HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE February 24, 2000 3:06 p.m. MEMBERS PRESENT Representative Fred Dyson, Chairman Representative Jim Whitaker Representative Joe Green Representative Carl Morgan Representative Tom Brice Representative Allen Kemplen Representative John Coghill MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 321 "An Act relating to the confidentiality of investigations, court hearings, and court and public agency information in child in need of aid matters; relating to immunity regarding disclosure of information in child in need of aid matters; amending Rules 3 and 22, Alaska Rules of Child in Need of Aid; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 300 "An Act relating to the establishment and enforcement of medical support orders for children; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 257 "An Act relating to funding for school districts operating secondary school boarding programs; and providing for an effective date." - MOVED CSHB 257(HES) OUT OF COMMITTEE HOUSE BILL NO. 325 "An Act relating to priorities, claims, and liens for payment for certain medical services provided to medical assistance recipients; and providing for an effective date." - MOVED CSHB 325(HES) OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 321 SHORT TITLE: CONFIDENTIALITY OF CINA HEARINGS & RECORD Jrn-Date Jrn-Page Action 1/26/00 2009 (H) READ THE FIRST TIME - REFERRALS 1/26/00 2009 (H) HES, JUD, FIN 1/26/00 2009 (H) 3 FISCAL NOTES (2 DHSS, LAW) 1/26/00 2009 (H) 3 ZERO FISCAL NOTES (2 ADM, DPS) 1/26/00 2009 (H) GOVERNOR'S TRANSMITTAL LETTER 1/26/00 2009 (H) REFERRED TO HES 2/17/00 (H) HES AT 3:00 PM CAPITOL 106 2/17/00 (H) Heard & Held 2/24/00 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 300 SHORT TITLE: MEDICAL SUPPORT ORDERS FOR CHILDREN Jrn-Date Jrn-Page Action 1/21/00 1962 (H) READ THE FIRST TIME - REFERRALS 1/21/00 1962 (H) HES, JUD, FIN 1/21/00 1962 (H) ZERO FISCAL NOTE (REV) 1/21/00 1962 (H) GOVERNOR'S TRANSMITTAL LETTER 1/21/00 1962 (H) REFERRED TO HES 2/24/00 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 257 SHORT TITLE: BOARDING SCHOOL FUNDING Jrn-Date Jrn-Page Action 1/10/00 1886 (H) PREFILE RELEASED 12/30/99 1/10/00 1887 (H) READ THE FIRST TIME - REFERRALS 1/10/00 1887 (H) HES, FIN 2/24/00 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 325 SHORT TITLE: MEDICAL ASSISTANCE:LIENS & CLAIMS Jrn-Date Jrn-Page Action 2/02/00 2061 (H) READ THE FIRST TIME - REFERRALS 2/02/00 2061 (H) HES, JUD, FIN 2/02/00 2061 (H) FISCAL NOTE (DHSS) 2/02/00 2061 (H) GOVERNOR'S TRANSMITTAL LETTER 2/24/00 (H) HES AT 3:00 PM CAPITOL 106 WITNESS REGISTER DOUG WOOLIVER, Administrative Attorney Office of the Administrative Director Alaska Court System 820 West Fourth Avenue Anchorage, Alaska 99501 POSITION STATEMENT: Testified on HB 321. KAREN PERDUE, Commissioner Department of Health & Social Services PO Box 110601 Juneau, Alaska 99811 POSITION STATEMENT: Testified on HB 321 and HB 325. BARBARA MIKLOS, Director Central Office Child Support Enforcement Agency Department of Revenue 550 West Seventh Avenue, Suite 310 Anchorage, Alaska 99501 POSITION STATEMENT: Presented HB 300. REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99801 POSITION STATEMENT: Presented HB 257 as sponsor. JOHN ANGAIAK PO Box 1233 Bethel, Alaska 99559 POSITION STATEMENT: Testified in support of HB 257. BOB KNIGHT, Mayor City of Nenana PO Box 70 Nenana, Alaska 99760 POSITION STATEMENT: Testified in support of HB 257. TERRY BENTLEY, Superintendent Nenana City Schools PO Box 10 Nenana, Alaska 99760 POSITION STATEMENT: Testified in support of HB 257. EDDY JEANS, Manager School Finance and Facilities Section Education Support Services Department of Education & Early Development 801 West Tenth Street, Suite 200 Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 257. JOHN CYR, President National Education Association (NEA)-Alaska 114 Second Street Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 257. BOB MEDINGER, Principal Bethel Alternative Boarding School PO Box 1858 Bethel, Alaska 99559 POSITION STATEMENT: Testified in support of HB 257. JON SHERWOOD, Program Officer Division of Medical Assistance Department of Health & Social Services PO Box 110660 Juneau, Alaska 99811 POSITION STATEMENT: Presented HB 325. LISA KIRSCH, Assistant Attorney General Human Services Section Civil Division (Juneau) Department of Law PO Box 110300 Juneau, Alaska 99811 POSITION STATEMENT: Answered questions on HB 325. LEONARD ANDERSON, Attorney Davis & Davis, PC 405 West 36th Avenue Anchorage, Alaska 99503 POSITION STATEMENT: Testified in support of HB 325. ACTION NARRATIVE TAPE 00-21, SIDE A Number 0001 CHAIRMAN FRED DYSON called the House Health, Education and Social Services Standing Committee meeting to order at 3:06 p.m. Members present at the call to order were Representatives Dyson and Coghill. Representatives Whitaker, Green, Morgan, Brice and Kemplen arrived as the meeting was in progress. HB 321 - CONFIDENTIALITY OF CINA HEARINGS & RECORD Number 0088 CHAIRMAN DYSON announced the first order of business as House Bill No. 321, "An Act relating to the confidentiality of investigations, court hearings, and court and public agency information in child in need of aid matters; relating to immunity regarding disclosure of information in child in need of aid matters; amending Rules 3 and 22, Alaska Rules of Child in Need of Aid; and providing for an effective date." DOUG WOOLIVER, Administrative Attorney, Office of the Administrative Director, Alaska Court System, came forward to testify. He indicated that the court doesn't take a position on HB 321 one way or another, but HB 321 makes a lot of changes that will affect the court system. In most courts, the CINA [Child in Need of Aid] records are kept in the "one child, one file rule," so the delinquency file is with the CINA file if it is joint. Procedurally the court will separate all of those type of files into two separate files, and then separate the CINA files based on what parts are open or closed. MR. WOOLIVER explained that the clerks will need to be trained on what information is going to be confidential