Legislature(2019 - 2020)CAPITOL 106
04/18/2019 03:00 PM House HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| HB96 | |
| SB37 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 96 | TELECONFERENCED | |
| + | SB 37 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 96-PIONEERS' HOME AND VETERANS' HOME RATES
3:11:01 PM
CO-CHAIR ZULKOSKY announced that the first order of business
would be HOUSE BILL NO. 96, "An Act relating to Alaska Pioneers'
Home and Alaska Veterans' Home rates and services." [Before the
committee was CSHB 96(STA).]
3:11:26 PM
REPRESENTATIVE ZACK FIELDS, Alaska State Legislature, as prime
sponsor, presented HB 96. He said the bill's goal is to keep
Alaska's Pioneer Homes thriving. He explained that inflation
has reduced the real value of rates paid at the Pioneer Homes.
He said rates have been adjusted a few times since 2004, but
rates have not kept pace with inflation. He said CSHB 96(STA)
would rebase rates to keep pace with inflation since 2004. It
would give the Department of Health and Social Services (DHSS)
the ability to have care levels of Level IV and Level V.
Representative Fields stated that there is a need for higher
intensity of care, given that the average age of residents has
risen to about 87, and given a growing population of residents
with dementia. Consistent with the Agnew Beck Report [November
29, 2018], the proposed bill would allow a Level V care, which
is a totally separate billing structure for what the department
and Agnew Beck envision as behavioral health neighborhoods.
These neighborhoods would be physically separate but still
within the Pioneer Homes. He emphasized the importance of
behavioral health neighborhoods for broader cost control and
quality of care issues.
REPRESENTATIVE FIELDS stated the CSHB 96(STA) would effect a
change from a Consumer Price Index (CPI) to a Social Security
cost-of-living adjustment (COLA), which the department has
indicated is its preference. He remarked that he does not have
a strong preference on what the index rate is. He pointed out
that the CSHB 96(STA) represents a substantive compromise
between the original bill and where the department is trying to
go.
3:13:44 PM
The committee took a brief at-ease.
3:14:10 PM
REPRESENTATIVE FIELDS noted that the first Pioneer Home was
established in 1913 in Sitka. The Pioneer Homes expanded
steadily throughout the Twentieth Century, with the newest home
constructed in Juneau in 1988, and there are currently homes in
six communities. There was a major improvement in 2007 when
Representative Shaw helped establish the first certified
Veterans' Home in Palmer while he was the commissioner of the
Department of Military and Veterans Affairs.
REPRESENTATIVE FIELDS explained that the rates at the Pioneer
Homes are established by regulation. Because the rates have
failed to keep pace with inflation going back to 2004, the state
has lost about 15 percent of real value since then. He said
CSHB 96(STA) would make a significant rate update to keep pace
with inflation. Unique about the Pioneer Homes is the mix of
residents in terms of income levels and intensity of care. A
large percentage of residents are private pay, and while the
rates currently don't capture the full cost of care, they do
capture a substantial amount of the cost of care.
REPRESENTATIVE FIELDS discussed the topic of what would be a
sustainable financial model long into the future for the Pioneer
Homes. He said it is to the state's and department's advantage
to maintain a robust share of residents who are private pay,
whether they are paying full cost of care or 70-90 percent of
the cost of care. If 51 percent of the residents are paying at
least a substantial portion of the cost of care, that is a more
secure place to be financially than if 100 percent of the
residents are being completely subsidized, because that would
entail more general fund obligations to the Pioneer Homes.
REPRESENTATIVE FIELDS stated he is concerned about the
department's proposed new rates, because the rate jumps are so
high and the rate levels so high that many fewer self-paying
residents will enter and stay in the Pioneer Homes. He posited
that rather than simply capturing those much higher rates, there
would be adverse selection and the population at the Pioneer
Homes would quickly shift to a much larger percentage of
residents who are almost wholly being subsidized by the state.
