Act.
RACHEL PETRO, Deputy Commissioner, Department of Administration
POSITION STATEMENT: *
PATRICK SHIER, Director
Division of Retirement and Benefits
Department of Administration
POSITION STATEMENT: Delivered a presentation entitled PPACA
Provisions Impacting the State of Alaska as an Employer.
JON SHERWOOD, Medical Assistance Administrator
Department of Health and Social Services
Juneau, AK
POSITION STATEMENT: Provided information related to the impact
of the Patient Protection and Affordable Care Act on the State
of Alaska.
JON SHERWOOD, Medical Assistance Administrator
Department of Health and Social Services (DHSS)
Juneau, AK
POSITION STATEMENT: Provided information about the Medicaid
program as it relates to Denali Kid Care.
STACIE KRALY, Chief Assistant Attorney General
Department of Law (DOL)
Juneau, AK
POSITION STATEMENT: Answered questions about the instructions
from the governor to conduct a comprehensive review of the
options available under the Medicaid program relative to the
veto of SB 13.
RANDI SWEET
United Way of Anchorage (UWA)
POSITION STATEMENT: Testified in support of increasing the
federal poverty level limit to qualify for Denali Kid Care.
DAVID MASUO, representing himself
POSITION STATEMENT: Testified in support of increasing the
federal poverty level limit to qualify for Denali Kid Care.
ACTION NARRATIVE
9:02:38 AM
CHAIR BETTYE DAVIS called the Senate Health and Social Services
Standing Committee meeting to order at 9:02 a.m. Present at the
call to order were Senators Paskvan, Ellis, Dyson and Davis.
^Patient Protection and Affordable Care Act
9:04:40 AM
CHAIR DAVIS announced the first order of business was to hear an
overview of the federal health care bill, the Patient Protection
and Affordable Care Act ("Affordable Care Act").
SENATOR PASKVAN expressed hope that the review would identify
the sections of the federal legislation that are important to
Alaska and the timeline for implementation. He understands that
there are mandates and opportunities and he is interested in
knowing the timelines that are applicable to each. In particular
he'd like to know what grants are available to the state for the
various components of the federal health care law and what
information the Legislature will need to receive in order to
effectively take advantage of the opportunities.
SENATOR ELLIS related that he recently attended a conference
that was sponsored by the National Conference of State
Legislatures and principally funded by the Annie E. Casey
Foundation. He offered to pass along the information that he
received to this committee and perhaps the finance committees
because Medicaid is a growing component of every state budget
and it's a common complaint among legislators. According to the
staff at the Annie E. Casey Foundation, the federal legislation
put a lot of money on the table and many states applied for
those federal dollars to help fund their Medicaid budgets. Other
states opted to sue the federal government and some were just
holding back. What is absolutely clear is that once the money's
gone, it's gone.
9:07:27 AM
SENATOR ELLIS expressed interest in knowing if the State of
Alaska is making use of the available opportunities to help fund
or refinance its Medicaid budget, if it's in a holding pattern,
or if the administration has decided to reject the money.
9:10:16 AM
DEBORAH ERICKSON, Executive Director, Alaska Health Care
Commission, apologized for Commissioner Hogan that he wasn't
available today. She said she was asked to speak to specific
workforce and public health provisions, but she would first
provide some context for the rest of today's presentations. She
related that an interagency team has been meeting periodically
to ensure that state agencies are identifying mandatory
provisions in the federal law, looking at the options, looking
at the legal considerations and making decisions about
implementation. Representatives from the agencies will be
speaking to these particular provisions. Mr. Sherwood will speak
to the specific Medicaid provisions; Deputy Commissioner Petro
and Retirement and Benefits Director Patrick Shirer will speak
to the requirements for the state as an employer under this new
law; Division of Insurance Director Hall will talk about the
private insurance market reforms under the law and where the
state stands with respect to compliance.
MS ERICKSON directed attention to the PowerPoint that she
intended to present today and explained that while she did not
plan to provide an overview of the health care law as she had in
a presentation at the end of the session last year, she would
lay out the major components of the Affordable Care Act. This
includes the changes to the private health insurance market;
changes to Medicaid and Medicare; provisions related to
prevention and strengthening public health and population-based
health; a series of health care workforce development provisions
related to transparency and strengthening fraud, waste, and
abuse provisions; the new act entitled The Class Act that is
embedded in the law and creates a new long term care insurance
program; and new taxes and fees that help to finance the changes
that the new law imposes.
9:13:08 AM
MS ERICKSON noted that there are many different interrelated
pieces to this new law and she regularly comes across provisions
that contain mistakes. Understand, she said, that the first nine
titles of the Affordable Care Act are the basis of the basic
law, but Title 10 of the Affordable Care Act actually makes
amendments to Titles 1-10 and then the Health Care and Education
Reconciliation Act again makes amendments. A consolidated
version that reflects all the changes to the law came out of one
of the congressional committees and DHSS has posted that on
their website. She said she's mentioning this to ensure that
it's understood that they are looking at the current amended
version of the law. She said it's also important for the public
to understand the distinction between authorizations and
appropriations and that the new law authorized many new programs
and reauthorized some old programs, but not all of the
provisions include the appropriations. While it appears that
there may be another funding opportunity, Congress must first
appropriate the funds to support it.
9:15:26 AM
MS ERICKSON highlighted the apparent conflicts in some of the
effective dates and explained that she has been maintaining a
master spreadsheet for the interagency team showing the
effective dates of provisions in the law, but some of the other
spreadsheets are from the program folks who are working on
implementation and these identify when the state will have to
take action. Those dates aren't necessarily the same as when the
provision in the law takes effect. Obviously, she summarized,
it's important to understand what an effective date means in
terms of whether that's when the law takes effect or if there's
a different date by which the state government of some other
federal agency might have to take some particular action.
MS. ERICKSON emphasized that the details on how the law is
implemented are coming out daily. She referenced slide 4 to
illustrate how quickly things change. Late last Friday the
information she submitted for this presentation indicated that
DHSS was aware of at least 25 new funding opportunities that had
been released - grant guidances, grant RFP that had been
released by the federal government. Literally minutes after she
sent the information an email came in from the federal
government advertising a new opportunity that had become
available. Over the weekend she heard about a grant that had
been awarded to an organization in the state and she didn't even
know that that funding opportunity was available. It was an
existing program that had been reauthorized under the Affordable
Care Act, but it wasn't on any federal lists of opportunities
under the Affordable Care Act. So while the PowerPoint lists 25,
she knows that at least 27 funding opportunities have been
released. Similarly, the information she sent last Friday lists
8 regulation packages and she now knows that at least 10 have
been released. One came out later on Friday and she wasn't aware
of the other, which came out in May, and it wasn't on any U.S.
Department of Health and Human Services list.
9:17:49 AM
MS ERICKSON said that at least one new federal office has been
established and a few more are authorized under the new law. The
most significant is the Office of Consumer Information and
Insurance Oversight, which was created right after the law
passed. That's the office within the U.S. Office of Health and
Human Services that's overseeing all the changes related to
private insurance market reforms and also some of the new
insurance programs - like the temporary high risk pool and the
insurance exchanges. A number of new
councils/committees/commissions were also formed under the
Affordable Care Act and she's aware of 3 that are already
functioning. 1) The National Prevention Health Promotion and
Public Health Council convened and has already released a
preliminary report on the status of public health nationwide; 2)
A committee specifically to review criteria for federal
designations for health professional shortage areas and
medically underserved areas has been created to advise the
federal government on new regulations they plan to adopt related
to those designations; and 3) A Plan Advisory Board to guide the
development of regulations and other guidance related to the
grants that will come out in a couple of years to support the
nonprofit member-operated insurance companies that are created
under the Act.
9:20:27 AM
One of the many mandates for the Secretary for the Department of
Health and Human Services was to create a website for the public
specifically on insurance opportunities and options and other
issues related to health care and health care reform. It was
posted on July 1; www.healthcare.gov includes state-by-state
information. While this was a requirement for the federal
government and would appear as though state government would
have no role, the state insurance division actually had a staff
member assigned for a full week to compile some of the basic
information for the federal government. The website also has
information and links to the state Medicaid program so the state
Medicaid staff has to be involved to ensure that the information
is accurate and complete. That's an example of just one area
where state government is involved even though there isn't a
mandate in the law for the state to participate directly. She
noted that the website contains information specific to Alaska
and a summary of the federal implementation of the new law.
9:22:13 AM
MS ERICKSON referenced slide five and explained that the
interagency team that she's mentioned is entitled the Alaska
PPACA Impact Team. This group came together initially to ensure
a coordinated approach across agencies in an effort to
understand and identify areas where state government needs to
comply with the law.
Consultation with the Department of Law (DOL) has been
particularly important in understanding the interface between
the lawsuit to which the state government is a plaintiff and
applications for any of the federal funding opportunities and if
there is any special legal disclaimer language that needs to be
included with the grant applications. She affirmed that they
have been consistent in identifying what that is and including
it. They are also looking at the potential risks and potential
benefits to state government when considering and operating
grants and these new programs.
The members of the team are largely present today. Patrick
Shirer, the director of the Division of Retirement and Benefits,
is representing the Department of Administration (DOA) looking
specifically at the requirements for the state as an employer;
Linda Hall, the director of the Division of Insurance, is
representing the Department of Commerce, Community and Economic
Development; deputy commissioner Bill Streur and deputy
commissioner Patrick Hefley, and the chief medical officer
Doctor Hurlbert have been representing Department of Health and
Social Services (DHSS) on the team.
While Dr. Hurlbert wasn't present due to a family obligation,
she assured the members that he would be happy to speak to the
committee about any issues related to health care reform
generally and how it impacts the state and anything related to
population-based health improvement. Mr. Streur is representing
the state today at a one day meeting in Minnesota by the U.S.
Department of Health and Human Services on the health insurance
changes. She said that Ms. Hall is taking the lead today on the
issues related to the health insurance exchange. She noted that
as that moves forward she will need to work closely with DHSS,
specifically the Medicaid agency, because of the requirements
that Medicaid enrollment and eligibility be integrated into the
health insurance exchange.
9:26:30 AM
SENATOR PASKVAN said he made a request in early June for
information regarding this and was told that there would be
meetings under executive privilege, but that a report would be
issued by the end of June. He said he hadn't received it and
questioned when it might be issued.
MS ERICKSON apologized that an expectation was created for the
production of a report. She said at one point this committee
envisioned that a preliminary report on the impact of the new
law could be produced in short order. This past month a draft
report was provided to the governor's office and the information
that's being provided today is a summary of what's been provided
to the governor's office to date. The resources that have thus
far been required to understand what's involved in
implementation of this new law have overwhelmed this interagency
team more than was anticipated. Because things are changing on a
daily basis with respect to this new law, she said she can't
commit to when a comprehensive and consolidated report might
come out from state government.