and how to handle records requests. When someone requests a CINA file, it could be a simple process, or it could be an enormous process. Not only are there certain documents that are entirely confidential, there are lots of documents that are only confidential in part. If there is any confidential information in the document, it would have to be redacted. The clerk will have to go through the document page by page to make sure there isn't any confidential information mentioned anywhere in the document. There are many unknowns in this process. The court is assuming there won't be a huge interest in the records requests; if the court is wrong, his fiscal note is inadequate. If 80 percent of the hearings are in fact going to be closed, that will add a great deal of time to the process. Another unknown is how much motion practice there will be. MR. WOOLIVER noted that the pilot project on this in Minnesota didn't get as bad as previously thought. However, Alaska may have a completely different approach. Oregon has open hearings because of the way their court interpreted Oregon's constitution; it wasn't a statute that their legislature passed opening the hearings. Number 0574 CHAIRMAN DYSON expressed his concern about the unsubstantiated information in the CINA files in the department. He asked Mr. Wooliver if he understood that the unsubstantiated records would remain closed. MR. WOOLIVER answered he didn't look at the provisions that govern the agency records closely. If it were to become part of a court record, it would be open. He is not sure how the agency handles unsubstantiated reports and whether the records end up in a court proceeding or court record. He understands that the agency records wouldn't release the unsubstantiated reports of harm, but he doesn't know the likelihood of those making it into a subsequent court record. Those records have always been confidential so it hasn't been an issue. CHAIRMAN DYSON asked Mr. Wooliver about the fiscal note. MR. WOOLIVER indicated there is a $116,000 fiscal note. There is $33,000 for training the court clerks, magistrates, judges and developing the new filing procedures. The ongoing costs are $83,000 for part-time clerks to be distributed around the state where the needs are. KAREN PERDUE, Commissioner, Department of Health & Social Services (DHSS), came forward to testify on HB 321. She indicated that she had participated in the two-year process that brought this bill forward. The bill provides for open court proceedings, open court records and the fact that the confidentiality of the child should be protected at all times. It gives the court the ability to not release certain records that are confidential as well. There is some increased openness of agency records, but by in large, agency records are to remain closed because there are unsubstantiated records and confidential information about reporters. COMMISSIONER PERDUE explained that the task force looked at what was going on in other states. Alaska would be on the leading edge in terms of openness with this bill, but the task force picked up some ideas from the other states. It complies with the federal law which says information should be released on the agency's activities if a child died who was in state custody within the past 12 month;, it brings the department into compliance with CAPTA [Child Abuse Prevention and Treatment Act] in that area. COMMISSIONER PERDUE stated this will be a major change in practice for the department. The bill before the committee is a carefully crafted compromise in weighing the privacy needs of a child and the public's ability to know. CHAIRMAN DYSON asked Commissioner Perdue if the department is saying "pass this law or we're going to get in trouble with the feds because we will not be legal under state law to release information they're requiring, and they're going to get us." COMMISSIONER PERDUE answered no, that is not being said. She wasn't sure if it is close. She will have to check to see if any state has been sanctioned under the capital law, but she doesn't believe so. CHAIRMAN DYSON asked Commissioner Perdue if a parent involved a CINA case has counsel, what agency records can the attorney not get under discovery. COMMISSIONER PERDUE replied she didn't know the answer to that question. CHAIRMAN DYSON asked her to get that answer in writing so he can distribute it to the committee members. CHAIRMAN DYSON asked Commissioner Perdue what is gained by having the openness permitted in HB 321. COMMISSIONER PERDUE replied that the public can see how the child protection system operates including seeing the judge has certain responsibilities to make a decision, seeing there is counsel for the parent and the state and seeing a lot of things people do not understand about the system. There are multiple parts and all those parts have to work together to do the best job for the public in protecting children and protecting the rights of parents. There is so much mystery around the process, and people need to see it. However, the line must be drawn to protect the child and family. She agreed with Chairman Dyson that the main thing gained will be a better informed public and some more accountability. CHAIRMAN DYSON asked Commissioner Perdue to let the committee know what the priority is for HB 321 because it will be difficult to get through all the legislation for DHSS this year. [HB 321 was heard and held.] HB 300 - MEDICAL SUPPORT ORDERS FOR CHILDREN Number 1440 CHAIRMAN DYSON announced the next order of business as House Bill No. 300, "An Act relating to the establishment and enforcement of medical support orders for children; and providing for an effective date." Number 1467 BARBARA MIKLOS, Director, Central Office, Child Support Enforcement Agency (CSED), Department of Revenue, came forward to present HB 300. Her agency has requested that this legislation be introduced because it will better serve the public. The bill makes three changes to existing statute. First it allows the CSED to establish a medical support order only. Right now the courts and the CSED establish financial support orders that require a monthly support obligation, and