REPRESENTATIVE FIELDS said he supports the State of Alaska
subsidizing residents to the extent necessary, including to
seniors with less means. However, he cautioned, the legislature
should be careful to not unintentionally push out self-paying
residents. Even a resident paying 80 percent of the cost of
care is a lot more than 0 percent. That is an important part of
the financial sustainability of the Pioneer Homes going forward
and, hence, the rates in the proposed bill are a compromise.
3:17:30 PM
REPRESENTATIVE FIELDS said there are currently three levels of
care. He related that internally DHSS is preparing, including
through regulation, to go to five levels of care, which is
consistent with the Agnew Beck recommendations that are very
detailed and based on good research. The bill before the
committee would allow five levels of care and would not cap base
Level V because that is a separate category of reimbursement for
much more intensive behavioral health care where a much higher
reimbursement rate can be captured than the daily Medicaid rate
for assisted living. Pioneer Homes are assisted living, not
nursing homes, and because of that [the state] has a more
limited ability to capture a higher daily rate from Medicaid.
Pioneer Homes happen to be a relatively more acute intense form
of assisted living, but they are still assisted living, and that
does limit [the state's] federal revenue potential.
REPRESENTATIVE FIELDS stated that while the rates proposed under
CSHB 96(STA) are a significant [increase], they are a much more
modest increase for Levels I, II, and III. The proposed bill
would allow a new Level IV, plus a new Level V that is not
capped, based on the ability to capture potentially more
revenue.
3:19:03 PM
REPRESENTATIVE FIELDS provided a comparison of rates: current
costs of care that go back to 2004 for Levels I, II, and III; a
comparison of the current monthly rate with the department's
proposed rates; and the rates proposed under CSHB 96(STA). The
bill represents a compromise and would cap rate increases in the
future to the Social Security cost-of-living adjustment (COLA),
which would provide certainty for residents following the
significant bump in rates to catch up with inflation. He said
this is important for residents and for older folks and families
who are saving for their final years.
REPRESENTATIVE TARR observed sponsor information stating that
the rate increases may be annual and then will be capped at the
most recent Social Security COLA. She asked whether
consideration was given between the words "may" and "shall". A
challenge she has seen over the years is that in some
circumstances, using "may" creates a need to allow for receipt
authority, so [DHSS] could collect more in fees. She inquired
whether "shall do an annual adjustment" should be used so that
it is built in.
3:21:07 PM
TRISTAN WALSH, Staff, Representative Zack Fields, Alaska State
Legislature, replied that CSHB 96(STA) describes the rate
increase mechanism on page 4, lines 17-21, Section 4(g), and the
word "shall" is used. He explained he used "may" in the
PowerPoint because the Social Security cost-of-living adjustment
isn't necessarily always raised, sometimes it is held flat.
REPRESENTATIVE TARR expressed her hope that this would set up a
new way of doing things because the Pioneer Home is not the only
state service that has been limited in this way, where the user
of the service would be willing to pay more if the state were
asking more.
3:22:22 PM
REPRESENTATIVE FIELDS resumed his presentation. He talked about
what the Social Security COLA has been historically. The rates
of inflation were much higher in the 1970s, and in recent years
they have been more modest. This provision in the bill would
allow for keeping pace with gradual increases in costs.
CO-CHAIR SPOHNHOLZ inquired about the relationship between the
Social Security COLA and the CPI and asked why the Social
Security COLA was picked versus the CPI.
MR. WALSH responded that in discussions with the department,
DHSS related that it has historically preferred the Social
Security COLA because that is more directly linked to most
residents' direct source of income. Broadly speaking the Social
Security COLA is still largely relative to the CPI, so they
generally track with each other.
3:23:44 PM
REPRESENTATIVE FIELDS summarized that CSHB 96(STA) would provide
certainty for the residents and for the department. It would
provide more certainty for DHSS in terms of capturing some
additional revenue, but hopefully at prices that are affordable
for residents. The bill would ensure timely and orderly rate
increases, and these would be more regular than in the past.