9:29:21 AM
CHAIR DAVIS said at some point there has to be a plan that's
laid out and once that's submitted to the governor, the
Legislature should have access to it. She asked how many people
make up the interagency team.
MS ERICKSON replied this group met once for 45 minutes via
teleconference in the past 4 weeks. Before that when they were
trying to develop a consolidated list and identify the areas
where they needed to be coordinating, like the legal waiver
language she mentioned previously, they were meeting via
teleconference on a weekly basis for 45 minutes to an hour. The
official members include the people she listed earlier and
Stacie Kraly representing the Department of Law and Kelly White
representing the Office of Management and Budget. In addition,
some agencies have had their assistant attorneys general
participate including assistant AG Ann Johnson, who supports the
Department of Administration and the Division of Retirement and
Benefits. Mr. Sherwood, who is representing Medicaid, has been
convening an intradepartmental staff team that came together to
identify the issues within the DHSS on a programmatic level that
shouldn't take the time of the other division directors and
deputy commissioners. Mr. Sherwood has been sitting in on the
meetings more recently. Because of the scope of the impact on
DHSS, Commissioner Hogan has made a point of participating in
these meetings regularly. A couple of people from the governor's
office have been sitting in as well.
9:33:02 AM
CHAIR DAVIS questioned why the Department of Education and Early
Development (DEED) isn't involved because money is earmarked for
DEED for health clinics and [indisc] in particular.
MS ERICKSON explained that initially the decision was to limit
it to those agencies that would have multiple programs or
impacts. They've identified a number of departments that will be
impacted and the Department of Labor and Workforce Development
(DOLWD) has already applied for one grant under the Affordable
Care Act to support statewide health workforce development
planning. And they are in the process of applying for another
grant opportunity specific to developing health professional
occupation opportunities for low income people and Temporary
Assistance for Needy Families (TANF) recipients. There was never
an intention to bring every agency to the table that might have
some opportunity because it wouldn't be a good use of their
time.
REPRESENTATIVE WES KELLER asked the interagency team to
generally track how the various divisions and departments
respond to these funding opportunities.
CHAIR DAVIS interjected to recognize the next speaker.
JUDITH BENDERSKY, Health Program Manager, Medicare Information
Office, Division of Senior and Disability Services, Department
of Health and Social Services (DHSS), reported that her office
is funded through the centers for Medicare and Medicaid and the
Administration on Aging to provide one-on-one counseling to
people as they turn 65 and become eligible for Medicare and to
do public outreach helping Alaskans navigate Medicare.
She noted that Mr. Obermeyer provided some points in the
Affordable Care Act for her to address with respect to impact on
the state. She said she doesn't see many specific points that
the state needs to create new policy or regulations around, but
she would touch on a few. One provision in Section 3110 that was
to be effective March 2010 may impact dual eligibility - people
on Medicaid and Medicare. It's a special enrollment period for
disabled tri-care beneficiaries; those are people who are
receiving health insurance benefits through the military will
automatically become enrolled in Medicare Part A and Part B
effective the 25th month of receiving Social Security disability
benefits. That's a minor tweak in the Affordable Care Act that
makes a needed fix in Medicare so that tri-care beneficiaries
receive the same enrollment period as other disabled
beneficiaries. There are a number of points like that, but they
have no specific impact on the State of Alaska and anything the
state has to do in terms of response.
9:39:42 AM
MS. BENDERSKY said the largest impact that the Affordable Care
Act has on Medicare beneficiaries is to reduce and close the
coverage gap known as "the donut hole." This gap in prescription
coverage impacts about 12,000 people in Alaska and now they'll
pay less out of pocket to get prescriptions. She mentioned that
Medicaid is impacted by the Affordable Care Act so it will have
to align its payment policies to accommodate benefit changes in
the Medicare program. It also means that there will be more
people eligible for Medicaid in the future. At some point Mr.
Sherwood will address that in greater detail. She offered to
address specifics the committee may have.
9:42:15 AM
CHAIR DAVIS found no questions and asked Ms. Erikson to respond
to Representative Keller's question.
MS ERICKSON said she recently started a spreadsheet that lists
the grant opportunities and some information about the deadlines
and dates and specific proposal information. That information is
summarized in the PowerPoint. She offered to provide the
committee with copies of the spreadsheet.
CHAIR DAVIS said she would like that.
MS ERICKSON directed attention to slide 6 and explained that
state governments are responsible for implementing the
requirements imposed on employers and will be responsible for
implementing the Medicaid expansion requirements. There also are
a series of programs that state government may participate in
including the high risk pool, early retirees reinsurance
program, the health insurance exchange, the insurance market
reforms - a series of service delivery and payment reforms that
are made through changes to Medicare and Medicaid so those
changes that are made through Medicaid and are presented as
state options will be considered. Also included are public
health and preventions programs and the workforce development
program. She said these are general areas of options and
opportunities for the state and she will defer explanation of
them to the other presenters.
9:45:28 AM
MS. ERICKSON said she imagines that the needed statutory and
regulatory changes for implementation will be made prior to
2014, which is the date that the Medicaid expansion takes
effect.
SENATOR PASKVAN recalled reading that in mid July Alaska signed
a contract with the federal government related to the high risk
pool. He asked what the state contractually obligated itself to
do and what the policy choices were for coming to the decision
to sign or not to sign that contract.
CHAIR DAVIS said that will be taken up by the Division of
Insurance. She asked Ms. Erickson to continue.
MS ERICKSON said she anticipates that Director Hall will address
the issues of the health insurance exchange and the insurance
market reforms and be able to answer detailed questions. She
acknowledged that the committee had specifically asked about the
general areas that might require state legislation and those are
the three main areas she would anticipate.
Continuing with the presentation, she said the next several
slides contain lists of grants or contracts for which state
agencies are either in the process of developing applications or
have already applied. The high risk pool is in place and she
believes that it's a contract with the Alaska Comprehensive
Health Insurance Association (ACHIA). State government was
involved in supporting and negotiating for that and Director
Hall will address that further.
The temporary reinsurance program for early retirees is an
application that the Department of Administration (DOA)
submitted and those department officials will explain that in
greater detail.
A number of programs in this new law focus on maternal and child
health so the first several bullets on slide 8 are about two
programs. The Personal Responsibility Education Grant focuses on
adolescent health and safety issues; DHSS applied for that grant
in early June. The Maternal, Infant, and Early Childhood Home
Visitation Home Visitation is a new program created under the
bill. It's significant in that there was a requirement for all
states to participate in phase 1 grants in order to continue to
receive their maternal and child health block grants. The state
submitted an application for phase 1 funding and received
$584,000 several weeks later. This first phase grant expands a
requirement under the maternal and child health block grant that
all states conduct every 5 years a needs assessment related to
maternal and child health issues and resources in the state. The
scope of that assessment was expanded significantly and the
phase 1 grant supports the expansion of that data
collection/needs assessment effort.
Support for pregnant and parenting teens is another new grant
opportunity. The Council for Domestic Violence and Sexual
Assault under the Department of Public Safety (DPS) developed an
application for that program and she assumes it was sent in by
the deadline, which was yesterday.
9:50:28 AM
One workforce planning and development grant is available for
each state and provides strategic planning funds. For states
that have a strategic plan in place, implementation funds are
available. The Alaska Workforce Investment Board submitted an
application on July 19 for the planning funds. They have been
working with a statewide coalition that produced a strategic
plan. She believes that they envision using these funds to apply
for a workforce development implementation grant.
In a couple of days an application is due for health professions
for low income individuals and TANF recipients. She reiterated
that the Alaska Workforce Investment Board under the Department
of Labor is working with their partners on that.
Two grant applications that were submitted last Friday include
aging and disability resource centers and a small grant
opportunity - Medicare part D outreach for about $60,000. Ms.
Bendersky's office provides the outreach support work to
Medicare recipients with information about part D, specifically
the pharmacy benefit under Medicare.
There's also funding available that the Division of Public
Health within DHSS will pursue related to that division's
background check program in order to participate in a national
background check program. She noted that Alaska was a pilot
program state, but she isn't sure how it expands or continues
the state's participation in that program. Nonetheless, DHSS is
applying and that application is due August 9.
She referenced the new National Public Health Prevention and
Health Promotion Council and noted that a new program was
created under the Affordable Care Act and $500 million was
appropriated in the first federal fiscal year for that. A new
process is being pilot tested moving towards developing an
accreditation program for state and local government public
health agencies. In the future all state and local government
agencies will have an opportunity to become accredited as a
state or local government public health agency. Performance
standards and performance measurement plans are being put in
place related to that new accreditation process.
9:53:36 AM
MS. ERICKSON offered her understanding that the first grant
related more generally to strengthening the public health
infrastructure is meant to support states in developing their
performance management systems for public health. And it's
intended to support states in moving towards that accreditation
process.
A new grant that she learned about just yesterday and that DHSS
is applying for is an existing grant program - public health
laboratory and epidemiology capacity support. The Division of
Public Health has received a grant under that program for a
number of years, but it's been reauthorized and expanded under
the Affordable Care Act with the new National Public Health
Fund. She learned yesterday that the state Division of Public
Health is in the process of developing an application for that
program and the application is due August 27.
Slide 11 lists some of the grant programs. The first two came
out in the last week or 10 days and are related to health
insurance funding opportunities. Last Thursday the federal
government announced they were releasing the grant guidance for
health insurance exchange planning for each state. Those
applications are due on September 1. Last week she learned about
the grant opportunities to develop offices of health insurance
consumer information and assistance in states and/or a health
insurance ombudsman office or program. Director Hall will
provide more detailed information about what is included in
those grant opportunities and what the state's considerations
are related to risks and benefits and the possibility of
applying for those two programs.
9:56:32 AM
MS. ERICKSON said another opportunity that was released recently
is the Money Follows the Person Rebalancing Demonstration
Project. That's a Medicaid funding opportunity and those
applications aren't due until January.
She said she wanted to point out several things related to State
of Alaska government officials being involved. She noted that
earlier she mentioned the new committee to review criteria for
designation of health professional shortage areas and medically
underserved areas and it was an honor that two Alaskans were
appointed to this new committee, but it's also potentially a
real benefit to the State of Alaska and Alaskans. Issues related
to measuring and understanding medical access in remote areas of
Alaska will be considered in this. Alice Rarig who is a planner
with DHSS has been actively involved in seeking these
designations in the past is a member of this committee now and
Sally Smith who is the chair of the board for the Bristol Bay
Area Health Corporation and is a member of the national Indian
Health Board have both been appointed to this committee. The
Division of Insurance is also actively involved and Linda Hall
can speak to any questions with regard to the National
Association of Insurance Commissioners involvement, but that
association is actually named in the Affordable Care Act in some
places as a partner with the federal government to help come up
with some of the new federal regulations related to the private
insurance market reforms as well as the development of some of
these new programs - like the health insurance exchanges. That
association is made up of members from state insurance divisions
and departments. Staff from the Alaska Division of Insurance are
actively involved in some of those work groups in helping to
participate in development of some of those federal guidelines.