in conjunction with that, there is a medical support order. There isn't the option under state law just to establish a medical support order. This becomes a problem for some people in Medicaid or Denali KidCare because the federal government requires CSED to have a medical support order. When the order is established, it comes along with a monthly support obligation which is not necessarily what the parents want. MS. MIKLOS explained that a medical support order would order either parent to provide health insurance for the child if it is available to the parent at reasonable cost. The federal definition of reasonable is health insurance available through the parent's employer. The state has further defined it by saying if it is available through work but may be expensive, it wouldn't necessarily be considered reasonable. As far as the federal government is concerned, if someone has health insurance available, he/she must provide it. If it's not available, it doesn't mean he/she can't provide it. There are still other ways to provide cost of medical care, and that is defined in some of the child support orders. The intent is the public will not pay for the child's health care if the parents can provide for the child. MS. MIKLOS said the way it is now, when the orders are done, the financial order comes along with it. Some people don't want to go on Medicaid or Denali KidCare because they don't want a child support order. The CSED prefers to give the parents that choice but cannot give them that choice right now under state law. Sometimes when people go on Medicaid, they'll have a financial support order, and the CSED will not enforce that order, and the obligation will continue to accumulate. The CSED would like to make it simpler by having the option of just doing a medical support order. MS. MIKLOS explained the second change in the law says that either parent may be required to provide health insurance, not just the obligor. Court Rule 90.3, Guidelines for Child Support, already says that; the CSED would like to have that in statute. MS. MIKLOS said the third change just clarifies that the order may be established before the order is in place, but the order is not in effect until the insurance is in place. MS. MIKLOS summarized that HB 300 helps the public, helps the CSED and is consistent with federal law. Number 1722 REPRESENTATIVE GREEN asked if a family couldn't afford insurance, would it be in contempt if insurance wasn't provided. MS. MIKLOS replied no, not at all. Insurance is only required if it is available at reasonable cost. The original intent when Congress passed this years ago was that if someone had a first family, and that first family didn't have insurance available and had public insurance, but then the person had a second family on insurance, then the children from the first family would be included on the insurance. REPRESENTATIVE GREEN asked who determines reasonable cost. MS. MIKLOS answered CSED would make that original determination. Someone may appeal that decision through a hearing within the Department of Revenue or further through the court. People have an opportunity to say it is not reasonable. She further explained there are circumstances when parents work things out and would choose not to be involved and choose not to get a financial support order, and the CSED would like to honor those requests. CHAIRMAN DYSON asked how someone would accumulate a debt from the support orders. MS. MIKLOS explained in order to do a medical support order now, the CSED also has to put on a financial obligation. The CSED is not enforcing the financial obligation, so the debt for the monthly support obligation still accumulates. There are rules that must be done consistently so the amount for the financial order could not be zero; the obligation is based on how much money is earned by the parent. The CSED doesn't want to be in the position of collecting a debt that no one wanted in the first place, and HB 300 will do that. If the bill doesn't pass, the CSED has to continue to put on debts. CHAIRMAN DYSON asked if the state starts supporting a custodial parent and children, and a debt starts accumulating to the non- custodial parent, and the children are covered under Denali KidCare, does the non-custodial parent owe a debt to reimburse the state and the federal government for the insurance costs obligated under Denali KidCare. MS. MIKLOS answered no. CHAIRMAN DYSON asked Ms. Miklos why does it say "insurance" instead of just saying the parents have to provide for the children's medical needs. Number 2175 MS. MIKLOS admitted it never occurred to them. In terms of child support, the CSED has gone as far as required by the federal government which is that the insurance be available. In terms of providing for medical care, there could be a lot of problems, but it wouldn't necessarily be a child support issue. The CSED is only trying to separate out the medical support order from the financial support order to make it easier for people. CHAIRMAN DYSON said it sounds like the bill is trying to remove the administrative barrier to get children signed up for Denali KidCare. MS. MIKLOS agreed that might be one of the things, but it is not the only thing. It is also that there are debts accumulating in existing cases in the Medicaid program; a debt goes on that no one really wanted in the first place. In response to a question by Representative Coghill, Ms. Miklos explained that if any family goes on Medicaid, CSED must go after medical support, and that is why the CSED is involved. Number 2284 REPRESENTATIVE KEMPLEN asked Ms. Miklos how the CSED will address the orders that have been accumulating but not enforced under HB 300. MS. MIKLOS said ways are being looked at to reestablish an order that would be medical support only if it can be done. MS. MIKLOS explained the intent of a financial support order originally was to reimburse the state and federal government for public assistance, and a medical support order was for medical assistance. The first choice is for the parents to support the children. TAPE 00-21, SIDE B Number 2364 REPRESENTATIVE WHITAKER asked