Limiting the rate increases to the rate of inflation as per the
Social Security COLA would provide peace of mind to the
residents. The proposed update to the levels of care would more
accurately correspond to the population of residents who are
currently in the Pioneer Homes, which has many older residents
and a higher and growing percentage of residents with dementia.
3:24:44 PM
REPRESENTATIVE TARR inquired about the bill's fiscal notes.
REPRESENTATIVE FIELDS replied the fiscal notes are complex. He
said historically the Pioneer Homes have been subsidized through
general fund. The administration's proposal is general fund and
payment assistance. The bill is written so it would maintain
the department's flexibility to use general fund funding for
general support of the Pioneer Homes and payment assistance.
The bill would give DHSS the ability to shift more to a need-
based model while still allowing for the prices to be below the
cost of care for some levels of care. The bill would raise
revenue relative to the status quo. He deferred to Mr. Lasley
of DHSS to explain the fiscal notes.
3:26:09 PM
CLINTON LASLEY, Director, Central Office, Division of Alaska
Pioneer Homes, Department of Health and Social Services (DHSS),
stated that the budget put forward by the governor, and then
amended by the governor at the end of March, would raise rates
reflective of what it truly costs to provide services. The
structure in which the fiscal notes were set up was that the
entire general fund (GF) portion of the Pioneer Homes component,
which is the component that operates the homes themselves, was
removed and general funds were put into a new component that was
specifically for assisting those individuals that need
assistance to pay, so it is a payment assistance component. In
the subcomponent for the Pioneer Homes payment assistance
component there is $20.9 million, but in the governor's proposal
there is no funding and currently the $33 million that has been
in the Pioneer Homes component is no longer there. The purpose
of that was because current statute protects all elders who live
in any of the Pioneer Homes such that if they cannot pay the
rates that are charged, they may apply for the payment
assistance program. Statute specifies how that program is
managed and there are specifications on income limits and what
portion a resident may keep for personal needs and for federal
taxes and a spouse in the community. The remaining portion
would be paid to the Pioneer Homes and whatever the difference
between the rates at the Pioneer Homes and the amount that the
resident needs for assistance would be paid by the state -
historically out of normal general funds, but under the
governor's proposal it would come out of a new component which
is specifically only to be used for payment assistance, so for
those that truly need assistance.
3:28:48 PM
REPRESENTATIVE FIELDS interjected that a key question here is,
what is the elasticity of demand for people to enter and stay in
a Pioneer Home? He argued that by setting price points at the
cost of care the department's assumption is that demand for the
Pioneer Homes is highly inelastic - whatever price is set,
people are going to enter the Pioneer Homes at that level. He
said it is fair to assume that demand for the Pioneer Homes is
relatively inelastic, but that it definitely isn't completely
inelastic. This bill is important because right now 51 percent
of the residents are self-paid people and it is really important
to retain a payer mix that includes some self-pay along with
people who are very reliant on the state for subsidies. Losing
the self-pay population is not wanted. From a financial
perspective it is better to have someone who is paying 80-90
percent of the cost of a given level of care than it is to have
someone who is paying 0 percent of the cost.
REPRESENTATIVE FIELDS related that he compared prices for
assisted living throughout the region. He said he found that
the cost of assisted living in the Pacific Northwest frequently
ranges between $5,000 and $6,000 per month, which is why the
bill has an attractive rate structure to get people in the door.
It would remain competitive at Level II and would be
significantly more expensive at Levels III and IV, but he is
trying to get people in the door because that self-pay
population is really important for the financial health of the
Pioneer Homes. He has no objection to the ethical decision that
[the state] should go to a need-based model. As proposed by the
Pioneer Homes, his concern is an economic one. If prices are
set too high in a competitive marketplace, customers will be
lost. There aren't a lot of institutions out there like the
Pioneer Homes, but when families are looking around the country,
regardless of whether they have limited or significant means, if
the prices are that high, he is worried the Pioneer Homes will
lose a significant percentage of the self-pay population.
