Legislature(2015 - 2016)BUTROVICH 205
02/25/2015 01:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Medicaid Expansion | |
| 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
February 25, 2015
1:32 p.m.
MEMBERS PRESENT
Senator Bert Stedman, Chair
Senator Cathy Giessel, Vice Chair
Senator Pete Kelly
Senator Bill Stoltze
MEMBERS ABSENT
Senator Johnny Ellis
COMMITTEE CALENDAR
PRESENTATION: MEDICAID EXPANSION
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
VALERIE DAVIDSON, Commissioner
Department of Health and Social Services (DHSS)
Anchorage, Alaska
POSITION STATEMENT: Presented information on Medicaid Expansion.
JOHN SHERWOOD, Deputy Commissioner
Department of Health and Social Services (DHSS)
Anchorage, Alaska
POSITION STATEMENT: Presented information on Medicaid Expansion.
RON KREHER, Acting Director
Division of Public Assistance
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Presented information on Medicaid Expansion.
ACTION NARRATIVE
1:32:31 PM
CHAIR BERT STEDMAN called the Senate Health and Social Services
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Stoltz, Kelly, Giessel, and Chair
Stedman.
^PRESENTATION: Medicaid Expansion
PRESENTATION: Medicaid Expansion
1:33:16 PM
CHAIR STEDMAN announced that there would be a presentation on
Medicaid Expansion by the Department of Health and Social
Services (DHSS).
VALERIE DAVIDSON, Commissioner, Department of Health and Social
Services (DHSS), said she would discuss the Healthy Alaska Plan
today. She introduced Mr. Sherwood.
1:34:28 PM
At ease
1:37:43 PM
CHAIR STEDMAN brought the meeting back to order.
COMMISSIONER DAVIDSON began by introducing the recently released
Healthy Alaska Plan that can be found on the department's
website. She stated that the Healthy Alaska Plan found that
Medicaid expansion is healthy for Alaskans, healthy for the
Alaska economy, healthy for the state general fund budget, and
it advances reform. She maintained that reform is necessary and
Medicaid opportunities are enhanced with expansion. In the
current fiscal environment, the state must ensure that there is
a sustainable Medicaid program for years to come.
She referred to Governor Walker's state of the budget address
where he asked the commissioners to look at the budget and plan
for a total of 25 percent cuts to department budgets over the
next several years. She related that the DHSS budget totals $2.7
billion, of which Medicaid is $1.7 billion. Reform provides an
opportunity to identify and implement efficiencies, to make
improvements, and to deploy innovations in order to minimize the
impact to Alaska's most vulnerable population. She maintained
that the conversation must go beyond simple fixes and look at
the current Medicaid program as an opportunity to design an
Alaska plan.
CHAIR STEDMAN opined that the target is closer to $3 billion or
$4 billion.
COMMISSIONER DAVIDSON continued with a discussion of reforms the
department is already undertaking. The first reform is to
control the over-utilization of hospital emergency room
services. The department has identified over 5,000 people who
are Medicaid beneficiaries who over-utilize emergency rooms,
costing about $29 million a year. The department began a care
management program that would direct those people to the
appropriate level of care. The target was $7 million in savings,
or reducing the expense by 25 percent. The method used was
through policy. She noted it is a voluntary program, and to make
it mandatory would require a regulation change. She addressed
the reason why individuals over-use emergency rooms; those who
do not have health care coverage can, by federal law, receive it
at emergency rooms.
She explained that the second reform looks at increased fraud
and abuse prevention and control efforts. This is cost avoidance
as a result of providers not submitting future claims based upon
another provider found to be fraudulent. She said they saw this
a lot with personal care attendant fraud prosecutions. The
department then required all the personal care attendant
providers to be registered as Medicaid providers. This allowed
the department to reduce waste. The target of this reform is $15
million in annual avoided costs. The method used was through
policy.
SENATOR KELLY asked if the target had a time-certain date.
COMMISSIONER DAVIDSON said some of the cost-avoidance efforts
have already begun. They anticipate arriving at the $15 million
mark in a couple years.
1:44:08 PM
COMMISSIONER DAVIDSON continued with the third reform effort -
home and community-based service improvements. She said this
option was available in 2010 under the Affordable Care Act. She
said the department is currently exploring two of four possible
options; a 1915-I waiver that replaces services that are
currently being provided, with 100 percent state general fund.