Ms. Miklos for clarification on the connection of a parent providing health coverage if it is at a reasonable cost and Denali KidCare. MS. MIKLOS said she is not the expert on Denali KidCare so she can only go so far. The idea is if someone is on the Medicaid program, the state's obligation for that program would be reduced if there is other insurance available. She doesn't know if the obligation goes totally away; all she knows is the state's obligation is reduced. REPRESENTATIVE WHITAKER asked if he heard correctly that there was an inference that this was somehow tantamount to increasing the number of children on Denali KidCare. MS. MIKLOS stated that HB 300 would not make more people qualify for Denali KidCare. It's just that there may be people that wouldn't get involved at all because of the financial issue. Number 2215 CHAIRMAN DYSON informed the committee he does not intend to move HB 300 out today so there will be time to have other questions answered. REPRESENTATIVE KEMPLEN asked how the CSED will deal with the paper debts that have been accumulating. MS. MIKLOS answered as long as the custodial parent does not want CSED to enforce the paper debt, it won't. If the custodial parent asked CSED to enforce the paper debt, it would have to. REPRESENTATIVE KEMPLEN commented he would like CSED to commit to getting those paper debts off the books if HB 300 passes. CHAIRMAN DYSON asked Ms. Miklos for responses on the following: 1) Representative Kemplen's last question; 2) where and why in the law it says "medical insurance" and doesn't say "medical care"; 3) the portion of the bill that fixes the accumulating paper debt; 4) the definition of the criteria of "reasonable"; why isn't it a certain percentage of the income. REPRESENTATIVE COGHILL said he was interested to know if a debt on responsible health care delivery can be levied against the obligor. Number 2086 REPRESENTATIVE GREEN asked if the accumulated paper debts include some bad debts that shouldn't be eliminated. MS. MIKLOS said the bad debts will not be eradicated. That is why the bill would not be effective the day the Governor signs it. If possible, the old order would be vacated and a new order established separating those debts out. She cannot definitely answer that will be done, but that is what is being looked at. CHAIRMAN DYSON asked if the paper debts were accumulating with interest and penalties. Number 1919 MS. MIKLOS answered yes. CHAIRMAN DYSON suspended the hearing on HB 300. [HB 300 was heard and held.] HB 257 - BOARDING SCHOOL FUNDING Number 1898 CHAIRMAN DYSON announced the next order of business as House Bill No. 257, "An Act relating to funding for school districts operating secondary school boarding programs; and providing for an effective date." Number 1877 REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature, sponsor, came forward to present HB 257. She prefaced her remarks with the fact that she has supported regional boarding schools for 15-20 years. When Nenana was in her district, she tried to get some support for a boarding school which was unsuccessful. Now things are in place for a dormitory for the boarding school in Nenana; the school could have twice the population without additional teachers or funding. She principally filed this bill for them. However, she knew there would be other beneficiaries if this bill passed. REPRESENTATIVE JAMES explained that under the current law, boarding students who don't have the opportunity to go to school in their own district can go to a boarding school and get stipend rates for their room and board. This bill would allow students who don't qualify because there is a school in their district to attend boarding school. She found out Bethel has a boarding school that is operating on a very low budget; the school leases a four-plex for the students to live in. The 30 students at the Bethel Alternative Boarding School are students that wouldn't be going to school otherwise; the Bethel Alternative Boarding School is a safety net for students. The school has been getting some grants but is at the "bottom of the barrel" as far as getting grants. If it doesn't get some assistance some way, this school may not be able to continue. REPRESENTATIVE JAMES has consistently said that the goal of the legislature and the state should be to determine what is the best way to deliver education to the many different students in different parts of the state with different needs and different kinds of learning abilities. The boarding school wouldn't be for everyone. Not everyone can make it in a regular classroom, and those students need to have this opportunity. REPRESENTATIVE JAMES indicated that the fiscal note for the first year would be about $600,000, which is a small price to pay for these students have this opportunity. She urged the committee to consider this legislation. Number 1666 REPRESENTATIVE KEMPLEN asked Representative James if she had any letters of support from school districts that would use this option. He didn't see any backup information in the packet. REPRESENTATIVE JAMES answered she doesn't; she hasn't solicited any. Most of the support she has been given has been verbal. She could get that if it were required. CHAIRMAN DYSON asked Representative James if this bill passes, the existing boarding schools will gain more resources. Number 1567 REPRESENTATIVE JAMES answered for the most part, yes. Galena does have five students who qualify under existing law, but the rest of the boarding schools will get resources to assist with room and board. CHAIRMAN DYSON said when SB 36 was discussed two years ago, the legislature was told that SB 36 would force the closure of some schools and would force Native students to go to boarding schools. He asked Representative James if she has gotten feedback from the Native community to see if there is going to be resistance to this bill. Number 1519 REPRESENTATIVE JAMES commented that there would always be that concern, but she has heard more that it is an opportunity for students. She's heard of places that wish there were more of those opportunities for their children. It is a mixed bag out there. The