MINUTES SENATE FINANCE COMMITTEE March 28, 1994 9:00 a.m. TAPES SFC-94, #51, Side 2 (300-end) SFC-94, #55, Side 1 (000-end) SFC-94, #55, Side 2 (end-345) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:00 a.m. PRESENT In addition to Co-chair Pearce, Senators Rieger, Kelly, Sharp and Kerttula were present. Co-chair Frank, Senator Jacko joined the meeting after it was in progress. ALSO ATTENDING: Commissioner Nancy Bear Usera, Department of Administration; Connie Sipe, Executive Director, Older Alaskans Commission, Department of Administration; John Barnett, Executive Director, Board of Storage Tank Assistance, Division of Spill Prevention and Response, Department of Environmental Conservation; Mike Conway, Director, Division of Spill Prevention & Response, Department of Environmental Conservation; David Skidmore, aide to Co-chair Frank; Kimberly Busch, Director, Division of Medical Assistance, Department of Health & Social Services; Kevin Henderson, John Sherwood, and Dave Williams, Medical Assistance Administrators, Division of Medical Assistance, Department of Health & Social Services; Dennis Murray, Administrator, Heritage Place; Don Koch, Marketing Surveillance, Division of Insurance, Department of Commerce & Economic Development; Dana LaTour and Susan Sorensen, fiscal analysts, and Mike Greany, Director, Legislative Finance Division; aides to committee members and other members of the legislature. TELECONFERENCE: Phil Petrie, Child Support Enforcement Division, Department of Revenue, from Anchorage. SUMMARY INFORMATION CSSB 249(HES): An Act relating to assisted living homes; relating to the conversion of an assisted living home to a nursing home; repealing references to residential facilities for dependent adults; abolishing the authority of certain municipalities to license or supervise institutions caring for dependent adults; and providing for an effective date. Commissioner Nancy Usera, Department of Administration, and Connie Sipe, Director, Older Alaskans Commissioner, Department of Administration, spoke in support of SB 249. Discussion followed by Senators Kerttula and Rieger regarding nursing care. CSSB 249(HES) was REPORTED OUT of committee with a "do pass," and zero fiscal notes for the Department of Administration, Department of Health & Social Services, Medicaid and Claims, and a fiscal note in the amount of $154.3 for the Department of Health & Social Services, MH/DD Administration. SB 289: An Act making appropriations to satisfy the agreed-upon monetary terms of certain collective bargaining agreements for certain public employees; and providing for an effective date. Commissioner Nancy Usera, Department of Administra-tion, spoke in support of the bill. Discussion was had by Senators Rieger, Kelly, Kerttula, and Sharp regarding health insurance and cost of living issues. Commissioner Usera was in support of SB 289 being HELD in committee until 4 other contracts had been settled for incorporation into this bill. SB 289 was HELD in committee. CSSB 295(JUD): An Act relating to financial assistance for certain owners or operators of underground petroleum storage tank systems; and providing for an effective date. John Barnett, Executive Director, Board of Storage Tank Assistance, Division of Spill Prevention and Response, Department of Environmental Conservation, and Mike Conway, Director, Division of Spill Preven-tion and Response, Department of Environmental Con- servation, spoke in support of the bill. Discussion was had by Senators Kerttula, Sharp, and Co-chair Frank, regarding the Underground Storage Tank Program as it related to bigger businesses, fees, and the bush and rural areas. CSSB 295(JUD) was REPORTED OUT of committee with individual recommendations, and zero fiscal notes for the Department of Environmental Conservation, and the Department of Transportation and Public Facilities. SB 366: An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. Dave Skidmore, aide to Co-chair Frank, spoke in support of SB 366. Kimberly Busch, Director; Kevin Henderson, John Sherwood, and Dave Williams, Medical Assistance Administrators, Division of Medical Assistance, Department of Health & Social Services; Dennis Murray, Administrator, Heritage Place; Don Koch, Marketing Surveillance, Division of Insurance, Department of Commerce & Economic Development; and Phil Petrie, Child Support Enforcement Division, Department of Revenue, via teleconference from Anchorage, all testified in support of SB 366 and answered questions. Discussion was had by Senators Rieger, Sharp, Kerttula and Co-chair Frank regarding federal requirements, the estate recovery program, Medicaid co-payments, etc. SB 366 was HELD in committee until amendments and letter of intent language were drafted. CS FOR SENATE BILL NO. 249(HES): An Act relating to assisted living homes; relating to the conversion of an assisted living home to a nursing home; repealing references to residential facilities for dependent adults; abolishing the authority of certain municipalities to license or supervise institutions caring for dependent adults; and providing for an effective date. Co-chair Pearce announced that SB 249 was before the committee. She invited Commissioner Nancy Bear Usera, Department of Administration, to join the members at the table. COMMISSIONER USERA asked Connie Sipe, Executive Director, Older Alaskans Commission, Department of Administration, to join her. She said SB 249 had had numerous hearings. This bill authorized the licensing of assisted living facilities. She stated there was a great demand for some