A new federal taskforce created under the Affordable Care Act is
specifically looking at improving access to health care in
Alaska. This was an amendment that was proposed by Senator
Begich and is included in Title 10. The members were appointed
about a week ago and it has a deadline of September 23. The
taskforce has had one teleconference and will be in Alaska next
week for a week. The slide lists the members representing the
different federal agencies involved. During the week they'll
conduct site visits and she understands that they'll break into
2 groups and will each go to 2 or 3 different communities. A
week from tomorrow, Wednesday, everyone will convene in
Anchorage for a meeting.
9:59:55 AM
MS. ERICKSON said she's only talked briefly with Senator
Begich's office and with Susan Johnson who is the Region 10
director in Seattle for the U.S. Department of Health and Human
Services about this. She suggested that if members want more
information they go to her at this point. The health care
commission will be interested in seeing the findings that this
taskforce will produce in their report. According to the law the
taskforce expires with the production of the report that is due
to Congress on September 23.
Another important aspect of the law is that the Indian Health
Care Improvement Act was reauthorized under the Affordable Care
Act after having sunsetted essentially 10 years ago. To her
knowledge the State of Alaska isn't directly participating, but
the Alaska tribal health system has been actively involved
working on the reauthorization and is now working to ensure that
the different tribal health organizations statewide understand
the implications.
MS. ERICKSON said she's communicated periodically with staff
from the University of Alaska and has looked at the various
opportunities available for workforce development, specifically
for colleges and universities.
She continued to say that the committee will hear from the
Department of Administration and the Medicaid program the extent
to which state agencies have preliminarily identified potential
future costs to state government as well as some funding
opportunities. She said she noted earlier the three main areas
where they anticipate there might be changes required to state
law related to implementing private market insurance reforms and
the health insurance exchange and changes to the Medicaid
program. There are numerous policy and programmatic changes that
state agencies already have to make. The committee will hear
from other presenters too, including the new employer
obligations. She said they continue to try to understand how the
flexibility of state government is being impacted with all the
new federal rules and how the state's role in this new health
care delivery system might change. For example, considering the
potential changes through the Medicaid program to organization
and payment mechanisms for health care.
10:03:15 AM
MS. ERICKSON noted that the committee asked her to wrap up with
an update on the status of the Health Care Commission and the
potential role for that commission in understanding the impacts
of the Affordable Care Act and developing recommendations for
moving forward. She directed attention to slide 16, which is
relates to the commission. It had been established by Governor
Palin and it met for the calendar year 2009. Representative
Keller participated as a commission member representing the
House of Representatives on the initial commission. SB 172
established the Alaska Health Care Commission in statute and
transitioned the existing voting members to the new commission
and added four more seats. Currently the board has five
vacancies and the governor's office of boards and commissions
has interviewed over 20 applicants. She anticipates that the
governor will make those appointments in the next week or so and
that the commission will meet twice in the fall for a day and a
half each time. The new commission will continue the established
practice of holding a public hearing as part of each meeting.
The primary concern of the commission this past year was related
to the cost of healthcare in Alaska. She noted that Dr.
Hurlbert, who is chair of the commission, reminds anybody who
will listen that paying attention to the cost of health care in
the state should be one of the highest priorities of any
official in state government. If not checked, the cost of care
translated through the Medicaid program will continue to consume
more and more of the state's budget and potentially impact other
programs.
10:06:00 AM
At the beginning of the first year the Health Care Commission
decided it was not interested in identifying and responding to
any new policy option or opportunity that came along in
developing a response. It was more related to more potential
federal and state legislation. They didn't want to be seen as
the policy analysis and impact analysis body because they were
formed to develop their own recommendation rather than to
evaluate others. She said she doesn't believe that the
commission has the capacity, resources, or time to do a
comprehensive impact analysis of the entire Affordable Care Act
and she doesn't believe that they will see that as their
mission. That being said, the commission identified it their
first year report the importance of understanding that if
federal health care reform passed, what the implications for
the state were related to how it might change the health care
environment in this state. She admitted that it's going to be a
challenge and Dr. Hurlbert has expressed concern that if the
commission spends all its time studying the Affordable Care Act
that they're not going to get anything else done and won't be
able to make any sort of impact on the issue related to health
care cost control. With that in mind, she anticipates that the
commission might look at the Affordable Care Act from the
perspective of the changes that they might be making
recommendations about and making sure that they're integrating
into any recommendations related to health care cost control
both opportunities that might be available through the
Affordable Care Act and other changes that are being made by the
Affordable Care Act that will impact in some way the delivery of
health care in this state and the cost of health care in this
state. She acknowledged that she is in part speculating and that
it's important to get the new members appointed and convene the
group and see what direction they want to take. Hopefully that
will be sooner rather than later.
10:08:18 AM
CHAIR DAVIS remarked that she didn't know that the intent of the
bill was to bring all the members of the temporary commission
along to the permanent commission and then add 5 new positions.
She observed that many of the names listed might not be in the
Legislature come next January.
MS ERICKSON explained that SB 172 included a transition clause
that automatically appointed the existing voting members of the
commission to the new commission. Legislators are not voting
members. Under the former commission that was established under
Administrative Order 246, there were 7 voting members. Six of
the voting members have indicated an interest in continuing with
the commission and she anticipates that Governor Parnell will
reappoint them automatically. The commission has 3 ex officio or
nonvoting members: Senator Donald Olson was the representative
from the Senate and she believes he will be appointed to
continue; Representative Wes Keller was the representative from
the state House and Speaker Chennault has already reappointed
him to the new commission; and Linda Hall was initially in the
seat appointed by the governor to represent the Administration.
She can't speculate who might fill that seat on the new
commission, but she assumes that will be announced when the new
members are appointed to the five vacant voting seats.
10:11:13 AM
CHAIR DAVIS said the information has been helpful but at the end
of this session she isn't sure she'll have all the information
she's looking for. For example, she would like to know how much
money the state has received in grants through the Affordable
Care Act; how many opportunities the state has refused to apply
for; and what those are because they apparently haven't applied
for everything that's available to the state. She asked the
members if they needed additional information.
REPRESENTATIVE KELLER said he's eager to receive the spreadsheet
Ms. Erickson offered to provide, but the question he asked was
answered in the PowerPoint.
SENATOR DYSON commented that he suspects that the elephant in
room that hasn't been discussed is the governor's veto of
increasing the limit for Denali Kid Care due to the abortion
issue.
CHAIR DAVIS said that issue will be addressed this afternoon.
SENATOR DYSON asked Ms. Erickson if she knows of any grants and
funding streams that the Administration has decided not to
pursue.
MS ERICKSON replied she's aware of one that's related to health
insurance rate review and she would defer to Ms. Hall to explain
the rationale for that.
10:14:12 AM
LINDA HALL, Director, Division of Insurance, said she will try
to address the questions that came up during Ms. Erickson's
presentation. She continued to say that many of the provisions
of the Affordable Care Act that have become effective are
related to insurance. She informed the committee that in the
presentation she is using a cut down version of a document from
the National Association of Insurance Commissioners (NAIC) that
is being used around the country and she will address Alaska's
position relative to that. She will not discuss things to the
level of detail that is in the PowerPoint, but she will touch on
each point because there's a lot to deal with market reform and
what that means to the state. As Ms. Erickson stated, the
National Association of Insurance Commissioners has a large role
in the implementation and establishing regulations for the
Affordable Care Act. Katie Campbell who is the DHSS health
actuary is active in a number of those committees. On average
she and Ms. Campbell participate in 5 teleconference meetings a
week on these various provisions as well as attending meetings.
MS. HALL informed the committee that today she would address the
major areas of consumer assistance grants; health insurance rate
review, which is grant money she did not apply for; the high
risk pool and what they did with that and why; the web portal,
which is minor; health insurance market reforms, which she
believes are much of the stimulus for all of this to prohibit
the rescissions and exclusions that have been a problem in the
health insurance world for a long time; and the health insurance
exchange that isn't effective until 2014. Many of these reforms
are being implemented gradually with the outcome to be the
insurance exchange.
10:17:24 AM
She displayed a slide depicting a spreadsheet and explained that
it has a column that shows what action the division is taking
and the effective dates and a column for a group of things
called market reform. She noted that annual lifetime limits are
one of the market reforms and as of September 23 they will
transition from lifetime limits on health insurance policies to
annual limits. She pointed to the blue section, which reflects
the transition, and remarked that some people but not many reach
either the annual or their lifetime limit. Rescissions, which
are part of the market reforms that are effective September 23,
can be made for only two reasons - fraud or intentional
misrepresentation. A policy cannot be canceled because an
individual got sick.
MS. HALL explained that when she talks about reviewing coverage
forms for compliance those are coverage changes. The division
approves and keeps on file all policy forms and today they
receive 98 percent of their filings through the NAIC electronic
system. This means that an insurance company can go on line,
file a coverage forms and select the states they file it for.
This makes the forms more consistent from state to state. She
said they will see a number of those forms filed between now and
September 23 and they will look similar to most other states. So
in their form review the division will watch to make sure that
provisions that are in health insurance policies today are
changed to reflect these mandatory coverage changes.
10:20:15 AM
MS. HALL noted that she was specifically asked to address
preventative coverage and said that one benefit to consumers is
that there will be mandatory coverage for preventative services
without cost sharing, but there will limits to the services that
are considered preventative. Also, there will be an annual
review of who recommended the preventative services be offered.
The extension of adult dependent care is part of the September
23 market reform that has received a lot of media coverage. It
extends coverage to adult children up to age 26.
Preexisting condition exclusions will no longer be allowed in
policies for children under age 19. In 2014 there will no longer
be preexisting exclusions in any policy. The appeals process is
part of the market reform. That means that if a claim is denied,
the consumer policy holder has the ability to appeal that
decision. These are usually disputes about whether it is or is
not medically necessary. There are two types of appeals
processes. An internal review is internal to the insurance
company staff and an external review is one that must comply
with the minimum NAIC model Act including review by an
independent outside source with specialty qualification. While
both types of review are in statute, the NAIC model has not been
implemented because it requires the Division of Insurance to
administer the program and they didn't want to insert themselves
in that process. The external review is probably an area that
will need legislative changes.
10:24:01 AM
Patient Protection is another part of the market reform. It
allows the policyholder to designate the primary care provider,
emergencies services do not need prior authorization, and it
allows a female patient to receive obstetric or gynecological
care from a participating provider without a referral. She
described these as provisions that allow an individual to see
his/her own doctor.