3:31:02 PM
REPRESENTATIVE TARR acknowledged that there is a fast-growing
senior population and so it seems that demand won't be a
problem. She said she appreciates the department wanting to
make sure there were funds available for people who didn't have
the ability to pay and she also appreciates the move toward
capturing the people who can. She noted the bill would raise
the rates and secondarily would try to maintain this new
[needs]-based pot of money that was going to be the general fund
portion. The fiscal note says the difference would be $13
million to fund the gap between charge rates and full cost of
services for the residents on private pay. There would be some
increase in revenue from the increased rates and hopefully a
healthy percentage of fully private-pay people would be
maintained. The increased rates would also help offset what is
trying to be accomplished by having the needs-based system. She
asked how to blend the two sets of numbers.
3:32:45 PM
MR. LASLEY responded that the current structure of the Pioneer
Homes is a needs-based system, but [the department] has not been
charging the rates that reflect the needs. Therefore, everyone
who lives in the Pioneer Homes, regardless of whether they are
private pay today, is being subsidized by the state and this is
anywhere from 40 percent to a little over 100 percent. That is
where the $33 million the department has been spending in
general fund in the Pioneer Homes component comes in because the
department isn't charging rates equivalent. Under CSHB 96(STA),
if the current pair mix and the current level of care mix in the
home is looked at and what is anticipated for fiscal year (FY)
2020, the maximum amount that [the department] would be able to
charge is $13 million less than what it costs to provide the
service. There would need to be $13 million in general fund in
the Pioneer Homes component in order to make up, because under
the current proposal from the governor the payment assistance
component is only for payment assistance. For example, if the
rate was $13,000 and [the department] was only charging $10,000,
[the department] couldn't draw that extra $3,000 a month from
the payment assistance component because the resident is not
truly on payment assistance, [the department] is not charging
the resident for it. Same today - for those individuals who are
on Medicaid, for example, [the department] charges a rate for
Medicaid, [the department] only gets a certain reimbursement
rate; that cannot be drawn down from payment assistance. "And
so," Mr. Lasley continued, "the intent of this from the
governor's bill is to truly charge what it costs to provide
services knowing that there is the protection in place that
those individuals that are on Medicaid - it would not affect
Medicaid Waiver because we have a set rate - those individuals
that are currently on payment assistance it would not affect in
any way because they're already paying the maximum amount that
they can under the formula of the payment assistance program.
And those individuals who are currently private pay, but still
being subsidized by the state, would pay what they could pay
under the payment assistance formula that's set in statute and
the remainder amount would be subsidized by the state and be
captured in that payment assistance component."
3:35:34 PM
REPRESENTATIVE TARR surmised the difference is from the $33
million to the $13 million. The bill would get [the state] $20
million ahead in the financial problem because it would go from
the $33 million for the general fund subsidy down to $13 million
with implementation of the bill.
MR. LASLEY answered there still would be the $33 million; just
$20 million is in the payment assistance general fund component
and $13 million. When doing the original analysis for proposing
the rate increases, and looking at the budget and how to pay for
services if [the state] truly needs to not spend more than what
it is earning, [the state] can't earn the money if [the state]
is not at least charging for it. Proposing rate increases of
that amount was not an easy decision to make. The proposal put
forward is a true needs-based system, [the state] is not
subsidizing those individuals who may have the ability to pay
for the services. Everyone would use the program that is set
forward under statute, which is payment assistance, and pay what
they can pay, and the remainder would be subsidized by the
state. So, in any of these proposals the general fund amount
really doesn't change, it just is where the money is coming from
whether it is coming from true payment assistance or mandating
the $13 million under the bill because not enough is being
charged to provide the services. In the initial analysis of
raising the rates to what it truly costs to provide services it
was estimated that revenue would be increased by about $5.7
million, which is still nowhere near what it costs [the state]
to provide the service.