type of interim care, particularly for seniors but this also effected other individuals. It gave a lot of flexibility for alternative care for individuals that could use help but did not want institutionalization. She felt it was a great option for the state of Alaska, and would prove effective. It came about, in part, because of the success and experience in this area in the Pioneer Homes. She strongly supported the bill. In answer to Senator Kerttula, CONNIE SIPE said it would take about six months to get regulations in place to license and relicense those facilities which explained the effective date of January 1, 1995. Again, in answer to Senator Kerttula, Ms. Sipe said that individuals could receive home health nursing care for 60 days from Medicare if they had just come out of the hospital, or they could get a personal care attendant or chore service at home. She explained that nursing in your own home was legal. What was not legal was nursing in an adult foster care home or adult residential care home. If a person lived in their own home, he/she could get nursing. If a person lived in someone else's home, he/she could not get nursing care unless they moved to a nursing home. Senator Kerttula asked Senator Rieger if he wanted to make any comments since the HESS Committee had held extensive hearings on the bill. Senator Rieger mentioned concern regarding nursing authority that was referenced in the bill. The Nurses' Association wrote a letter saying that they thought it should be watched carefully. Ms. Usera said those provisions were governed by the Board of Nursing and the bill did not effect any authority or responsibilities in regard to the conduct of nursing activities. In answer to Senator Kerttula, regarding cost to the state, Ms. Usera said that SB 249 provided for the licensing of additional facilities by the private sector. She went on to explain that through the consolidation of the senior programs, the administration had been able to absorb this activity within the Division of Senior Services. The fiscal note was for licensing other facilities that might serve different constituencies, such as developmentally disabled, or certain youth. Senator Rieger MOVED for passage of CSSB 249(HES) from committee with individual recommendations. No objection being heard, CSSB 249(HES) was REPORTED OUT of committee with a "do pass," zero fiscal notes for the Department of Administration, Department of Health & Social Services, Medicaid and Claims, and a fiscal note for the department of Health & Social Services-MH/DD Administration for $154.3. Senators Rieger, Kelly, Sharp and Jacko signed "do pass." Co-chairs Pearce, Frank and Senator Kerttula signed "no recommendation." SENATE BILL NO. 289: An Act making appropriations to satisfy the agreed-upon monetary terms of certain collective bargaining agreements for certain public employees; and providing for an effective date. Co-chair Pearce announced that SB 289 was before the committee. She asked Commissioner Usera to return to the table. At this time, Co-chair Pearce said she intended to hold the bill and roll the dollars into the budget unless Co-chair Frank wished otherwise. Commissioner Usera said she was in support of holding SB 289 because there were four other contracts that were outstanding. The terms of those agreements could be added to this bill and it could serve as a complete package. She went on to say that an amendment covered the confidential employees unit and represented a two year agreement. She said it contained consistencies in regard to health insurance and overtime standards. She said that a 2.5 percent cost of living increase was allowed effective July 1995 and provided for a three year hiatus for any cost of living increase. The $9,000 fiscal note provided for incidental costs associated with the contract. In answer to Senator Kelly, Ms. Usera said it differed between bargaining units but the cost to the state for health insurance was about $423.50 a month per employee. In answer to Senator Rieger, Ms. Usera said the contract provided for the state health insurance plan but the bargaining units would have the option to choose another plan within the same price range. She was pleased to note that employees having to pay a small 5 percent co-pay amount had had a significant effect on cost containment. In answer to Senator Sharp, regarding the fact there was no cap on insurance, Ms. Usera said the budget process would keep that in check. Another conclusion with the agreement was that there was going to be many changes in regard to health insurance, and the administration needed some flexibility. A state employee survey shocked the administration with a strong choice towards an insurance package. Senator Sharp voiced his opinion that health insurance needed a cap. Ms. Usera said there was a cap in the sense that if the union decided to go to a trust, there was a limit set but when management was designing the health plan, there was not. Senator Rieger made a statement regarding the SBS account. He felt it was inevitable that eventually a basic plan would be offered to employees with the ability to add supplementals at the employee's expense. Ms. Usera agreed. In answer to Senator Kerttula, Ms. Usera said that in the last round of bargaining, employees were willing to forego wage increases or large cost of living increases in order to maintain an adequate health package. In answer to Senator Kelly, Ms. Usera spoke to the impasse of one negotiation. She said that after seventeen months of bargaining, mediation would be