It would serve people that don't meet nursing level of care, but
do meet another criteria, such as Alzheimer's-related diseases,
traumatic brain injury, or severe mental illness. The types of
services are personal care attendant services, general relief
services, adult day care, and senior in-home services. Some will
be at 50 percent match or under the expansion group match. The
1915-K waiver would allow the department to replace existing
Medicaid home and community-based waiver services matched at 50
percent federal with 1915-K services that are matched at 56
percent federal. The combined total waiver target is $24 million
annual savings upon full implementation, which is expected in
two or three years. The method used is through a waiver.
1:46:07 PM
COMMISSIONER DAVIDSON turned to the fourth reform, patient-
centered medical home initiatives which help those with chronic
health issues. The initiatives allow individuals to reduce
hospitalizations. The target in savings is between $78,000 and
$165,000 annually per 1,000 enrollees. This recommendation came
from the 2011 Medicaid Task Force and would be enacted by a
regulation change making the initiatives mandatory.
She said the final reform is coordination with the Alaska Tribal
Health System. She explained that when three agencies are
involved with a beneficiary, the Indian Health Service,
Medicaid, and Tribal Health, the state is allowed to claim 100
percent federal match. The department would like to target about
10 percent, or $15 million in savings to the state general fund
through policy and through agreements.
She noted other waiver opportunities are also available to
explore, such as behavioral health and senior disability
waivers. She clarified that all reforms are in the existing
Medicaid program, however, some are voluntary, but some can be
negotiated through a federal waiver.
1:48:54 PM
SENATOR STOLTZE asked if the department has statutory
recommendations for the legislature or the Governor.
COMMISSIONER DAVIDSON clarified that none of the reform efforts
require a statutory change; they may require regulation changes.
SENATOR STOLTZE pointed out that there is a 90-day session and
the regulatory process can be much longer. He suggested that
there might not be enough time to implement expansions and
reforms might have to come first.
COMMISSIONER DAVIDSON reiterated that the reforms are already
underway. The department would like to build upon those efforts
and believes reform and expansion can go hand in hand. The
department has a longer-term strategy plan for 2017 and beyond.
The department anticipates legislative suggestions and will take
the time needed to develop an Alaska plan. The reason expansion
is being addressed now is due to a very limited opportunity to
take advantage of federal match under expansion. Under the
Affordable Care Act, expansion is only allowed during the 2014-
2016 years.
CHAIR STEDMAN mentioned the need for cost containment and
reducing expenditures by 25 percent while absorbing the costs of
expansion.
1:52:38 PM
COMMISSIONER DAVIDSON turned to additional reforms that have
been recently identified: changing the eligibility for Personal
Care Assistance (PCA) services for a savings of $2.5 million, a
possible savings of $1 million in durable medical equipment,
vision, and hearing, an increase in the number in the Super
Utilizer contract for management of care, a $1 million savings
in dental, implement utilization control for Behavioral Health
services, and ground transportation savings by reinforcing
policy, encouraging escorts for multiple members for travel, and
developing a fee structure.
She addressed other reforms that could happen by 2016 totaling
$10 million in savings, such as efficiencies in the Tribal
Health System due to new facilities on board, resulting in
savings in support and ancillary services - labs, dental, long-
term care.
1:57:51 PM
SENATOR STOLTZE recalled a visit from families with disabled
family members. They had two priorities, available used durable
medical equipment and telemedicine. He inquired if they would
require statutory changes or regulatory changes.
COMMISSIONER DAVIDSON replied that there is a surplus of durable
medical equipment available and the department has had
conversations with providers to let them know this is a
priority. She added that regulations are available to go to
public hearing now. She commented that the state often has to
deal with challenging issues, however, when it works together
with communities, stakeholders, and providers, progress is made.
She agreed that telemedicine in Alaska should be utilized more
than is being done and should be built upon.
JOHN SHERWOOD, Deputy Commissioner, Department of Health and
Social Services (DHSS), added that neither change requires a
statutory change. If it was a mandate, it might require
statutory work. He offered to follow up on the issue.