3:37:40 PM
REPRESENTATIVE FIELDS said the aforementioned is a good
description. Put another way, he continued, is that either the
bill or the proposed rates and regulation would increase revenue
to the state next year. If the administration's regulations
went through, the question is how much of that would actually be
captured in revenue because very few people will be able to pay
that. The Medicaid daily rate for residential support living is
$162.70 per day, which comes out to a little less than $5,000
per month. So, once the department has captured people's assets
and they have qualified for Medicaid, the state is not going to
capture anywhere near the department's advertised rates. If the
department adopts these rates, the question is what will be the
gap between advertised rate and what the state actually
captures. An analogous question is what the complex interaction
will be in two to five years of some private-pay people
departing from the Pioneer Homes. Representative Fields posited
that there would be a larger mix of people who are effectively
paying nothing or are on the Medicaid daily rate. But under his
bill, he posited further, more of those private-pay people would
stay in the system with the relatively more affordable rates.
Either way the state is going to increase revenue in the short
term and his hope is that revenue is increased in a sustainable
manner that does not unintentionally push private-pay people out
of the system.
3:39:34 PM
CO-CHAIR SPOHNHOLZ requested clarification from Representative
Fields that he said only 54 percent are currently self-pay.
REPRESENTATIVE FIELDS clarified that 51 percent are self-pay.
He acknowledged Mr. Lasley correctly stated that self-pay is not
self-pay per se, because they are not paying the full rate.
However, he continued, they are paying a significant amount that
does make the homes more financially sustainable. He wants to
ensure that [the Pioneer Homes] still have a large self-pay
population even if it is only 80 percent of the full cost.
CO-CHAIR SPOHNHOLZ compared the current rates to those proposed
by the administration and those proposed by CSHB 96(STA). She
noted that for Level I the current rate is almost $2,600 a
month, the administration has proposed $3,800 a month, and the
bill proposes $3,100, which is still a substantial increase in
rates. For the highest [level] the current rate is about
$6,800, the administration is proposing $13,000, and the bill
proposes $10,000.
REPRESENTATIVE FIELDS responded that Level IV is a challenging
level because these are largely going to be folks with dementia
with a very high acuity level for assisted living. He said he
doesn't know that $10,000 is the perfect number, but $13,000 is
such a high rate compared to other assisted living care in this
region that it could cause people to flee and deter them from
ever entering the Pioneer Homes to begin with.
CO-CHAIR SPOHNHOLZ asked Mr. Lasley whether dementia patients
are typically Level IV, because her understanding was that these
patients are typically Level V. She requested Mr. Lasley
describe the difference between Level IV and Level V.
MR. LASLEY answered that a little over 50 percent of the elders
in the Pioneer Homes are at the current Level III, the highest
level of care, and those individuals primarily would move to the
new Level IV. He said the gap is primarily in [the current]
Level II. Individuals move into the home at Level I or Level
II, but there is a big gap at the Level II because the current
Level II requires that the individual only receive nursing care
during the day. As individuals age in place they maybe don't
need 24-hour a day nursing care seven days a week, so they don't
move to the current Level III. As their acuity level continues
to increase, they sort of get trapped at that high level of II
because they don't meet that definition of Level III. So, [the
Pioneer Homes would] try to move the current 50 percent of the
population up to a Level IV, and then Level II would be split
into two levels of care. The Level V that is proposed is
individuals with complex behaviors that [the Pioneer Homes] are
not currently serving.
CO-CHAIR SPOHNHOLZ stated that a current challenge in providing
for Alaska's elder community is ensuring adequate care for
people with dementia. She inquired about the difference between
Level IV and Level V as they relate to that and further inquired
what "complex care" means. She requested Mr. Lasley to be more
specific about the kinds of care at Level V and whether care is
being provided to people with dementias at Level IV.
MR. LASLEY replied that the proposed Level V, complex behaviors,
are individuals with dementia that may have excessive wandering,
elopement issues where they try to leave the building, self-
harm, aggressive to themselves or others. Under the current
model, the Pioneer Homes have not been caring for this
population, but oftentimes these individuals are inappropriately
placed in emergency rooms or maybe the Alaska Psychiatric
Institute (API). Last year capital funding was requested to
help take a neighborhood within the Anchorage Pioneer Home and
build out a complex behavior neighborhood to serve that need.