attempted on April 11. Co-chair Pearce announced that SB 289 would be HELD in committee. CS FOR SENATE BILL NO. 295(JUD): An Act relating to financial assistance for certain owners or operators of underground petroleum storage tank systems; and providing for an effective date. Co-chair Pearce announced that SB 295 was before the committee. JOHN BARNETT, Executive Director, Board of Storage Tank Assistance, Division of Spill Prevention and Response, Department of Environmental Conservation (DEC), testified that SB 295 was requested by the Alaska Underground Tank Owners and Operators Association. The Board of Storage Tank Assistance worked in cooperation with DEC to administer a grant and loan program for underground tank owners throughout the state. The Board acted as an appeal Board and the first section of the bill clarified the appeal authority of the Board. Currently only tank owners could appeal if DEC determined that certain costs were ineligible for reimbursement. This clarification allowed tank owners to appeal if they had been determined ineligible. At present there were 152 applications which DEC said were totally ineligible and had no appeal rights. This bill would provide a forum for and give the Board authority to hear those appeals. The second section of the bill gave the closure and upgrade program a statutory deadline of December 31, 1994. Senator Kerttula asked if that date needed to be extended because of rural problems. Mr. Barnett felt that the bush was always a challenge, but public workshops and outreach had been done in the fall of 1990 throughout the state. Media advertising had been done and a newsletter had gone out to all known tank owners listed in a database established in 1986. He felt most of the rural areas were aware of the program. Senator Kerttula asked for assurance that all rural areas and river communities had been noticed. MIKE CONWAY, Director, Division of Spill Prevention & Response, Department of Environmental Conservation, stated that most river communities used above ground storage tanks and this legislation targeted underground tanks. He said there were problems with above ground tanks too but there was no state program to deal with it if the tank held less than 10,000 barrels. Mr. Barnett said very few small communities had applied to this program. He went on to explain that the Board was working with the Rural Bulk Fuel Task Force to share what it had learned in order to address some the problems they faced. Co-chair Frank felt that SB 295 was a good bill and asked Mr. Barnett or Conway to speak to the concern that this program somehow benefited large companies. Mr. Barnett thanked Co-chair Frank for bringing up this issue. He said that at the beginning of the program a registration fee was paid to defer some of the costs, and a ranking system was established using a score. Fifty percent was scored if the tank related to a public health threat. The other half the score related to the distance to an alternate fuel source, including details how many tanks were owned with higher points for fewer tanks owned (giving smaller businesses the advantage). Twenty percent of the score was insurability. If a person was not self-insurable they would receive 20 points. This definitely targeted small mom and pop businesses. There were large companies that belonged to this program but they paid large registration fees each year and waited for a longer time to receive funding. He estimated the program to take at least 10 years to complete. Co-chair Frank asked Mr. Barnett to provide the committee with the latest funding and criteria for the program. Mr. Barnett said that information was available from their annual report and funding was in the $4-5M range. End SFC-94 #51, Side 2 Begin SFC-94 #55, Side 1 In answer to Senator Sharp, Mr. Barnett said that DEC, DOT&PF, and the Board of Storage Tank Assistance, supported SB 295. He said that the position paper should be in the members' files. Mr. Barnett restated that about 400 upgrade and closure applicants were on a waiting list for funds. What this bill provided for those applicants, already on the list and acting in good faith, was eligibility for clean up after the clean up program deadline closed. He said the bill would allow an extra six months to do outreach for the closure and upgrade list and those people would also be eligible for the clean up program. After December 31, 1994, there would be a finite list of all applicants outlining the scope of the problem. Mr. Conway said that DEC was in support of the program because it was a prevention program. It kept owners and operators involved in the clean-ups, helped the rural areas stay in business, and, if not funded, the response fund would have to be used "after the fact" at a bigger expense to the state. There also could be health problems if the program was not in place. In answer to Senator Sharp, Mr. Conway said that DEC continued to get federal funds for the technical assistance part of the program. He stated it was a state fund with no other assistance. Co-chair Frank MOVED for passage of CSSB 295 from committee with individual recommendations. No objection being heard, it was REPORTED OUT of committee with "individual recommendations," and zero fiscal notes for the Department of Transportation & Public Facilities and the Department of Environmental Conservation. Co-chair Pearce, Senators Rieger, Kerttula, and Sharp signed "no recommendation." Senator Jacko and Co-chair Frank signed "do pass." SENATE BILL NO. 366: An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. Co-chair