MS. HALL referenced three bullet points at the bottom of slide 2
and said this particular provision is how premium dollars will
be allocated - how much is for clinical or provider services.
There's a provision for activities that improve health care
quality and there's a third expense category. The first two must
be clinical services and activities that improve health care
quality. In the small group and individual market, 80 percent of
premium dollar has to be spent in this area and in the large
group market it's 85 percent. There's a huge debate about what a
provider is, what a clinical service is, and what an activity is
that improves health care quality. The remaining 15 or 20
percent is the only part of the premium dollar that insurance
companies will have for administration, commissions to agents,
and the various expenses that they have.
These expenses are likely to exceed the allocation. Maine, for
example, has already asked for a waiver because their current
state law allows a 35 percent administrative margin. If an
insurance company does not meet the 80 or 85 percent, they must
rebate the excess to the policy holder. She noted that it may be
necessary to make a statutory change in the definition of rebate
because that term currently references an illegal activity. Ms.
Hall emphasized that this is a real tightening on how insurance
money can be spent and an attempt to ensure that it's spent on
actual health care.
10:27:38 AM
Health Insurance Consumer Assistance Office or an Ombudsman is
another grant opportunity. While $30 million is available for
divisions and departments of insurance to set up and operate
consumer assistance programs, the Alaska Division of Insurance
is still evaluating if it wants to apply for funds because it
already has a Section of Consumer Services that currently
performs most of these tasks. She said she isn't sure that an
additional person is needed to do these tasks, but they're
evaluating other things they may be able to provide with the
money. She explained that the problem with federal grants is
that the money lasts for just a year, but a function and
position were created and then it becomes a state funding
obligation. They're trying to figure out how to keep that money
in ways that are effective without creating obligations going
forward. Assisting consumers with enrollment and plans and
resolving problems with obtaining subsidies really will not come
into being until the exchanges are operational. Today the
division occasionally assists a consumer with applications or
where to go to apply for insurance, but they're not really
involved with enrollment per se. So 2 of the 5 functions of this
position wouldn't be applicable until 2014.
MS. HALL said the title of the next area is Ensuring Consumers
Get Value for Their Dollar, but this was actually the rate
review part of the Act and she recommended Alaska not apply for
the grant. $250 million in grants is to be awarded over a 5-year
period and that money could be used both to do a rate review
program and to establish medical reimbursement data centers.
The first round of grants was $51 million so each state could
apply for $1 million, but they had to apply for the full amount.
Alaska is small and has 10 health insurance companies who write
business in the state. There is no domestic health insurer in
the state but they do review rates. The division reviewed what
it might do with $1 million and could have put together a plan
to enhance the data collection systems…
SENATOR DYSON interjected to ask if this money could be used to
put the unfinished drug registry program in place.
10:32:34 AM
Ms. HALL replied that's not her understanding. There were very
strict limitations on what the money could be used for; just
$50,000 of the $1 million could be used for the data centers. It
had to do with insurance rates.
SENATOR DYSON acknowledged that his question was misplaced. He
then referenced an earlier subject related to preexisting
conditions and asked if there's a provision that would allow
some judgment or discrimination based on behavior-related
conditions that are preexisting.
MS. HALL answered she isn't aware of any exceptions.
SENATOR DYSON asked if the new law provides incentives or help
to manage situations where people with chronic and very
expensive health problems won't cooperate with the best
treatment.
MS. HALL replied she isn't aware of any penalty but there
certainly is an awareness of preventative services and the
management of chronic illnesses. She noted that the last
estimate she saw indicated that chronic disease takes up 75
percent of all health care costs.
10:35:54 AM
SENATOR DYSON asked if the insurance companies are authorized to
work on that issue.
MS. HALL replied she believes they are authorized and that can
be included in the things they'll pay for under medical expense.
SENATOR DYSON posed a hypothetical example of a person with
adult onset type II diabetes who isn't compliant in tending to
his/her health care. He asked if the insurance company can do
something to encourage that person to take care of him/herself,
both for their own health and the sake of the costs involved.
MS. HALL replied she believes they can but they don't have to.
She again mentioned the $1 million rate review grant and
clarified that the rationale for not applying didn't relate to
the lawsuit; it was due to a philosophical stance she took.
10:39:11 AM
MS. HALL said the next topic is the Temporary High Risk Pools.
She explained that this was optional for the state, through a
nonprofit entity or the federal government and either 21 or 28
states opted to operate their own in various ways. Alaska has a
high risk pool through the Alaska Comprehensive Health Insurance
Association (ACHIA). To make it clear that it's totally separate
she said they named it the Alaska Federally Qualified High Risk
Pool. It's all federal money but there is a premium tax offset
that's been in place for 3-4 years.
She explained that they did risk and benefit analyses to make
the decision to make this recommendation and they looked at
ACHIA that has a third party administrator and an established
network and is familiar with the high risk individual in Alaska.
The system is already established to deal with those
individuals. The risks were that if the money ran out the state
might be liable for that money. The original allocation of the
$5 billion was done the same basic way the Children's Health
Insurance Programs (CHIP) are done. Alaska's portion of that
allocation was $13 million. The state doesn't get that as a pot
of money to draw from; it's set up on a reimbursement basis.
There's a 10 percent limit of the cost of the program to do the
administration so the actual contract was signed by the
executive director of ACHIA. They are the nonprofit entity who
can contract to operate this federally qualified high risk pool.
It's temporary because of preexisting conditions. Once the
exchange is in effect in 2014 that's the point at which all
preexisting exclusions go away. Thus, individuals who are unable
to obtain insurance today through the normal private market will
be able to do so through the exchanges. At that point there will
no longer be a need for a high risk pool - either this temporary
one or ACHIA.
Current statutes allow ACHIA to go forward with this and barring
some unforeseen circumstance the state would not have any
obligation at the end. The application that the individuals sign
clearly says that this is a federal program that's done with
federal money and when the federal money runs out the program
ends. To highlight the high cost of health care she warned that
the $13 million will give coverage for only 100-105 individuals
based on the experience in the current high risk pool about what
it costs to provide medical care for individuals. Some states
have lower costs; Illinois' projections, for example, indicate
it would cost about $47,000 per individual as opposed to the
$130,000 cost per individual in Alaska.
SENATOR PASKVAN asked why there's such a difference in cost
between states.
10:46:44 AM
MS. HALL replied it reflects the cost to provide health care in
Alaska. She doesn't want to speculate on why it costs so much
more, but Alaska does have the highest health care costs in the
nation.
SENATOR PASKVAN asked if it's related to hospital charges or
doctor charges. He assumes it isn't prescription costs.
MS. HALL replied it's every element of the health care system
including prescription costs.
SENATOR DYSON opined that Senator Paskvan has highlighted a key
problem that this committee at some point ought to pursue. He
mentioned contributing factors including physician's costs,
transport costs, the requirement for hospitals to treat
individuals regardless of their ability to pay, and the
resulting cost shifting that hospitals do to help pay for those
unrecovered costs. He asked the chair to consider this for
future committee work.
CHAIR DAVIS announced that Senator Thomas joined the meeting via
teleconference.
SENATOR ELLIS asked if she wouldn't be better able to answer the
questions about why health care costs in Alaska are so high if
she had applied for the rate review grant and therefore had the
money to study all the contributing elements. He said he
understands the small market here and that carriers can write
more business in a single Lower 48 city than the entire state of
Alaska and he knows that she is obligated to maintain a healthy
market and to keep the 10 carriers that routinely threaten to
leave. Other states are trying to find out about all the
elements that contribute to the cost of care in their states and
he finds it striking that Alaska didn't apply for the grant that
would help to answer those questions. He asked if she could
offer a better explanation for not applying for the money
because the committee is confronted with a lack of information
and understanding of the true costs of care and coverage in the
state and it's been very frustrating to the members of this
committee on both sides of the aisle.
10:52:55 AM
MS. HALL explained that the Division of Insurance already does
rate reviews looking at the elements and claim costs and they
feel that they have existing rate standards and resources to do
the kind of rate review that is required to look at those
elements. She elaborated that the Division of Insurance
currently collects an insurer's report of charges by CPT codes
[current procedural terminology codes] so they already have that
kind of information to use. When they do a review they look at
claim costs and where the increases are. She noted that Senator
Ellis mentioned transportation costs and those have dramatically
increased.
The data collection is a different issue. She reiterated her
understanding that a restriction on the $1 million for rate
review was that only $50,000 could be spent on a data collection
center. That's a very limited amount to truly have a data
collection center. Yes they could have hired a consultant to do
the work, but she doesn't believe it would cost the full $1
million. That was the problem because states weren't allowed to
apply for less than the full amount. While they could have used
some of the money she and others didn't feel they could use it
all because of the federal sideboards restricting the use.
10:55:32 AM
SENATOR ELLIS encouraged her to consider asking the Legislature
for the money that she thinks is needed to answer these
recurring questions.
MS. HALL replied she would consider that. She added that she is
also seriously considering asking the Legislature for greater
statutory rate authority oversight. Part of the current
limitation is that they have general rating standards and the
ability to ask for actuarial justification in the event of a
complaint, but she only has the ability to do prior rate
approval for Premera. She doesn't have the authority to do prior
rate approval for the other 9 companies that write health
insurance in the state.
SENATOR ELLIS summarized that she can review the rates under
current statutory authority but she doesn't have any kind of
hammer to get the insurance companies to justify the rates
they're charging.
MS. HALL said that as the result of a complaint she can ask for
the actuarial justification, but she can't do that prior to the
rate being used. She explained that Premera files a rate with
the division with all the actuarial justification, but they
can't use that rate until it's been approved and the division
goes through a fairly lengthy and complex process before it
gives approval. But she only has that ability with Premera; she
does not have that ability with any of the other 9 insurers that
write business in the state.
SENATOR ELLIS said he looks forward to the discussion and the
proposal from the administration.
10:58:32 AM
SENATOR PASKVAN summarized that she believes that someone in her
position would be appropriate to do some consumer protection for
those rate applications
MS. HALL said absolutely.
SENATOR PASKVAN asked what percentage of Alaskans are uninsured
and how that compares to other states.
MS. HALL replied about 18 percent of Alaskans are truly
uninsured and that's not all that different from other states.
Uninsured rates are higher in some southern states and others
are single digit. She acknowledged that she hasn't made
comparisons in awhile and perhaps someone from HSS could provide
a better answer.
Moving on to the Web Portal topic, Ms. Hall confirmed that while
it was a federal requirement every state was required to provide
information for it to start. We did, but it took significant
Division of Insurance resources to try to interpret and
implement those requirements.
She mentioned the topic Preservation of Right to Maintain
Existing Coverage and explained that these are the grandfather
provisions. Any coverage in place on March 23 2110 can stay in
place unless they have changes, but the federal guidelines
indicate that those changes don't necessarily have to be
significant to lose grandfathering status. It can include things
like a change in the contribution amounts.