Native communities really want the best education for their children. She believes there is big support out there for this school system as a way to deliver education. CHAIRMAN DYSON asked her if this bill affects Mt. Edgecumbe High School. REPRESENTATIVE JAMES answered no, unless some of the students who currently attend Mt. Edgecumbe go somewhere else closer to home. She further explained that this bill gives the other boarding schools approximately half of what Mt. Edgecumbe gets. REPRESENTATIVE GREEN asked Representative James about the additional cost of room and board for the other boarding schools. REPRESENTATIVE JAMES indicated that the boarding schools would have to find that funding elsewhere; the parents might have to pay something. The stipend is not enough to cover the whole cost; it just assists with the cost. Without the stipend, the schools might not be able to do it. She further explained that the stipend is paid monthly based on the actual count of who is at the school. The stipend does not fall into the count taken in the fall. She went on the answer Chairman Dyson that the Department of Education & Early Development has not submitted a fiscal note because the proposed committee substitute has not been adopted. Number 1251 REPRESENTATIVE COGHILL made a motion to adopt the proposed committee substitute (CS) for HB 257, version 1-LS1055\I, Ford, 2/2/00, as a work draft. There being no objection, that proposed CS was before the committee. CHAIRMAN DYSON asked what committee referrals HB 257 has. REPRESENTATIVE JAMES answered the HES committee and the Finance Committee. REPRESENTATIVE COGHILL asked if there is a wait list at Mt. Edgecumbe. REPRESENTATIVE JAMES replied yes. Number 1138 JOHN ANGAIAK testified via teleconference from Bethel. He expressed his support for HB 257. He explained his reasons for support which included the school districts being reimbursed for some expenses in running these schools which often offer a second chance to some students. The Bethel Alternative Boarding School serves 30 students whose lives have been changed. Room and board is a costly item. He believes if this becomes law, the state will save money in the long run because students will be turned around and will become productive adults. REPRESENTATIVE KEMPLEN asked Mr. Angaiak what his connection is to the educational system in Bethel. MR. ANGAIAK answered he is speaking as a committed parent. He was on the school board last year. His commitment is unending to improve the educational situation for the students whether or not he is on the board. Number 0865 BOB KNIGHT, Mayor, City of Nenana, testified via teleconference from Nenana. He expressed his support for HB 257. He believes this will be an opportunity for students in the state to increase their potential for their education, and it will give the students in Nenana a chance to intermingle with the rest of the state. Number 0767 TERRY BENTLEY, Superintendent, Nenana City Schools, testified via teleconference from Nenana. He expressed support for HB 257. Nenana is trying to get a boarding school going, and the stipend will allow Nenana, Bethel, Galena and Takotna a chance to recoup some money for the student's room and board. Each boarding school runs a different style of program. These boarding schools give the students choices about where they want to go. He believes that Nenana can offer a good program by offering the students a choice. Number 0624 EDDY JEANS, Manager, School Finance and Facilities Section, Education Support Services, Department of Education & Early Development (EED), came forward to testify. He referred to the spreadsheet that was handed out to committee members. He told the committee that since the proposed CS has been adopted, he will prepare and submit a fiscal note immediately. He reviewed the five different residential programs around the state that are shown on the spreadsheet. The five schools are located in Bethel, Nenana, Galena, Takotna [Iditarod REAA District] and St. Paul. MR. JEANS pointed out that 123 students are being served by these five schools, and if they receive the current stipend rate for boarding homes, it will cost approximately $540,000. When an average figure of $500 is figured in for airfare, the cost goes up to $601,671. When the enrollment projections are figured, the total cost in FY 2002 could be approximately $1.4 million. He explained other districts could start other programs, but the figures on the spreadsheet are the ones out there right now. Number 0430 REPRESENTATIVE KEMPLEN asked Mr. Jeans if the EED has a position on HB 257. MR. JEANS said that the EED supports choice; but the department has not had the legislative meeting to establish a policy on this. That meeting will be this week, and he could report back after the meeting. REPRESENTATIVE KEMPLEN stated he felt the EED's comments would be relevant especially since concern was expressed several years ago on SB 36 about schools closing in villages and the students having to attend boarding schools. He would like to allay any concerns about those issues. He asked Mr. Jeans how the stipend rate is determined. Number 0336 MR. JEANS explained that the stipend rate was established by the department years ago, and it is set out in regulation. The rates are not included in regulation but are included in the boarding home application packet. He didn't know the actual origination of the rates. REPRESENTATIVE COGHILL asked if schools are shutting down, would this allow more latitude to open a high school in a REAA [Rural Education Attendance Area]; could this be a cost saving in that area that has to be done. MR. JEANS explained that SB 36 changed the funding mechanism for schools serving less than ten children, which basically did not give the schools enough money to operate. The local school board makes the decision to continue to operate using resources generated by other schools or whether the school needs to be closed. He said since SB 36 passed, a number of schools closed, but a number have convinced their school boards to remain open to show that the student population would come back and get back the funding. The