2:02:09 PM
SENATOR KELLY asked about $10 million in savings due to
coordination with Tribal Health organizations. He maintained
that some of that money was for the Alaska Native Medical Center
and has been counted.
COMMISSIONER DAVIDSON responded that a part of those savings
have been included in SB 88, but not all. For example, the
projected annual savings the department allocated to SB 88 was
$3.8 million. The department anticipates about $8.8 million in
annual savings.
CHAIR STEDMAN requested information about the targeted savings
and budget reductions from last year were.
SENATOR KELLY thought that an increase in Medicaid cost was
included as expenses in the presentation, when, in fact,
Medicaid costs have decreased. He asked for clarification.
2:05:08 PM
COMMISSIONER DAVIDSON said the department would be happy to
provide that information.
She discussed designing reform by using funding from the Alaska
Mental Health Trust Authority to fund technical assistance. The
department will look at reform in other states and at how to
engage stakeholders when building an Alaskan model. The
contractor will also help identify the approval process, whether
it be through regulation, statutory change, state plan
amendments, and/or waivers.
2:07:13 PM
COMMISSIONER DAVIDSON reviewed the timeline for reform. In
February 2015, the RFP was released, March is the deadline for
proposal submissions, in April or May the department will meet
with the contractor and stakeholders, and then in January of
2016, the department will present the report to the legislature
and the public.
CHAIR STEDMAN said there might not be enough cash in the bank to
survive the time schedule. He suggested that it be accelerated.
SENATOR STOLTZE asked how stakeholders are defined. He said his
stakeholders are his constituents.
COMMISSIONER DAVIDSON responded that the department is open to
all reform ideas and plans to have a conversation out in the
open. She said she is a collaborative person and will meet with
persons of all viewpoints.
SENATOR STOLTZE hoped for widespread involvement and a
significant outreach.
2:11:11 PM
COMMISSIONER DAVIDSON spoke of additional reform options,
building blocks to achieving meaningful reform, which the
contractor will be researching. Some reforms are: payment
reform, strengthened primary care, care management, workforce
innovation, maximizing federal matching fund opportunities, and
improved Telehealth capabilities. The department is looking at
examples of what other states do.
2:13:27 PM
COMMISSIONER DAVIDSON continued with reform strategies for
increasing prevention and shared responsibility: cost-sharing
options, health savings accounts (HSA's), service to direct
patients to the appropriate level of care, incentives for
healthy behaviors, increased access to preventative services,
and work assistance benefit for the expansion group. These are
additional reforms other states have.
2:15:33 PM
SENATOR KELLY voiced concern about the lack of time to enact the
reforms. He opined that the state already knows about other
states' reforms. He suggested using a model to see various
savings scenarios in order to extend reserves. He said the
scenarios he looks at show the state running out of money in FY
2018. He suggested not studying reforms much more and just doing
something. He thought there would be support from the Governor
and the legislature.
CHAIR STEDMAN said he does not see any real reductions in the
reforms. He agreed with Senator Kelly and cautioned about
pending budget cuts in services.
SENATOR KELLY recalled sales courses and said, "If you think you
should do something, do it."
2:19:09 PM
COMMISSIONER DAVIDSON related who is covered by Medicaid and who
is in "the gap". She listed those not covered: adults without
dependent children who earn less than 100 percent of the federal
poverty level do not qualify for Medicaid nor a subsidy. She
said the "donut hole" was created when the Supreme Court
determined that states have the option of expanding Medicaid.
She explained what Medicaid expansion consists of: a higher
federal match resulting in an immediate economic boost to the
state, reducing uncompensated care of $100 million by reducing
the number of uninsured, and opportunities for reform and
waivers by using higher federal match. She noted that Arizona
saw their uncompensated care drop by 30 percent in the first six
months of Medicaid expansion.
2:21:55 PM
COMMISSIONER DAVISON related who would be covered by the
expansion. Adults between the ages of 19 - 64 without dependent
children with incomes up to 138 percent of the federal poverty
level would be covered. She showed a map of where these 42,000
adults live. Most live around large population centers.
Anchorage and Mat-Su have about 21,000 people who would be
covered, or about 50 percent. She listed the percentages in
every area.
SENATOR KELLY asked if the total is 41,000 people.