11:02:55 AM
The topic Affordable Choices of Health Plans relates to the
exchanges that will be effective January 1, 2014. States that
are going to do an exchange must have the plan in process by
January 1, 2013 so that the Department of Health and Human
Services knows the state is actually going forward. This is an
option and the division will go through an evaluation procedure
to determine if they want to manage an exchange as a state or
join with other states and have a regional exchange or let the
federal government do the exchange. There's a grant opportunity
for $1 million per state to fund a study of whether or not to do
the exchange. The applications are due by September 10 and there
are a number of workshops ongoing to provide information. Mr.
Streur is attending a meeting today, division staff attended a
2-day meeting in Washington D.C. last week, and she is going to
a 5-hour meeting in Seattle as part of the NAIC meeting next
week. There's a lot of discussion nationwide about exchanges and
the division is also getting solicitations from companies
claiming to be exchange experts. That will be the next thing
we're doing, she said.
SENATOR DYSON mentioned a conversation they had several years
ago about giving people the option of purchasing health care
insurance from purveyors that don't reside in the state. He
asked if that relates to exchanges.
MS. HALL answered no; all policies can be sold through the
exchange. Premera can sell through exchange or out of exchange
as long as the plans are qualified. The idea is to bring in more
companies that want to sell through exchange but it can be the
same companies that sell in the state today.
SENATOR DYSON clarified that his point was that it could also be
companies that don't sell in the state today. He recalls that
her reservation was that it doesn't allow her office to ensure
quality control because services purchased from a provider that
isn't here may or may not be very good. He asked if there is
some criteria for joining the exchange and if she has confidence
in that process.
MS. HALL replied there are criteria. The policies being sold are
more standardized and have 4 levels of benefits: platinum, gold
silver, and bronze. They have to be qualifying plans and the
companies have to be licensed in Alaska to sell through the
exchange.
SENATOR DYSON asked if they would be under her purview.
MS. HALL said that's correct. The state of domicile is still the
primary regulator - and that's true today. Her concerns have
been making sure that a particular company follows Alaska
consumer protection laws. For example, Alaska has a fairly
strong patient bill of rights that is absent in other states and
she wants to be able to enforce that. She believes that
standards can be built in under these exchanges to provide
appropriate consumer protections.
CHAIR DAVIS asked her to speak to the issue of insuring and
reinsuring early retirees age 50-64.
11:07:03 AM
MS. HALL said she believes that the Department of Administration
will address that part.
CHAIR DAVIS asked if coverage for preexisting conditions in
children is currently in effect.
MS. HALL replied it will be in effect September 23. She added
that it's part of that group of market reforms that become
effective on that date.
CHAIR DAVIS asked if she anticipates any problems in that area.
MS. HALL answered no.
CHAIR DAVIS asked about insurance companies dropping clients
before a certain period of time or not picking them up if their
policy expired.
MS. HALL said no; some states have reported insurance companies
no longer writing in the individual market, but she hasn't seen
that in Alaska and she isn't anticipating any problem.
CHAIR DAVIS asked if it related to the age extension.
MS. HALL said yes, but probably more with the preexisting
condition. The age extension probably isn't an issue in Alaska
because some of the companies already provide coverage until age
24 or 25.
CHAIR DAVIS asked if she's saying that when that goes into
effect the state is ready to go and there's no need to wait
until the next benefit year.
MS. HALL replied some of the things go into effect with the plan
year so if somebody's plan year was August the ability to do it
should have gone into effect then. They wouldn't need to wait
until August 2011.
REPRESENTATIVE KELLER asked if these grants are specifically for
DHSS or should the Legislature be looking at the grant for the
Office of Health Insurance Consumer Information and Assistance
of Ombudsman Office since there's already a unique ombudsman
system within the Legislature.
MS. HALL said the grant proposal that's currently available
isn't just for the Division of Insurance but that office has to
do those fairly defined things. She added that since those
services are for the most part provided already, she would not
want to duplicate the services or have two different departments
doing the same thing.
REPRESENTATIVE KELLER suggested she keep the thought in mind and
he appreciates that she doesn't want to duplicate services or
create something that would leave a hole once the money goes
away.
11:11:05 AM
SENATOR THOMAS asked if there are any requirements or emphasis
on managed care for the high risk pool. He opined that it would
be helpful for people who have a variety of diseases and don't
take care of themselves.
MS. HALL said no. There are provisions that allow payment in the
medical services part of a premium, but there are no mandates
requiring people to take good care of themselves.
CHAIR DAVIS added that the new federal Act has a preventative
model and it has provision that might address some of those
issues. Getting people into the system early helps to keep them
from becoming chronic.
SENATOR THOMAS asked Ms. Hall if she has the staff to write the
grant applications and implement the new programs.
MS. HALL said she and 2 staff have done most of the work. She
explained that the Division of Insurance is a receipts-based
agency so they have never been involved in grant writing. People
in other departments who do have experience with grant writing
have offered assistance and she believes they'll get there, but
it is a stretch of their resources. They talked about hiring but
finding someone with the depth of knowledge to be useful didn't
seem practical. She restated her belief that they can do the job
that's needed. Responding to a further question she said the
short answer is that it will work.
11:15:45 AM
RACHEL PETRO, Deputy Commissioner, Department of Administration
informed the committee that she and Mr. Shier will talk about
the state as an employer with the nuances that the state is a
self-ensured employer and it administers the Alaska Care Retiree
Health Plan that covers public retirees statewide. In both
instances the new law applies differently compared to Alaskans
in general. She and Mr. Shier will walk through the provisions
they are aware of and where things are today. They provided a
FAQ handout on one of the most talked about provisions in the
new law - the dependent care extension to age 26. That is posted
on the website as well as information on a variety of
provisions. As new information comes in it is posted so that
active members and retirees have access to that information. It
changes frequently.
11:19:41 AM
MS. PETRO continued to explain that people expected the new law
to impact all plans the same way, but it does not. In June DOA
received clarifying regulations indicating that the dependent
care extension provision does not apply to the retiree plan.
Because they get new information all the time, they are being
circumspect about what they communicate because they don't want
to raise expectations that can't be met.
PATRICK SHIER, Director, Division of Retirement and Benefits,
Department of Administration directed attention to the
spreadsheet entitled PPACA PROVISIONS IMPACTING THE STATE OF
ALASKA AS AN EMPLOYER and expressed his intent to walk through
it top to bottom. He explained that the State of Alaska is an
employer and it also administers the Public Employees Retirement
System, the Teachers Retirement System, and the Judges
Retirement System. He will proceed in that context.
One of the first issues is for break time and locations to be
made available for nursing mothers. This is a mandatory issue
and policies and procedures for that are in place. As an
employer the State of Alaska already had such provisions in
place, but not in writing so it wasn't difficult to put them in
writing.
11:23:10 AM
Temporary reinsurance for early retirees is the next item. It
was the desire of law makers to stop what they view as the
decline in the number of retiree plans that were actually paying
for health care people who retire before they're eligible for
Medicare. One graph showed that it was high 20 percent headed to
mid 20 percent. This program is temporary and $5 billion was set
aside for it. Policy statements from the federal government
indicate that there is no intent to extend it. As fiduciaries
for PERS, TRS, and JRS DOA felt they should apply, because the
state's plans do cover medical expenses for early retirees and
the plan pays 100 percent of those costs. The application was
submitted on July 3 and it will likely be months before they
know if the application is approved. To date they don't have the
format for submitting periodic applications they'll be required
to make for actual reimbursement of funds. Those applications
will be data that substantiates eligibility and asks for
reimbursement for a percentage of the claims as they're
eligible.
Elimination of annual and lifetime limits is marked as complete
because the employee plan already did not have lifetime limits.
There are a number of provisions in the new law where the state
employee health plan already met or exceeded the requirement.
Extension of dependent coverage up to 26 is mandatory for the
employee plan. The regulations stipulate that the first plan
renewal after September 23 is the first time when plans must
implement the provision. It can be done earlier. They are on
schedule to implement that change and there will be an open
enrolment period to bring family members on who are eligible.
Prohibition of preexisting condition exclusion is a provision
that must be implemented no later than the first plan renewal
after September 23, 2010. They are on schedule to do that. There
is a preexisting condition exclusion in the current active
employee plan and the retiree plan, but they were not used.
11:27:32 AM
Class Act - long term care insurance program is optional. They
have not examined that provision for implementation; a self-
funded long term care program is already in place for retirees
in PERS, TRS, and JRS. A number of retirees select that and pay
monthly premium on an ongoing basis. About half of the retirees
choose not to take that benefit. Given that, they did not look
further at the option employer program. The long-term care
insurance program is destined to be fully participant funded and
not an employee benefit. The employer's role would be limited to
payroll deduction service.
Reported value of health care benefits on W-2s is the next item.
Commissioner Kreitzer directed the Division of Finance to start
reporting the value of health care benefits on pay stubs. The
process for capturing that value was already available and the
Division of Finance has said that the subcontractor that
provides the software to produce W-2s will be ready to implement
this January 1.
11:30:02 AM
There are provisions affecting health savings accounts, flexible
spending accounts, and health reimbursement arrangements. Under
the active plan they will be ready to notify individuals
effective January 1. Over the counter medications will no longer
be eligible as qualified reimbursements for the flexible
spending accounts. That's the device currently used for state
employees to set aside money for health care benefits.
SENATOR DYSON asked what the limits are on what state employees
can do with health savings accounts and how many are subject to
the bargaining unit agreement.
MR. SHIER replied that since the state currently uses only
flexible savings accounts that is the area on which they've
focused their analysis. It reduces the amount of money that can
be contributed to an FSA. He hasn't looked at the details for
health savings accounts or health reimbursement arrangements so
he can't answer the question in the detail it needs. For
example, the retiree health program in the new defined
contribution retirement plans are health reimbursement
arrangements and they want to make sure they fully understand
that going forward as well. He offered to provide the
information at a later time.
SENATOR DYSON asked if they'd be subject to bargaining unit
agreements.
MR. SHIER said he can't speak to what savings arrangements
they're operating individually. For the Alaska Care Plan, which
are the exempts and the the supervisory unit, those provisions
are tied up in collective bargaining and they would expect that
to be a topic of discussion by the health benefits evaluation
committee and in other venues.
SENATOR DYSON asked if the new federal Act supersedes bargaining
unit agreements particularly those with their own health
programs.
MS. PETRO said they have not analyzed the health trust and the
applicability to PPACA to their trust. Under the new law Alaska
Care employees with flexible spending accounts will only be able
to put away $2500 per year instead of the current $5000 per
year. While this doesn't impact the employer or the provider of
the benefit, it will impact employees.
11:34:07 AM
SENATOR DYSON said he and the other members of the committee
would enjoy being updated when the analysis is complete.