Current Level III individuals with dementia can progress in the
dementia through their life, so [the homes] may have individuals
at the lower level of dementia all the way up to starting some
wandering or a lot of memory loss, who cannot do activities of
daily living on their own, and then all the way to the point of
getting closer to end of life to where they are heavy dementia
but bedridden. So, there is a large gap in there.
3:45:33 PM
REPRESENTATIVE FIELDS added that Level V is an important thing
to mention because this is actually a significant cost savings
opportunity for the state at large. Right now, there are folks
who could be in a prospective behavioral health neighborhood in
the Anchorage Pioneer Home. These folks currently cost the
state over $500,000 a year at API or similar levels at other
facilities that aren't well suited for these seniors; API is
really not an ideal place to house these seniors. So, while it
sounds expensive to have Level V in the Pioneer Homes, the Agnew
Beck Report details that this would actually save the state a
lot of money and would be safer for seniors.
CO-CHAIR SPOHNHOLZ agreed with the aforementioned, noting that
back-of-the-hand math indicates it costs the state about $40,000
a month to keep somebody at API. He said if it can be done at
half of that at the Pioneer Home, which is a more supportive and
home-like environment, that is probably better for everyone. As
well, it would be a very significant cost savings and would
ensure that API can be used for people that only API can care
for, which is a very significant population.
REPRESENTATIVE FIELDS related that Mr. Lasley did a good job
describing to the State Affairs Standing Committee how the
population at the Pioneer Homes has changed over time. Mr.
Lasley said the population used to be more of a cocktail hour
crowd self-supporting people who have a great assisted living
facility to live out their final years. Whereas now it is an
older population with a greater spectrum and higher acuity of
need and CSHB 96(STA) really reflects that. The Level V shows
how much that spectrum has broadened as the needs have changed.
3:47:37 PM
CO-CHAIR ZULKOSKY asked whether it is correct that the Pioneer
Homes, through regulation, are able to adjust the rates with or
without this legislation.
REPRESENTATIVE FIELDS confirmed that is correct. He said the
bill would effectively cap the extent to which the Pioneer Homes
can raise the rates and it would allow the Pioneer Homes to
capture significantly more revenue. However, the bill would not
allow the Pioneer Homes to set as high of rates as proposed in
the current draft regulations.
CO-CHAIR ZULKOSKY offered her understanding that the bill does
increase rates as Co-Chair Spohnholz indicated, but with an
intention to find some rationale for basing those costs and also
finding some compromise in bringing in receipts where possible.
REPRESENTATIVE FIELDS confirmed that is correct. He related he
has heard from many people who are scared or angry about the
proposed rate increases. He sympathizes with the department and
how DHSS wants to capture new revenue, but he thinks it is
really important to share respect for the state's elders and
have rates that are affordable and that the Pioneer Homes
(indisc.).
3:49:00 PM
REPRESENTATIVE PRUITT asked when the rates had last been
changed.
MR. LASLEY responded that there was an 8.5 percent rate increase
in 2016, a 1 percent [increase] in 2017, which was equivalent to
Social Security, and no rate increase in 2018.
REPRESENTATIVE PRUITT surmised the rates have been changed
fairly regularly as needed.
MR. LASLEY answered that they have not been raised at a rate
that has kept up with inflation. He said the department is
trying to make a correction now and then come up with a
methodology in policy that would set an expectation that rates
would be raised (indisc.) some form, whether it be CPI or Social
Security. There are many variations of CPI. A health care
economist recently advised him that [the department] should be
looking at the health care CPI, which is much higher than the
CPI shown in the slides from Representative Fields. Last year,
for instance, health care CPI in the state of Alaska was 7
percent. So, the challenge has been that even with rate
increases, this bill does not get to what it truly costs [the
department] to provide service. Secondly, [the department] is
not keeping up with the cost of health care in the state of
Alaska.
REPRESENTATIVE PRUITT inquired about the annual increase in
delivering care through the Pioneer Homes.