COMMISIONER DAVIDSON said yes - 41,910.
She showed a graph that depicts the expansion population with,
and without, jobs. About 44 percent are working. About 43
percent of those eligible for expansion have no insurance and
about 29 percent have partial coverage.
2:24:49 PM
SENATOR KELLY asked if 58 percent of Alaskans are not in the
workforce.
CHAIR STEDMAN said 58 percent of those who qualify for
expansion. He requested a breakdown by regions of those who are
unemployed, unable to work, and not in the labor force.
COMMISSIONER DAVIDSON commented that everyone is impacted by
those who do not have health coverage. Lack of health coverage
impacts the workforce.
2:26:29 PM
COMMISSIONER DAVIDSON discussed how many people would sign up
for Medicaid if it was an option. It is estimated that about 63
percent would sign up. Part of the Healthy Alaska Plan included
the release of a report by Evergreen Economics that provided
statistics about the projection of enrollment, the per-enrollee
cost, and the estimate of total spending. The report showed that
in the first year 20,000 would sign up. That number will
increase to 26,000 by 2021.
The average cost per enrollee in 2016 would be $7,248,
increasing to about $8,433 in 2021. Those costs are lower than
previously projected by the state because 54 percent of
enrollees are men and males are lower-cost beneficiaries. Also,
the largest group is made up of enrollees ages 19-34, who are
also lower-cost beneficiaries. Based on the analysis from the
department's Medicaid Budget Group, between FY 2009 and FY 2013
the average spending per enrollee for adults and family Medicaid
group grew on average by 1 percent annually to $6,560 in FY
2013.
COMMISSIONER DAVIDSON turned to the subject of reducing the
recidivism rate. She showed a web site where the recidivism
reduction plan is found. The Alaska Judicial Council reported
that of convicted felons who completed an ADOC substance
program, 12 percent recidivated compared to the control group in
which 20 percent recidivated within 12 months of being release.
She noted that the prison population is predominantly made up of
adults without dependent children. She said this is a great
opportunity for Medicaid to invest in behavior health services
and alcohol and substance abuse programs. Other states are
seeing a reduction in recidivism by investing in these programs.
SENATOR STOLTZE asked whether persons are in prison for
substance abuse or for their actions while under the influence.
He maintained they were in prison for aberrant actions.
COMMISSIONER DAVIDSON said that is correct.
SENATOR KELLY said some are also there for pre-trial.
COMMISSIONER DAVIDSON stated that access to health care means
improved health outcomes and increased productivity and
independence. The number of uninsured Alaskans would be reduced
by half. More Alaskans would receive preventative and primary
care, including behavioral health services and help in managing
costly chronic diseases. Alaska's statewide mortality rate would
drop. There would be health care access for survivors of
domestic violence and sexual assault. Access to health care is
already showing a positive difference for the homeless
populations in other states.
2:34:06 PM
COMMISSIONER DAVIDSON explained how higher federal contributions
would occur under Medicaid expansion. She showed that FMAP was
100 percent in 2014 and declined to 90 percent by 2020. The
department projects that in 2016, new federal revenues will
total $145 million and increase to about $224.5 million in 2021.
There will be over $1 billion in new federal revenue to Alaska
over the next six years. In 2016, every day of delay would cost
the state $398,452 in lost federal revenue.
2:36:03 PM
COMMISSIONER DAVIDSON highlighted state expenditure in Medicaid
expansion. She showed a table of costs, offsets, and savings.
Costs begin at $0 in 2016 and increase to $19.6 million in 2021.
There are also administrative costs increasing from $0 to $1.6
million in 2021. These costs include positions to deal with the
increased enrollment volume and payments. She identified some of
the offsets, such as chronic and acute medical assistance,
corrections, and behavioral health grants, totaling $24.5
million. Increased savings are expected in the out years. The
net savings to the state general fund by 2021 would be $3.29
million.
2:38:08 PM
CHAIR STEDMAN requested information on the sensitivity of the
numerics by row.
COMMISSIONER DAVIDSON said she would be happy to provide that
information.
CHAIR STEDMAN asked if the department has that information
today.