communities have to work through the school boards to make the ultimate decision. This bill allows parents and students more choice. The choice is already happening, but HB 257 will provide some additional revenue to those districts to defray the residential component of their program. REPRESENTATIVE BRICE asked Mr. Jeans if SB 36 didn't give the school districts enough to operate, why did the EED support it. MR. JEANS replied the legislature made a decision that it didn't want to provide the same level of funding to schools that served less than ten students. It was the legislature that made the decision that the threshold would be ten students. It still provides the school with revenue, just not enough to operate an independent school at the level the school was accustomed to. TAPE 00-22, SIDE A Number 0001 JOHN CYR, President, National Education Association (NEA)-Alaska, came forward to testify. He indicated that the NEA-Alaska has not taken a formal position on HB 257, but NEA-Alaska does support more boarding schools, more flexibility and more choice within the public school system. If this bill is going to be used in the future to close local schools, obviously NEA-Alaska is not in favor of local schools closing. The NEA-Alaska does believe HB 257 is a good idea. It gives added potential to help students who need help. Number 0173 REPRESENTATIVE BRICE asked Mr. Jeans if a school with less than ten students brought in a number of boarding students to raise the enrollment number, how would the stipend and funding be affected. MR. JEANS noted that would be dealt with through regulation and may have to be addressed. He gave a brief explanation of the foundation funding formula. REPRESENTATIVE WHITAKER asked why small schools would be discouraged from attracting more students. Number 0583 REPRESENTATIVE JAMES pointed out that the stipend is for room and board, not the cost of running the school. She sees that as mixing apples and oranges. REPRESENTATIVE BRICE said that was the point he was trying to have clarified. Number 0629 BOB MEDINGER, Principal, Bethel Alternative Boarding School, testified via teleconference from Fairbanks. He told the committee that the Bethel Alternative Boarding School has been in operation since August 1998, and the program is meeting student needs that weren't addressed in regular programs. The Bethel Alternative Boarding School is having difficulty with the funding formula because it is treated as a classroom on the biggest school in its community. By not having the site allocation, the school board has had to subsidize the boarding school for the boarding portion. There aren't grants available to fund residential programs under state school districts. The boarding school has had to come up with about $150,000-$165,000 a year to operate the boarding portion. The need is greater than anticipated, and the school could serve more students if there were an avenue to fund this program. Mr. Medinger stated that the Bethel Alternative Boarding School is desperate for funding. He expressed strong support for HB 257. Number 0776 CHAIRMAN DYSON closed the public hearing on HB 257. The committee took an at-ease from 4:51 p.m. to 4:52 p.m. REPRESENTATIVE BRICE made a motion to move CSHB 257, version 1- LS1055\I, Ford, 2/2/00, out of committee with individual recommendations with accompanying fiscal note. There being no objection, CSHB 257(HES) moved from the House Health, Education and Social Services Committee. HB 325 - MEDICAL ASSISTANCE:LIENS & CLAIMS Number 0838 CHAIRMAN DYSON announced the next order of business as House Bill No. 325, "An Act relating to priorities, claims, and liens for payment for certain medical services provided to medical assistance recipients; and providing for an effective date." Number 0847 JON SHERWOOD, Program Officer, Division of Medical Assistance, Department of Health & Social Services, came forward to present HB 325. He explained that HB 325 proposes to make improvements to the Medical Assistance program in the third-party recovery and a timely filing of medical claims by the provider to the department. When a person applies for medical assistance in Alaska, he/she assigns his/her right to third-party recovery to the state. Under Medicaid, this is a federal requirement as well. Over the years, the contractor, who does much of the third-party recovery, has identified weaknesses in the present law that limit the department's ability to recover against the third-party claims. There is usually litigation involved, either against an insurance company or an individual, in these type of claims. MR. SHERWOOD offered an example: Someone is hit by a drunk driver, and the medical care is paid by Medicaid; the person makes a claim against the drunk driver or the drunk driver's insurance company. This bill would improve the department's ability to recover money in these situations. It would require recipients to notify the department of recovery actions; it creates the authority for the state to place a lien upon such recoveries that are made and establishes a precedent; and gives the department the ability to take its own action against the third party if the individual doesn't pursue it themselves. MR. SHERWOOD explained that additionally, HB 325 is intended to bring medical assistance statutes "in sync" with current practice of other health care payers. Right now the department gives providers six months to make claims for payment for medical assistance; twelve months if the recipient has private insurance that must be billed first. The industry standard generally gives people 12 months to file claims. The twelve-month period will give providers an opportunity to identify those claims and make claims against the department within the timely filing limits. The bill would also amend the law to allow the department to pay for 100 percent of a claim when it finds that a provider missed the timely filing deadline with good cause. Currently under statute, if the department makes that finding, it can only pay 50 percent of the claim. Number 1075 REPRESENTATIVE BRICE commented that he had dealt with constituents on a similar drunk