REPRESENTATIVE KELLER observed that the FSA program as a reform
element and important cost control for health care in Alaska and
asked if she can do anything to challenge this change.
MS. PETRO replied they're not focused on challenging the law;
they're scrambling to make sure they're in compliance. It is an
interesting question and they're limited in what they can do,
but they'd be happy to have a conversation.
REPRESENTATIVE KELLER said legislators have to decide whether or
not to continue with reform efforts or sit back and see what
comes down the pike.
11:36:31 AM
MR. SHIER continued his presentation. The uniform notice of
coverage and other things like the effective dates have not been
fully analyzed by the division in terms of its duties as
administrator of the Alaska Care Benefit package for active
employees and retirees. He said he'd just name the rest and
point out that they are future effective dates and will be
analyzed to comply as needed. These include: increasing FICA
taxes on earned income (employer has no role here); employee
notices regarding an exchange; mental health and substance use
disorder services included in essential benefits package (they
don't have a clear view of what the group assigned to arrive at
the essential benefits package will produce); reporting to the
IRS of health insurance coverage (this is a future requirement);
employer mandate to provide coverage and penalties for employers
offering coverage that is not sufficient (they have identified
some issues with meeting the requirements with temporary or
seasonal employees); free choice vouchers (related to whether
the state is contributing enough for individuals to secure
health insurance at some minimum level); excise tax on high cost
employer sponsored health coverage - Cadillac tax that has a
2018 effective date (this will affect some individuals in both
the active and retiree health plan and the taxes will likely be
borne by the State of Alaska in the Alaska Care active plan and
the trust fund for the retiree plans which is a concern).
11:39:32 AM
The last item on the spreadsheet is the State of Alaska as
employer - employee and retiree plans are assessed a tax of up
to $2. (They haven't seen the regulations on that but they're
estimating the impact will be about $160,000 per year.)
11:41:00 AM
JON SHERWOOD, Medical Assistance Administrator, Department of
Health and Social Services directed attention to his handout
that is entitled Summary of Medicaid Requirements Included in
PPACA. He said he did not intend to describe each provision in
depth. The federal health care legislation has and will continue
to have a substantial impact on state Medicaid programs and
Alaska is no exception. Many provisions in the law address
Medicaid but not all will have a significant effect on Alaska.
Other provisions like the Class Act and efforts to improve the
community health system may have indirect impact.
Providing some framework, he explained that some of the
provisions are about the federal health legislation attempt to
push toward universal coverage and providing a role for Medicaid
to fill in that push. The legislation was broader than that
attempting to improve the overall health care delivery system,
promoting prevention, and program integrity. Many of the things
he will describe cover a broad range of areas and will have
something for Medicare, something for private insurance, and
something for Medicaid. He emphasized that their analysis is
ongoing and that new policy regulations arrive daily. While the
effective dates are listed, not all are the practical effective
dates. Sometimes they're the date that the federal authority can
move forward to issue guidance. Our date will be when they give
guidance on what to do and in some cases we will have wait for
regulations or further clarification before we act, Mr. Sherwood
said.
MR. SHERWOOD said the maintenance of effort provision prevents
states from reducing Medicaid eligibility standards until the
mandated health insurance provisions of the law become
effective. It's a longer period for children.
The Medicaid budget at the state level will be less flexible
moving forward in terms of choices to implement cost containment
strategies. Eligibility has historically been one of the less
used strategies, but it has been implemented in the past.
The universal coverage provision is the centerpiece for Medicaid
in the law. Beginning in 2014 a new Medicaid category of
eligibility is created for legal residents under age 65. The
income standard is 133 percent of poverty with a mandatory 5
percent disregard so it's essentially 138 percent of poverty.
For this group the state-specific income disregards would not
apply. The most significant in Alaska is the permanent fund hold
harmless disregard. The state Medicaid office has used
provisions of federal law to exempt the permanent fund dividend
in order to comply with state statute. This is an area that will
need analysis to determine the real impact. If more people have
to be moved into a hold-harmless program, it would come out of
the dividend payment pool. Right now the impact is unclear, but
this coverage group has no asset test and is unique in Medicaid.
It represents a radical break from existing Medicaid eligibility
because it's not categorical in nature. The other eligibility
categories require the individual to be aged, blind, disabled, a
child, pregnant, or a caretaker relative of a dependent child.
Putting the pieces together - people over 65 are Medicare
eligible and there are special low-income Medicare savings
provisions in Medicaid that assist low-income Medicare
recipients. There are existing Medicaid categories and this
brings in the pool of able bodied childless adult who don't fit
into the current medical assistance framework. This category
does require steps to ensure that an individual did not already
fit into another Medicaid category.
11:49:45 AM
Virtually everybody in the Chronic & Acute Medical Assistance
(CAMA) program would probably be covered by this group in
Medicaid. This program provides drug assistance for people with
certain chronic conditions who do not fall under Medicaid. Based
on current data this will probably add about 30,000 people to
the program. This will have a substantial impact on the program
but it would be relatively straightforward and they'd do more of
what they're currently doing.
Referencing the bottom of page 2 he pointed out that one
provision of the new law requires the use of a new definition of
income called modified adjust growth income (MAGI). This shifts
income counting rules from longstanding principles developed
specifically for low income entitlement programs to rules based
on the federal tax code. This makes a lot of sense when you're
trying to integrate a seamless transition from Medicaid to the
health insurance exchanges. It provides a more commonly
understood framework for doing eligibility determinations for
the arcane rules of Medicaid, but it's a radical change for the
way the state Medicaid office has to do business.
At the system level this means training staff and receiving
guidance to answer literally hundreds of unanswered questions.
For example, a lot of the tax policy isn't written to make a
monthly income determination. It will be a big challenge to be
on schedule to implement this in 2014. To date they don't have
any needed guidance and it's unclear when it will be
forthcoming.
11:52:30 AM
SENATOR DYSON asked what the following statement means: "States
will be prohibited from applying any asset or resource test for
purposes of determining eligibility."
MR. SHERWOOD replied it does not matter how much money or
property you have. The state Medicaid office looks at your
income as defined and it's usually money you're receiving in a
particular time period. Now they do a monthly income
determination looking at the money they expect an individual to
receive in the future month.
SENATOR DYSON asked if a multimillionaire's other assets would
disqualify him/her even if his/her definable income flow
qualified him/her.
MR. SHERWOOD replied the simple answer is a tentative yes. The
way income is actually defined may be more complicated than
that, but he can conceive of situations where people could
qualify.
REPRESENTATIVE KELLER asked for confirmation that 30,000 new
people coming into the system is just a best guess.
MR. SHERWOOD agreed it is a best guess at this point in time,
but they will be refining that estimate going forward based on a
variety of circumstances. The number of people who will elect to
use the exchange rather than Medicaid, for example.
REPRESENTATIVE KELLER observed that it's clear that the number
is going up so some budget will go up.
11:55:38 AM
MR. SHERWOOD said he'll provide numbers at the end of the
presentation. Continuing, he said he expects this change in the
modified gross adjusted income calculation to be the biggest
single change in Medicaid eligibility that he's seen in his 30-
year career. It's not clear what kind of radical modification of
the eligibility system might be required to seamlessly interface
with the health insurance exchange.
Referencing the top of page 2 he said another mandated change is
coverage of all kids ages 6-19 up to 133 percent of poverty.
We've already made this change, he said, but a portion of that
population is covered under the Medicaid CHIP expansion. Right
now it looks like 3,700 kids will move from the CHIP Medicaid,
for with the state receives a higher match, to the regular
Medicaid. In addition, the kids who age out of foster care while
on Medicaid continue to be eligible up to age 26. Mr. Sherwood
described this as a parallel provision to the one that allows
children to remain on their parents' health insurance until age
26. The summary indicates that the CHIP authorization is
extended and some of the language anticipates further extension.
He noted that there will also be enhanced funding for CHIP.
There are other changes to the eligibility process. Presumptive
eligibility for hospitals would allow hospitals to make
preliminary eligibility determinations. Presumptive eligibility
is valid for a certain period of time until the state can make
its own determination. Administratively these are very
cumbersome to manage because it entails taking eligibility from
outside sources in order to enter it into your system to pay
claims. Follow up is then required. The law mandates some
spousal impoverishment protection that Alaska currently uses.
They will continue to monitor this.
11:59:39 AM
The next provisions cover a range of health information that
imposes standards or requirements on Medicaid including
enrollment simplification, health information technology, and
standards and protocol. They will try to keep up with these as
the guidance comes out. This ends the CHIP enrollment
performance bonus effective in 2013 and it's difficult to
estimate the impact. The federal government still hasn't
provided clarification about how they should account for
spending the bonus money they already received.
The state's CMS agency is keeping up with all areas of guidance
it needs for both the Medicaid program and the Medicare program.
The bulk of the health care reform requirements fell under that
agency's purview.
The descriptions of the mandated services are mostly minimal
impacts on Alaska because they're already doing it or something
similar. This includes things like tobacco cessation and payment
for free-standing birthing centers.
12:02:53 PM
The provision on home and community-based services requires the
federal government to issue regulations setting standards for
long term care systems. Until they see those requirements it's
hard to know the impact, but the federal government's track
record in this area hasn't been great. The fear is that they'll
be subject to micromanagement and a lack of flexibility.
Starting next July they have to figure out a way not to pay for
health care acquired conditions. The statute appears to be a
little broader than hospitals and they're still looking for
clarifications to ensure that everybody is included that's
appropriate. At the national level, the disproportionate share
of hospital payments will be reduced and the assumption is that
hospitals will serve fewer uninsured people. They don't
anticipate that it will impact Alaska's current use of these
federal funds because the state has never used its full
allocation.
Page 6 lists a number of fraud, waste, and abuse provisions.
Some have analyses pending under the description, but that
doesn't mean they aren't thinking about and working on them.
SENATOR DYSON asked to be updated going forward and said he
hopes to see Alaska's fraud investigation and screening
enhanced.
12:06:07 PM
Referencing the bottom of page 6, Mr. Sherwood said some of
these issues are significant. The Medicaid prescription drug
rebate system has changed. Currently there are mandatory rebates
that drug companies have to provide for the Medicaid program.
And some states have negotiated additional rebates from drug
companies for giving certain preferences in their coverage
policy. Essentially, the federal government has increased the
mandatory mandate and they keep the extra money from that. That
will likely decrease the state's supplemental rebates because
drug companies likely wouldn't want to pay much of a supplement
if they were paying more in the mandatory rebate. On Thursday
the federal government will hold a meeting addressing in greater
detail how this will be implemented.