MR. LASLEY replied that after talking with the health care
economist he looked at the budgets from the past 15 years and
looked at the cost of health care CPI for urban Alaska, which is
the sector to look at, and the cost is right in line with the
health care CPI. On average in the state of Alaska it is about
4.5-5.0 percent a year for health care cost in the state, and
last year was 7 percent.
REPRESENTATIVE PRUITT surmised that those changes are made
through a regulation change with a public process and comment
time, so therefore it takes a bit of time to make those changes.
MR. LASLEY responded correct. He said that currently when [the
department] puts forward the proposed rate increases it's not
like [the department] is saying this is the rates that are going
to be; [the department] is not mandating that these are the
rates at the end of the regulatory process. The purpose of the
process being in regulation is to allow for public comment. It
is now currently published and is a 60-day process, and during
the 60 days individuals have the ability to either make comment
through public meetings or send them in writing. All of that
information is then gathered, and the commissioner looks at all
of that data and determines what is in the best interest of the
department and the division and the elders.
REPRESENTATIVE PRUITT asked whether the bill would provide the
ability to recover costs and [make] change, or whether the bill
would provide a cap and once that cap was hit there would be no
way to recover any costs or make those changes or go through the
60-day process of changing regulations to deal with the impact
of increased CPI for medical in Alaska.
MR. LASLEY answered that, if passed, the bill would take the
ability for the department to manage the finances of the
division and put it with the legislature since it would become
statute, so [the department] would not have the regulatory
process.
REPRESENTATIVE PRUITT remarked that this would be a classic
scenario of "it takes an act of Congress to make a change
there." In this case it would take an act of the legislature to
be able to make these changes. He inquired about how easy it
would be to make changes in this particular case and whether Mr.
Lasley sees this as pretty much permanent. Representative
Pruitt posited that the fiscal note is probably wrong in regard
to the set amount of cost and therefore it should be expected
that there would be an increase to the State of Alaska in
general fund because the number will have been set at a specific
amount that cannot be raised.
MR. LASLEY replied it would be the anticipation under this bill
that the department would have to come before the legislature
every year and re-look at this because if anything changes and
there is additional cost to the division there is no way to
recapture those funds and they would be set in statute and [the
department] would be set to a formula that it has no way of
managing. As the subject matter experts, the department would
have to come and ask for a change.
3:55:42 PM
REPRESENTATIVE FIELDS noted that as a practical reality, CPI has
risen twice as fast as rates since 2004 and, as pointed out by
Mr. Lasley, health care costs have grown much faster than that.
So, he said, the regulatory process has not kept up with costs.
He pointed out that the bill would re-base rates to take into
account some of the growth in costs. There is a point beyond
which price increases are kind of theoretical because of
people's ability to pay. The charge could be $30,000 a month,
but if no one can actually pay that then more money isn't
actually being captured and helping the financial situation of
the Pioneer Homes. It is important to have rates that are
reality based that people can pay.
REPRESENTATIVE PRUITT stated that his point was just made by
Representative Fields. Rates haven't increased at the level
that it costs; rates have been increased through the regulatory
process at half the CPI. [The bill] would set in statute the
inability to raise them at all, so as the CPI increases [the
department] is going to have to come in front of [the
legislature] every single time [the department] has to make an
adjustment. Setting a rate from which to start this particular
year may make sense, but [the bill] doesn't give the ability to
recoup the cost going forward and that is a binding of the
hands. This legislation doesn't look to the future, it looks to
what the current situation is and isn't forward thinking.
3:57:22 PM
CO-CHAIR SPOHNHOLZ offered her understanding that CSHB 96(STA)
would re-base the rates and would allow for rates to be adjusted
annually based on Social Security cost-of-living adjustment.
REPRESENTATIVE FIELDS confirmed Co-Chair Spohnholz is correct.
Addressing Representative Pruitt, he said the bill does look
forward. By giving the department the authority to raise rates
annually it's designed to keep [the state] from falling back
into this hole like [the stated] did last time.