driving case in which the victim received close to a $300,000 court award against someone. The department came in and took every penny of it, and the victim had to go back on medical assistance. He asked Mr. Sherwood how HB 325 fixes that situation. MR. SHERWOOD answered that HB 325 is intended to give the state a clear position in making a claim. When someone is reimbursed for medical claims that the department has paid for, the department wants to be reimbursed for those claims. There is a provision under law that allows for attorneys' fees to be paid under the court rules. In the situation he is familiar with in Fairbanks, the department's eventual recovery was not 100 percent; it was substantially less than 100 percent. He doesn't believe HB 325 would fix the problem in the sense that if the department has paid for expenses and someone recovers on those expenses, the department intends to be reimbursed for those expenses. The money doesn't go to the recipient, even though the recipient may have other valid uses for the money. Number 1188 REPRESENTATIVE BRICE said he would feel better limiting what the department can go after. If there were compensatory damages as well as punitive damages, then the department could only go after the compensatory damages. MR. SHERWOOD indicated the department does not "go after the victim." The department goes after the award that was made as part of the settlement or the court case. In theory, it is before any money goes to the victim. The department has a right to collect reimbursement for the services it paid for. If an award is paid, then the department is trying to collect those funds for the services it paid for. He doesn't believe HB 325 will give the department any entitlement to a greater pool of money; it simply improves and clarifies the ability to get the money the department is already entitled to by law. REPRESENTATIVE BRICE commented that basically this is turning Medicaid and medical assistance programs into a low-interest loan program. MR. SHERWOOD said HB 325 would not create a low-interest loan program. This bill does not create any special requirement that a recipient pay back Medicaid; if there is a recovery against the third party, on behalf of that recipient, Medicaid is entitled to that part of the recovery for which the expenses have already been paid. Number 1354 CHAIRMAN DYSON asked Mr. Sherwood when the administration started working on HB 325. MR. SHERWOOD indicated it has been discussed over the past several years. The bill was put forward this year, about in November. CHAIRMAN DYSON noted that it is almost word for word what came out of the privatization commission. Number 1392 COMMISSIONER PERDUE restated that the department has done third- party recovery for about 15 to 20 years. This is not new; the department simply wants to refine the way it is done. CHAIRMAN DYSON asked Mr. Sherwood if the attorneys in the third- party cases get paid before or after the state. MR. SHERWOOD indicated there is a provision in the court rules for the determination of attorneys' fees, and the fees come out before the state makes its recovery. That determination is not the attorney-client contingency fee; that's based on the court rule formula for determining the allowable attorney fees. Number 1461 REPRESENTATIVE COGHILL said according to section 2, the department would be the first right of payer and the hospital would stand in line. He asked how the percentages of the total costs that the hospital would get affects the accounting. MR. SHERWOOD clarified that when the department pays a bill under Medicaid, the provider accepts this payment in full for the service with the exception of some small co-payments and deductibles. If the provider has accepted payment from Medicaid for the service, even though the department might not reimburse for the full charge, the provider has no claim for the additional percentage of what the department didn't pay for. It is a condition of participation; the provider has to accept the department's payment as payment in full. REPRESENTATIVE COGHILL asked about the rates. MR. SHERWOOD agreed that there are slightly different reimbursement rates for different kinds of providers. REPRESENTATIVE COGHILL asked what the process of payout would be. MR. SHERWOOD said he believes the department's lien would come first; if there were funds left over, the next lien would be paid. CHAIRMAN DYSON offered some amendments to discuss. On page 3, line 7, strike the period after liable and add "for cause." Number 1641 LISA KIRSCH, Assistant Attorney General, Human Services Section, Civil Division (Juneau), Department of Law, came forward to answer questions. She responded to the amendment. She said it doesn't appear to be problematic; she is not sure it changes things much. She wondered what he was trying to correct or achieve. CHAIRMAN DYSON said he will go through all the amendments and then Ms. Kirsch can decide if there are any problems. Number 1664 CHAIRMAN DYSON offered the following amendments: Page 3, lines 5 and 9, strike the word "payor" and insert "tort-feasor"; Page 4, line 25, strike "and" after assistance, insert "that are"; Page 4, line 28, insert "that are" after "services"; Page 4, lines 28-29, delete "for which the medical services were provided"; Page 4, line 9, delete "has not been" and insert "is not". CHAIRMAN DYSON referred to page 4, line 6. He asked for an explanation of what is the effect of an action that has been filed but is not in effect. MS. KIRSCH explained that is the notice provision which is designed to assure that everyone who is involved in the lawsuit, if there is a lawsuit, is aware that the lien exists. The second sentence modifies the first. If the notice provision is not met, then the lien is not enforceable. Number 1864 CHAIRMAN DYSON asked what "perfected" means. MS. KIRSCH said it doesn't imply any particular action other than that the lien is not legally enforceable until it is perfected. She indicated that the chronological order is probably reversed from the way it appears in this paragraph. That provision is in there so everyone involved is aware of the lien, so