12:08:10 PM
MR. SHERWOOD said phasing out the donut hole in Medicare part D
doesn't have a direct impact on Medicaid but it's an issue his
office continues to monitor. When the State of Alaska
implemented Medicare part D it was required to make claw-back
payments to help offset the cost of Medicare part D for people
who have dual eligibility. Prior to Medicare part D the state
provided the drug coverage for "dual eligibles." Generally
states feel that part of that was to pay for things that were
uniquely provided to the dual eligibles and if the donut hole
closes and becomes something that is available to all Medicare
recipients then maybe Medicaid shouldn't have to pay so much.
Part of what the state pays for in the claw-back payments is the
fact that dual eligibles are not subject to the donut hole. They
have special provisions including lower co-payments and they're
not subject to the donut hole. If that becomes a broad-based
benefit the question is if states should have to pay as much in
their claw-back payments, but nothing in the law specifically
addresses that.
The class act will be a voluntary, self-sustaining, long-term
care insurance system. Medicaid is a major payer of long-term
care insurance so that will have some potential effect. They
will have to figure out how Medicaid will interact with class
act benefits. Also, Medicaid gets some new responsibilities in
terms of oversight of the home and community-based service
system. These are things that sound wise on paper but it's not
clear what those responsibilities really mean or how much effort
it will take to keep up with them.
Significant federal money will go into the expansion of
community health centers. They play an important role in
providing health care in many areas of Alaska so this could have
direct impact, both increasing access and increasing the work
load as CHSs typically bill Medicaid as one source of income. As
access is expanded costs may go up in the Medicaid program.
Page 8 describes grants and options for Medicaid that are made
available through the new law. They'll need to look at the
funding opportunities, figure out what they mean, and determine
how relevant they might be to Alaska. There's an option to
provide family planning services to low income individuals under
Medicaid as a stand-alone service group not the full range of
services. A number of states do it through demonstration waivers
but that's not necessary. It's generally seen as a health
promotion, cost management proposal as Medicaid agencies
typically cover low-income pregnancies and health care for low-
income children.
12:13:56 PM
The early expansion option relates to the new big category of
working adults, childless adults, low-income adults he mentioned
earlier. States have the option to expand earlier. As previously
mentioned the Medicaid program spends money through the CAMA
program on a subset of folks who would be covered here. Another
significant area where Medicaid spends money would be their
grants for behavioral health services. Many behavioral health
service recipients would fit into this group so there might be
opportunities for refinancing here. The analysis for this has
just begun.
It's taken a lot of work to identify and understand the
mandatory changes and while they will continue to examine the
opportunities presented by these options but it's a work in
progress and there will be challenges. Adding staff still
requires time to bring them up to speed with the programs.
Another option they'll be looking at is providing health homes
to enrollees for chronic conditions. They will be looking for
guidance to see if this option fits. The opportunity for a
demonstration project to allow payment to private institutions
for mental disease is likely not an option because Alaska
doesn't have a qualifying institution.
12:17:08 PM
The preliminary budget impact of the expansion for adults to 133
percent of poverty - effectively 138 percent with the mandatory
5 percent disregard - shows a savings for being able to absorb
CAMA into this group. It also shows a projected savings for the
increase in federal funds for CHIP. It's a short-term increase
over 4 years and it phases in and out over that period. The
impact of the drug rebate will increase Medicaid's costs by $7.5
million. The net cost to the state is projected to vary through
the 7-year period from about $65 million up to about $18 million
by the end of the period. The fluctuation is based on the CHIP
increase and also that there is no cost to the state the first 3
years because the federal government pays 100 percent of the
cost of expansion. In 2017 Medicaid begins to pay a percentage
and it's substantially higher than the regular federal medical
assistance percentage (FMAP). Overall it will bring in
substantial federal funds to the Medicaid program; by 2020 it
will be over $190 million.
12:20:07 PM
REPRESENTATIVE KELLER asked if the changes in the expenditures
include the administrative costs.
MR. SHERWOOD answered no; it's just the changes in the benefits.
SENATOR PASKVAN referenced the comment on page five that says
Alaska does not have a reporting requirement for health care,
acquired infections, or conditions. He asked if there is a
recommendation that Alaska have a reporting requirement, if
there is a model state to look to, and if that's a good step
toward consumer protection.
MR. SHERWOOD offered to provide the information later. He added
that in his tenure hospital reporting has been controversial
because of the administrative burden to the facility versus the
benefit to the state.
12:22:44 PM
CHAIR DAVIS recessed the meeting until 1:30 p.m.
^DENALI KID CARE (SB 13)
1:37:34 PM
CHAIR DAVIS reconvened the meeting at 1:37 p.m. [The business
before the committee was to hear a presentation on Denali Kid
Care.]
1:38:17 PM
JON SHERWOOD, Medical Assistance Administrator, Department of
Health and Social Services (DHSS) said that after the governor
vetoed SB 13 a number of questions came up about other options
under Medicaid or CHIP to expand coverage without raising the
same abortion issues.
The answer is yes there are other options to expand coverage.
Under CHIP an expansion would indirectly include pregnant women
under the coverage of unborn children as well as expanding
coverage of children of pregnant women under the Medicaid
program. However, it doesn't obviously provide a different
result with respect to abortion. He explained that under
Medicaid and CHIP federal law, most abortion coverage is already
excluded through the Hyde amendment that limits abortion to
cases of rape, incest, or jeopardy of the life of the mother.
But under Alaska case law, if the state provides medically
necessary services to pregnant women it must include coverage of
medically necessary abortions. Alaska courts have found that a
lack of federal funding or a specific appropriation to pay for
abortions is not a legitimate basis for the state not to pay for
abortions. Essentially, if the state operates a Medicaid or a
CHIP program that provides health care services to pregnant
women, medically necessary abortions have to be included under
that coverage. The difficulty is that there is no statutory
definition for "medically necessary."
1:41:26 PM
MR. SHERWOOD said that any time you take a new approach to
coverage, it opens the possibility to re-litigate the issues and
you may come to a different conclusion. Also, there may be
alternatives that aren't as obvious. He said he wants the
committee to be aware that the governor instructed the
Department of Law to analyze all possible options including
looking at other states that have limited coverage of abortion
services. This will take at least 3 months.
CHAIR DAVIS announced that Senator Dyson had rejoined the
committee and a quorum was present.
REPRESENTATIVE CISSNA observed that she has seen the terminology
"abortion" also used in cases of miscarriage and she wonders if
that figures into what happened [with respect to the veto of SB
13.] Both are the end of a pregnancy but in one case it's beyond
the woman's control. She asked if this is a possibility.
MR. SHERWOOD said he is not an expert on medical terminology,
but when they talk about coverage for abortion, it is
specifically about a procedure that is not a follow up to
miscarriage or a naturally terminated pregnancy. His
understanding is that those necessary procedures are coded
differently than for those services that they pay for from state
general funds under court order. He asked if he'd answered her
question.
1:46:58 PM
REPRESENTATIVE CISSNA replied maybe we need a doctor for this.
MR. SHERWOOD said you might need a doctor to parse out the
different procedures that are provided in different situations
and for different causes. He offered to provide more clarity in
a follow up.
CHAIR DAVIS asked if his statement that they code various
procedures differently is accurate because her understanding is
that abortions or other various procedures like giving pills to
prevent a pregnancy are all coded together. She asked if that's
true.
MR. SHERWOOD said the staff who oversee medical claims have said
that the statistics they developed were coded using codes that
applied only to Medicaid's coverage of therapeutic abortions -
not to procedures that would be a follow up to a miscarriage.
Because he isn't an expert on coding he said he wasn't
comfortable elaborating.
CHAIR DAVIS said she would like it clarified in writing how many
codes are used.
MR. SHERWOOD said he can provide a list of the codes that go in
this category. He clarified that in addition to codes for
different procedures, there are codes for health care services
that support a therapeutic abortion that may get included when
they set aside money around their expenditures on abortion.
1:50:48 PM
CHAIR DAVIS asked if he had ideas on how the committee might be
able to look at what other states do in terms of abortion
compared to the Denali Kid Care program to see if another system
might help Alaska look at a new way for doing procedures.
MR. SHERWOOD said the governor has asked the Department of Law
(DOL) to do that analysis. His understanding is that a lot of
what works in a particular state depends on the provisions in
the state constitution, which is why DOL has been charged with
the task.
CHAIR DAVIS recognized that Senator Thomas and Representative
Seaton were participating via teleconference.
SENATOR DYSON asked if there is a way to withhold benefits from
someone who has behavioral problems and over a long period of
time refuses to deal with that.
MR. SHERWOOD said his understanding is that the only way a
covered service might be withhold from an individual is if they
were found to be incompetent and that is outside the scope of
the Medicaid program. In those cases a referral would be made to
either Adult Protective Services or Child Protective Services.
SENATOR DYSON said he assumes that nothing in the new federal
law adds incentives or penalties for that.
MR. SHERWOOD replied he isn't aware of anything in the Medicaid
program, but there are incentives to encourage preventative
care.
1:54:18 PM
SENATOR DYSON asked if anything in the new law enhances the
ability to eliminate the misuse of pain medications.
MR. SHERWOOD replied he doesn't know of anything in regards to
Medicaid. He offered to follow up to find out if he's overlooked
anything.
SENATOR DYSON said his question was prompted by a pharmacist's
comment about abuse of the system with respect to Oxycontin.
He's also told that some professionals are notorious for writing
promiscuous prescriptions for psychoactive pain medication.
MR. SHERWOOD said there are a number of controls over those
medications in the Medicaid program including prior
authorization and a point of sale system to identify attempts to
fill a prescription multiple times. It's an area of concern and
they are constantly on the lookout for ways to improve
oversight, he said.
SENATOR DYSON asked if the point of sale system is in place and
working.
MR. SHERWOOD replied it is in place for Medicaid transactions.
SENATOR DYSON asked about non Medicaid transactions.
MR. SHERWOOD said he can't speak to other payers, but the Board
of Pharmacy has received a grant to develop a database for these
kinds of drugs. He said he didn't know the progress.
1:57:41 PM
CHAIR DAVIS asked if he'd like to speak to not having a
definition for "medically necessary" and if perhaps it should be
in statute so everyone is on the same page when using the
terminology.
MR. SHERWOOD responded that's part of the legal analysis that
DOL is doing.
CHAIR DAVIS asked Ms. Kraly if she'd like to enhance anything
Mr. Sherwood said.
STACIE KRALY, Chief Assistant Attorney General, Department of
Law (DOL) explained that DOL has been instructed by the
governor's office to do a comprehensive review of the options
available under the Medicaid program related to the expansion of
services as well as the coverage exclusions such as the use of
state general fund money for abortion services. Part of that
evaluation will be to look at each state program to see how each
one deals with these issues but the analysis will rest on an
evaluation of each state's constitution and how it relates to
this state's constitution.