Pearce announced that SB 366 was before the committee. She said that Phil Petrie, Child Support Enforcement Division, Department of Revenue, was on line via teleconference from Anchorage. She invited David Skidmore to join the committee. DAVID SKIDMORE, aide to Co-chair Frank, said that SB 366 was introduced at the request of the Division of Medical Assistance, Department of Health & Social Services. He said that the statutory changes in the bill were necessary to comply with the 1993 Federal Omnibus Budget Reconciliation Act (OBRA93). These changes fell in three areas; medical support orders, Medicaid estate recovery, and Medicaid qualifying trusts. Medical support orders had to do with orders for minor children, usually through divorce decrees in regard to health insurance coverage. He went on to detail those provisions. OBRA93 also required states to provide a Medicaid estate recovery program to collect amounts paid by Medicaid to individuals receiving long term care services, such as nursing home care, unless it would prove an undue hardship. In regard to Medicaid qualifying trusts, OBRA93 changed the law so that individuals in nursing facilities who dispose of resources during a 2-1/2 year period before they apply for Medicaid were not subject to a punitive delay in eligibility if it caused undue hardship. Mr. Skidmore said that the fourth part of SB 366 had to do with co-payments and was not contained in OBRA93. This would reduce cost to the state in regard to Medicaid. In answer to Senator Rieger, regarding Section 20, KIMBERLY BUSCH, Director, Division of Medical Assistance, said Kevin Henderson, Medical Assistance Administrator, had done a lot of work on this bill. She said the department supported the bill and it would enable the department to continue to receive federal funding for long term care. She said it also supported the provision allowing PERS and TERS to be put into a trust. It also allowed individuals to enter other nursing homes other than the Pioneer Homes. She thanked Co-chair Frank for taking the initiative on this bill. In regard to Section 20, Ms. Busch said it embraced federal regulations. Individuals could put social security and other income (not including their assets) into a qualifying trust in order to receive long term care. In return, at the time of death, the state and the federal government should be able to recover from the trust what it had paid out for long term care benefit (probably in excess of $100,000 a year, $50,000 state and $50,000 federal). Senator Rieger asked the difference between an estate and a trust. Ms. Busch said a trust was a way to put the income aside so it was not counted for Medicaid eligibility. The estate could include a home that was left. Generally the home was not counted if the individual could return to it, or, in rare circumstances, if there was a spouse at home. She agreed with the statement that when a person died, the state had a claim on that person's net worth. In answer to Senator Rieger, KEVIN HENDERSON said that the language in the bill was taken from OBRA93. He went on to say that there were only limited situations when a lien on someone's real property was appropriate. They went on to discuss other language regarding liens, and exceptions and exclusions regarding trusts and liens. JOHN SHERWOOD, Medical Assistance Administrator, said the lien was only extinguished when a person would go home from long term nursing care. The state could still recover from the estate (the remaining income trust) if the person was over 55 when they entered long term care. Senator Sharp asked how the bill addressed the current situation regarding a person's monthly income if it was over $1100. Ms. Busch said that the income cap was around $1340 in Alaska, as high as allowable, and the balance could be assigned to an income trust. What gives some individual's problems was their assets, such as stocks. This bill should solve this problem for many people. Senator Kerttula asked if grandchildren were included on page 11, lines 1-5. Mr. Henderson said that grandchildren were not allowed and again, language had been taken directly from federal law. Ms. Busch said the department would look at adding grandchildren. She understood the state could be more restrictive than federal law but not more liberal. Senator Kerttula pointed out that grandchildren were sometimes the main care givers. She reminded him that this legislation targeted people in long term care facilities. Mr. Henderson said that the section he was questioning may be protecting the rights to certain individuals who may have a right to real property. Senator Kerttula maintained, from personal experience, his belief that grandchildren should be included. PHIL PETRIE, Child Support Enforcement Division, Department of Revenue, via teleconference from Anchorage, offered to answer any questions from the committee. In answer to Senator Rieger, in reference to medical orders of support, Mr. Petrie said that as federal and state statutes exist, a medical support order was required of AFDC of a general nature which required the obligor to obtain insurance when it was available through an employer or union policy. The state did not have to pursue it any further than that unless the custodial parent had outstanding, out of pocket expenses and those were reduced to a judgement. SB 366 provided a new area where the state could go after retirement plans and trusts. Currently, the department only pursued Qualified Domestic Relations Orders (QDRO) when income was