people aren't going into settlement negotiations, and the plaintiff compromises their claim based on a belief that they are going to receive all of the funds. If they know about the lien, that will affect how they posture in a settlement proceeding because it has the potential of reducing the ultimate recovery. Number 1919 LEONARD ANDERSON, Attorney, Davis & Davis, PC, testified via teleconference from Anchorage. He explained that he has been the state's contractor for about 2.5 years and supports HB 325. Over those years, he has had many conversations and correspondences with plaintiffs related to the State of Alaska's subrogation rights under the current statute. A problem was encountered in recovering an amount that Medicaid recipients promised to pay back if the Medicaid recipients have a claim, if they bring a claim against a liable third party, is that the Medicaid recipients will reimburse the State of Alaska. The problem has been under the current statute, it gives a subrogation claim to the State of Alaska. The result has been that the state has compromised for probably the past 12-14 years or longer amounts that it recovered under the current statute. MR. ANDERSON indicated that the bill before the committee will allow the state to have a lien right that it does not currently have under AS 47.05.070. By giving the state that lien right, it forces attorneys representing Medicaid recipients in personal injury cases to add it to the checklist to ask their clients if they've received Medicaid; unfortunately, his client has found over the years that the attorneys don't always ask that question. MR. ANDERSON reported that he has had counsel ask him if the state actually has a lien right, and he had to answer, "Read the statute, but I don't see it." The problem is if the state doesn't have a lien right, the attorney doesn't have to add that to his checklist to ask the client, and sometimes doesn't. His client doesn't get notice that there's a possible pot of money to recover amounts that Medicaid has paid for the treatment of the recipient's injuries. Or, at the last minute, the contractor is informed of a potential settlement that's happening right away, and asked if the state will settle for "x" amount of dollars, which is pennies on the dollar. The state has not had a mechanism by which it has had any strong enforceable rights to go out and disagree with the settlement amount. The state has always opted to settle cases due to the weakness of the current statute. Number 2078 MR. ANDERSON commented on the proposed amendments. The reason for the proposed change on page 3, lines 5 and 9, inserting "tort-feasor" is the state won't have privity or the state won't have a contract with a third party payor, possibly an insurance company. Since the state isn't insured under the policy, it doesn't have the contractual right to go back after that company. The claim has to be actually brought against the liable third party. Tort-feasor is a fancy name for the liable third party. He noted that language is present also on page 4, line 3. If the amendment is accepted, it ought to be changed there as well. MR. ANDERSON referred to Representative Brice's comment about making a loan provision. On page 3, line 26, section 8, there is a hardship provision required by federal law that the current state statute doesn't have. Under federal law, the state is required to have a hardship provision so that the department can waive any subrogation rights it has underneath this bill or any new statute that's adopted. CHAIRMAN DYSON asked Mr. Anderson to explain the proposed change on page 4, line 9. Number 2206 MR. ANDERSON indicated it is a grammatical change to use an active voice instead of a passive voice. It is easier to read and understand. CHAIRMAN DYSON asked Mr. Anderson to explain the proposed changes on page 4, line 25 and lines 28-29. MR. ANDERSON said that didn't make any major change. That proposed change is for clarity. CHAIRMAN DYSON asked Mr. Anderson about the proposed change on page 3, line 3. MR. ANDERSON said he wasn't involved in that change. He believes it read fine as it was. Number 2287 MS. KIRSCH stated her only difficulty with the proposed amendments were on page 3, lines 5 and 9. If it is changed to tort-feasor, the ability to claim against a third-party insurer is eliminated when there is no tort. For example, a person had a claim against Medicaid at one time, but then there was some insurer who was ultimately liable, maybe for cause or maybe not, those amendments changing "payor" to "tort-feasor" and the amendment, page 3, line [7] "for cause" might limit the ability to recover in certain circumstances. She would resist those, but the other proposed amendments for grammatical and clarity issues are not a problem. CHAIRMAN DYSON asked Mr. Anderson to respond to the comments on substituting "tort-feasor" for "payor." MR. ANDERSON said the point may be well taken for both "tort- feasor" and "for cause"; however, he does see a potential problem in trying to bring it against possibly just an insurer as opposed to a liable third party. If there is an insurer out there from whom a pot of money is being collected, he would have to believe there is a liable third party being insured. TAPE 00-22, SIDE B Number 2341 REPRESENTATIVE GREEN made a motion to adopt the conceptual amendments for clarity, which read: Page 4, line 25, strike "and", insert "that are"; Page 4, line 28, insert "that are" after "services"; Page 4, lines 28-29, delete "for which the medical services were provided"; Page 4, line 9, delete "has not been" and insert "is not". CHAIRMAN DYSON asked if there was any objection. There being no objection, the conceptual amendments were adopted. Number 2327 REPRESENTATIVE BRICE made a motion to move HB 325, as amended, from the committee with individual recommendations and fiscal notes. There being no objection, CSHB 325(HES) moved from the House Health, Education and Social Services Standing Committee. ADJOURNMENT There being no further business before the committee, the House Health, Education and Social Services Standing Committee meeting was adjourned at 5:31 p.m.