MR. SHERWOOD pointed out that the bulk of the spending is in the
service component. In the early years the federal match is at or
near 100 percent so there is not much sensitivity in terms of
the impact on state spending. Total spending might be very
sensitive, but there is a lot less sensitivity in terms of
general fund spending. The administrative costs are relatively
stable and are expected to remain so. The two primary areas of
sensitivity are the average cost per individual and the total
number of individuals.
CHAIR STEDMAN asked how many new employees are needed.
COMMISSIONER DAVIDSON said 26 positions, 23 dedicated to
enrollment and 3 to paying providers.
CHAIR STEDMAN asked how efficient the software used for
projecting the 26 positions is.
COMMISSION DAVIDSON replied that the department is experiencing
problems with the conversion of the enrollment system to Aries.
The completion date was supposed to be in October of 2014. The
department has hired a previous director of Public Assistance to
clear backlogs. It is also working with the contractor Deloitte
to ensure an enrollment implementation date in July. On the
payment side, the department has been undergoing a conversion to
MMIS, a Xerox contract. The department has pursued liquidated
damages against Xerox in order to recoup expenses. Xerox has
indicated that it expects to have everything on track for a July
enrollment.
2:42:58 PM
CHAIR STEDMAN asked for more information about the 26 positions
and how soon they would be filled. He assumed they would be
using the updated software. He hoped there would be efficiencies
in the new system.
COMMISSIONER DAVIDSON agreed.
CHAIR STEDMAN asked how the 26 positions will be phased in.
MR. SHERWOOD said the department would have them all on board
right away as soon as they get authority due to the high number
of applications in the first few months. They expect 26
positions to work in the new system in July.
2:44:48 PM
CHAIR STEDMAN asked if there is time to train them all by July
1.
RON KREHER, Acting Director, Division of Public Assistance,
Department of Health and Social Services (DHSS), presented
information related to the Medicaid Expansion. He shared
information related to the hiring of staff. The ideal goal would
have been to bring the positions on board several months before
the start of the fiscal year. Instead, long-term, non-permanent
positions will carry some of the weight leading up to July by
reducing the backlog of work. He said he is confident they will
get the staff up and running in time.
CHAIR STEDMAN commented on reducing GF spending and adding
personnel.
SENATOR STOLTZE commented on the Affordable Care Act. He said he
does not understand the math. He asked if the administration
believes Medicaid expansion can proceed with or without
legislative approval.
CHAIR STEDMAN said Commissioner Davidson could get back to the
committee on that.
2:48:54 PM
COMMISSIONER DAVIDSON concluded that the Healthy Alaska Plan is
good for improving the health of Alaskans and is good for the
economy. It will provide a little over $1 billion in federal
revenue and 4,000 new jobs with about $1.2 billion in new wages
and salaries.
She addressed efforts to diversify beyond oil, LNG, and other
opportunities, noting those projects take time to develop.
Medicaid expansion is also one of the ways to shore up Alaska's
economy in the short term by infusing $145 million everywhere
health care is provided in the state. She stated that $1 billion
in federal resources to Alaska's economy at a match rate that is
about the same in the out years as what we currently pay for
road and airport maintenance is a good investment. The Healthy
Alaska Plan would allow the state to increase the health of
Alaskans, to mitigate some of the impact to Alaska's economy
quickly, as well as to address behavioral health issues of
Alaskans.
2:52:07 PM
CHAIR STEDMAN asked about the impact on rural hospitals.
COMMISSIONER DAVIDSON said where ever Medicaid services are
provided, there will be benefits to the communities. She offered
to provide the breakdown by community. In smaller communities
the benefits are as small as $2.2 million, but in the larger
communities, they are as high as $4.7 million in federal match.
CHAIR STEDMAN requested a copy of that information.
2:53:48 PM
SENATOR STOLTZE asked if the $1.2 billion benefit is for one
year.
COMMISSIONER DAVIDSON said the impact to the economy is over six
years of expansion. She said she looks forward to further
discussions.
CHAIR STEDMAN summarized that the entire state is in this crisis
and everyone would be working together.
2:55:07 PM
There being nothing further to come before the committee,
Chair Stedman adjourned the Senate Health and Social Services
Standing Committee at 2:55 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SENATE HSS_Healthy Alaska Plan (2).pptx |
SHSS 2/25/2015 1:30:00 PM |
Powerpoint |