attached. This bill provided a Qualified Medical Support Order which would increase the workload although there were not many cases like this. Mr. Petrie confirmed Senator Rieger's statement that SB 366 allowed the state to go after the obligor for the state's Medicaid outlays to the extent the person had insurance available through a union group or policy only. Again, Mr. Petrie said that it would have to be reduced to a judgement. Senator Rieger then asked the department for a comment regarding recovery. Mr. Henderson said that it would be part of an on-going program to recover as much as possible. Ms. Busch said that in third party recovery, the provider of the medical care would bill the third party except for such things as pharmaceuticals. Senator Rieger said if there was a case where the non- custodial parent had an order to buy health insurance for the child, and if that child went on Medicaid, the state would not file a claim against the custodial but could go after the non-custodial parent. Mr. Petrie agreed with that statement. Senator Rieger objected to this philosophy. Mr. Petrie pointed out that individuals going on Medicaid were probably already on AFDC. With this legislation, the department would not have to go to the Department of Law to have child(ren) added to a parent's health insurance. The employer would be required to add child(ren) by the department's request through the court order. Senator Sharp asked if all non-custodial parents would be eligible for this judgement. Mr. Henderson said that anyone determined by the Court that had insurance was subject to this law and that included military health coverage. Mr. Petrie said that child(ren) of divorced military personnel remained eligible for medical coverage and if not near a military facility, CHAMPUS covered military dependents in a civilian facility. He said that there were some problems with Indian Health Service Benefits which was being debated by the feds. He gave more details about that area. End SFC-94 #55, Side 1 Begin SFC-94 #55, Side 2 Senator Sharp stated that considering the Native population in Alaska, this would effect a large number of people. Mr. Petrie agreed but said that at present there were not many native obligors that were employed in businesses where medical insurance was available. DENNIS MURRAY, Administrator, Heritage Place, a nursing facility in Soldotna operated by Lutheran Health Systems, testified in support of SB 366. He said the question of the qualifying trust had been problematical for persons who had combinations of retirements. The critical issue was the upper threshold for eligibility and this bill would allow the individual to establish the trust, the income would go into the trust, and at the time of death, escheat to the state. He encouraged passing the bill. DON KOCH, Marketing Surveillance, Division of Insurance, Department of Commerce & Economic Development, said section 3 had sizeable revisions to the Unfair Trade Practices Act. He said that page 4, line 3, needed an amendment adding the words "as defined in AS 21.86.900;" after the word "organization." Mr. Koch went on to speak to concerns regarding reaching some insurance companies and self-insured plans mentioned in provisions on page 4, items 2 and 5. In answer to Co-chair Frank, Mr. Koch said that he would not remove the self- insureds from the legislation but be advised that they could not be reached. He suggested it be added in other parts of the statutes where self-insured's could be reached. He closed his comments saying the department did support the bill. Co-chair Frank brought up the co-payment issue. He asked Dave Williams to speak to it. Ms. Busch said essentially, the recipient went to their medical provider, and there was an expected amount that would be co-paid. If the amount was not known at the time of service, the individual could not be denied service. The provider needed to know the category of the individual. On a Medicaid coupon and on the automated eligibility system, it told the provider the category of the recipient. Different services were going to be examined to see if it was even cost effective to pay. She asked Mr. Williams to speak further on this issue. DAVE WILLIAMS, Medical Assistance Administrators, Division of Medical Assistance, Department of Health & Social Services, added that SB 366 would allow deductible co- insurance or co-pay. Every state he was aware of had found the co-pay system the most reasonable way to ask for contributions toward cost of care. The federal law was broad in allowing states to administer co-pay. He wanted to investigate the most practical way other states had used. Places to enlist co-pay could include services, equipment, and in and out-patient hospital care. He felt that SB 366 was a good tool in managing co-pay. He added that a word on page 10, line 11, should be changed to read "to the maximum extent practicable" instead of "to the maximum extent allowable." Co-chair Frank said he wanted a clear statement in SB 366 and was hesitant to make that change. He said the House had decided to take a more flexible approach and delineate all co-payments. He wanted the department to implement this as soon as possible. The word practicable could give the department another message. Mr. Williams understood the intent behind the bill but felt there could be some intent language added to solve this problem. He then spoke to the fiscal note. Co-chair Frank announced that SB 366 would be HELD in committee. ADJOURNMENT The meeting was adjourned at approximately 10:50 a.m.