In addition, she said, DOL will conduct a comprehensive review
of the definition of "medical necessity." Medicaid services and
most other health care services are predicated on a
determination that the service is medically necessary. Part of
the analysis will be to look at the states that do and that
don't have a definition and then they'll look at whether the
definitions are global or limited to specific services such as
reproductive services. They'll also evaluate how and if a
definition would be medically appropriate in the state of Alaska
in terms of the state consideration, case law, and other things.
One consideration is that when a definition of medical necessity
is created, it would apply to all services in the Medicaid
program, not just reproductive services.
2:01:35 PM
MS. KRALY said DOL decided to wait until after this meeting to
roll up their sleeves and get started in case there are further
instructions, but they intend to report to the governor as
quickly as possible.
SENATOR PASKVAN wondered if there's a definition for "medical
necessity" in the medical profession as opposed to the legal
profession.
MS. KRALY said the distinction will be a consideration. The
problem she and others in her office have is that Medicare is
administering a medically-based program but it's managed through
statutes and regulations so a medical definition has to dovetail
into a legal framework.
SENATOR PASKVAN said he'd like to know if the analysis
distinguishes between a medical definition of medical necessity
and legislative definitions of medical necessity on a nationwide
basis. The American Medical Association, the American Pediatric
Association and others may weigh in on the issue.
MS. KRALY said she made note of that.
SENATOR DYSON said a half dozen reports have been done about the
things that are done for "medical necessity" and evidence
indicates that it's been used by some as a real loophole. Whose
definition of how big a loophole has driven folks like himself
who have reservations about the promiscuous use of abortion to
be concerned. There's a long history of people trying to wrestle
through this issue on both levels, he said.
REPRESENTATIVE KELLER asked what is different this time about
what the governor has instructed DOL to do versus what's been
done before.
MS. KRALY said the difference is that the question has been
raised in the context of the veto of SB 13 and the issue is a
bit more comprehensive. If you define medical necessity you
define it for all purposes as to the Medicaid program so DOL
needs to evaluate whether it's possible to narrow the definition
for different types of procedures. They will also look at how
other states have dealt with the issue of public funding for
abortion services in light of the Hyde Amendment and specific
state constitutions. Part of that will be to evaluate how states
have progressed subsequent to passing legislation.
2:08:14 PM
MS. KRALY said what they've been asked to do will take
considerable time and resource allocation is an issue. She will
be the primary attorney working on this and she'll balance it
with the myriad of other time-sensitive health, safety, and
welfare issues that take priority over a research project.
CHAIR DAVIS referenced the increase in CHIP funding and observed
that it might be feasible to bring in all uninsured children
with the new money from the federal government.
MR. SHERWOOD said the money he talked about this morning is a
special time-limited enhanced match rate that would reduce the
requirement to provide a state match. So a bargain may be had
for awhile, but barring any change in federal law they'd go back
to the regular match rate beginning in 2020.
2:12:31 PM
CHAIR DAVIS asked if he had ideas on how to change the program
next year to keep the same thing from happening next year.
MR. SHERWOOD said he believes that the driving force behind the
Department of Law review is to look at options that may satisfy
the concerns of the governor and at the same time address the
intent of SB 13, to expand coverage for pregnant women and
children. It would be premature to comment on specifics.
CHAIR DAVIS asked if it would be premature for him to give an
opinion about the ideas that Mr. Obermeyer presented to him
about how some states are handling their programs.
MR. SHERWOOD said they did review that memo and he did outline a
number of different options that are available under CHIP for
expanding coverage for the pregnant women option or the unborn
child option. Their preliminary analysis is that neither option
gets around the issues raised by Alaska Supreme Court decisions.
Neither would be a secure solution to avoid the issue of
covering abortion.
2:16:02 PM
SENATOR PASKVAN asked what other areas of medicine she's looking
into that the definition of medical necessity would apply to.
MS. KRALY explained that as they look at how other states define
medically necessary services they'll analyze whether or not
other states' definition is limited to reproductive services or
if it's more of a global definition. She continued to say that
if they can agree on a definition of medical necessity, it will
have to apply across the entire program so the question is
whether or not it's over inclusive or under inclusive. She
doesn't want to create unintended consequences for the Medicaid
program going forward and lawsuits for the state. She asked if
that answered his question.
2:19:06 PM
SENATOR PASKVAN replied it piggybacks on his earlier question
about other organizations that may have defined medical
necessity within a particular field. He said he's trying to
determine how much latitude the definition gives the
practitioner compared to the politician. It'll be a lot of work
for you, he added.
MS. KRALY agreed it will be complicated.
CHAIR DAVIS noted that Mr. Sherwood said that the governor asked
the Department of Law to begin working this about a month ago.
She asked if that means they will be finished by November.
MR. SHERWOOD said he became aware of the request within the last
month, but he would defer to Ms. Kraly as to when the analysis
will be finished.
MS. KRALY said her office received the request from the governor
within the last ten days and at that time she estimated it would
take 3 months to do a comprehensive analysis and then it will be
the governor's prerogative whether or not to release the
information. While she can't promise that it will be finished by
November, she does hope that her part will be completed.
2:21:53 PM
CHAIR DAVIS said she'd like the information before she presents
a bill again next session so there wouldn't be any
misunderstanding and it would have a better chance of being
signed into law. But she understands that she's saying that it's
privileged communication and that the governor may or may not
release the information.
MS. KRALY said that's correct. They'll have to wait and see how
that plays out, but she believes that the governor's office is
eager to find a solution to this issue. That's why DOL was asked
to look into this and hopefully come up with recommendations for
statutory changes, new legislation, and/or a regulatory process
to achieve a different result than what happened recently.
2:24:30 PM
MR. SHERWOOD clarified that DHSS did not attempt to deceive
anyone or withhold information, but they did fail to ensure that
the governor's office adequately understood the implications of
the Supreme Court cases.
RANDI SWEET, United Way of Anchorage (UWA) stated that the
United Way of Anchorage has and continues to support the
increase of coverage for Denali Kid Care. Kids who don't get a
healthy start have more difficulty succeeding in school and in
the long run the community suffers. Families that are struggling
to survive should not have to choose between housing or food or
healthcare. Nor should they face bankruptcy because of medical
bills. Increasing coverage is a relatively small investment for
the state, but it will improve the lives of 1,300 children and
225 pregnant women. Increasing coverage is the right thing to do
and a sound community investment. She concluded saying that
United Way of Anchorage will continue to work with the governor
and the Legislature to find a solution to increase the Denali
Kid Care coverage.
2:29:25 PM
DAVID MASUO, representing himself, said he began working for the
Division of Public Assistance in 1989 because he wanted to help
people. In 1999 he was one of the first workers to be hired for
Denali Kid Care. At that time the income guideline was based on
200 percent of the federal poverty level. For people that had
insurance, it was 150 percent of the federal poverty level. He
expressed his personal feeling that the percentage is unfair to
children because all children should be covered.
In 1998 Governor Knowles saw the CHIP program in another state
and directed DHSS to develop a similar program within 6 months.
Mr. Sherwood was in charge of policy and had the responsibility
of establishing the rules. Denali Kid Care was a fantastic
program, he said. It allowed the state to pay less for health
care if a child met the CHIP income level as opposed to the
Medicaid income level, but Medicaid was the basic payer.
MR. MASUO related that U.S. Senator Frank Murkowski told him
that Denali Kid Care was a wonderful program and he'd never
touch it, but within 6 months of becoming governor he froze the
program and dropped the income level from 200 percent of the
federal poverty level, which hurt a lot of kids. When he was a
state employee he couldn't say much but now that he's retired he
can openly state that he's an advocate for Denali Kid Care.
He explained that Medicaid does not pay for abortions, but it
does pay for all procedures up to the termination of pregnancy
based on an abortion. It also pays for care for 2 months after
the pregnancy ends. He said that while he doesn't like the idea
of abortion, he doesn't believe that he or any other man has the
right to tell a woman that she can't have one.
MR. MASUO said it hurt when SB 13 was vetoed and he told the
governor that the information he received was wrong. Even when
the procedure is medically necessary a physician has to jump
through more hoops than you can imagine because Medicaid is
reluctant to pay even in that circumstance. In fact, the state
pays for the procedure, but not the pre care or the post care.
In conclusion Mr. Masuo said he made a special trip to Anchorage
today specifically to speak in support of Denali Kid Care.
2:44:25 PM
SENATOR DYSON asked how the Legislature should decide what the
optimum income level is for a family to receive coverage under
Denali Kid Care.
MR. MASUO replied he doesn't know what the limit should be, but
his personal feeling is that every child should be given the
option for Denali Kid Care because preventative care is much
less costly than after the fact care.
SENATOR DYSON said this program is designed for kids whose
parents can't afford minimum medical care, but there has to be a
rational process to determine what the optimum income level
should be.
MR. MASUO suggested matching whichever state has the highest
level. For example, if Minnesota has 300 percent, Alaska should
as well.
SENATOR DYSON commented that presupposes that Minnesota has a
process that even you with all your experience can't figure out.
He added that he rejects the premise that you can't stand up for
a group unless you're a part of it because many of the advances
in human rights around the world have been made by people who
were loathe to fight for the rights of others who were different
than they were.
2:51:27 PM
SENATOR PASKVAN asked him to estimate the number of Alaskan kids
that would not get appropriate medical care if the qualifying
level were 200-250 percent.
MR. MASUO replied he doesn't know the numbers, but when the
level was 200 percent they got a good group of kids and at 250
percent they would have gotten an even larger group. He said he
would like the notion of insurance to be removed because it's a
hindrance to parents that have purchased it. He cited an
example.
2:55:03 PM
CHAIR DAVIS described Denali Kid Care as a wonderful and proven
program and said she would like to move forward from the 175
percent level. For 4 years she's introduced legislation to raise
the income level to 200 percent of the poverty level percent and
when it passed the income level was reduced to 175 percent and
that's where it stands today. She said she plans to introduce
the legislation again next year and hopes to work out the
differences. At this point Alaska is near the bottom and is one
of just three states that have a standard that is less than 200
percent. We need to do everything possible to provide insurance
for those 30,000 uninsured Alaskan children who could qualify
for this program, she said.
SENATOR PASKVAN asked if there is any way to analyze how many
kids are not receiving appropriate medical care.
MR. SHERWOOD said the biggest stumbling block is getting
information about people's income if their care isn't
compensated.
2:59:10 PM
SENATOR PASKVAN said he's just trying to figure out how to
analyze how many kids aren't getting care at a particular income
level.
MR. SHERWOOD offered to do a demographic analysis to estimate
the number of kids that will fall within the different income
brackets.
CHAIR DAVIS thanked everyone who participated and said the
committee will continue to work to find resolution to this
problem. She added that it is indeed a problem when a state like
this can't cover its uninsured children because the state is
certainly capable of doing so.
3:02:22 PM
There being no further business to come before the committee,
Chair Davis adjourned the Senate Health and Social Services
Standing Committee hearing at 3:02 p.m.
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