CO-CHAIR SPOHNHOLZ said that in many respects CSHB 96(STA) is
designed to be forward thinking and to make sure that the cost-
of-living adjustment is taken into account and that a major
reform effort does not have to be launched in order to adjust
rates moving forward.
REPRESENTATIVE FIELDS concurred. He offered that if it would be
the committee's preference to have a medical CPI as the annual
cost inflator, he would be supportive. He noted he has had
discussion with the department about what is the best annual way
to keep pace with increasing cost.
CO-CHAIR SPOHNHOLZ recalled Mr. Lasley's statement that health
care inflation went up 7 percent last year. But, she noted, not
all the costs at the Pioneer Homes are health care related; many
are akin to traditional CPI because they are costs for people
who do laundry, deliver food, or other day-to-day living costs.
She therefore inquired how the department came up with using the
Social Security COLA to Representative Fields instead of health
care inflation or CPI.
MR. LASLEY answered that when he talked to Representative Fields
before they were talking about under the current payment
assistance program, for which the Social Security cost-of-living
increase has always been used because it was determined that
individuals on payment assistance have no additional resources
to pay for services and so the state is already subsidizing them
an amount determined under the formula of payment assistance.
The only additional increase in revenue that they would have
every year is primarily Social Security, and it is set in
statute that [the department] would have to review any
additional revenue that they have. When talking about the
health care CPI, 81 percent of the cost for operating the
Pioneer Homes is personnel and almost all of that is direct
care. Out of the 600 staff within the homes, 150 are not direct
care staff operating the 24-hour facility and 144 of those staff
are laundry, housekeeping, and food service currently. Usually
those individuals are at the lower end of the wage scale. Is
health care CPI the right number? That was a recommendation
made to him by a health care economist listening in on one of
the board meetings. It is known that the Social Security rate
of increase is not keeping up with the cost of inflation and the
cost of providing the services. That is why he did a comparison
of what was it costing to provide the services knowing that 81
percent of that is personnel. He compared it against health
care CPI after the health care economist's recommendation and it
was pretty close to the same.
CO-CHAIR SPOHNHOLZ asked whether Mr. Lasley just said that
health care inflation is pretty close to what the increase in
[Pioneer Home] expenses is from year to year.
MR. LASLEY replied yes. When doing the comparison, he took
health care CPI and looked back 15 years at the Pioneer Homes'
true cost of providing services and it is almost in line with
that.
4:01:49 PM
REPRESENTATIVE DRUMMOND inquired whether the State of Alaska
owns all the Pioneer Homes and Veterans Homes and that they are
not leased.
MR. LASLEY responded correct.
REPRESENTATIVE DRUMMOND surmised that these rates cover
operating costs and services delivered to the residents. She
asked whether [the division] has money set aside for maintenance
or major maintenance or whether that is something the Pioneer
Home system has to come to the state for if a major capital
improvement or roof repair is needed. She further asked whether
money is set aside for that or whether it goes on the capital
budget as a separate request.
MR. LASLEY answered it is both. Minor repairs are set within
[the division's] budget and the capital budget pays for the
large projects, so those are a capital request.
CO-CHAIR SPOHNHOLZ asked how much of [the division's] costs are
related to health care delivery. She clarified she is trying to
understand the distinction between what sort of a standard CPI
adjustment and what is related to health care cost increases,
and what the ratio is.
MR. LASLEY replied he does not have the exact percentage and
will get back to the committee with an answer.
CO-CHAIR SPOHNHOLZ said understanding that ratio is important to
her because she appreciates that the bill would allow for annual
cost of living increases that will be faced that the current
rate structure hasn't taken into account and which has meant
that every once in a while [the department] has done a little
jump-up that hasn't kept up with cost of services. [The bill]
finds a compromise position because there is a lot of concern
amongst people who are at the Pioneer Homes and the people who
love them. Providing some certainty is important and to her
there is a value statement that caring for the state's elders is
an important thing when she thinks about the people who changed
their children's diapers, put their children through school, and
helped their children along their way. There is value in caring
for elders and it isn't necessarily important to her that 100
percent of the cost of doing services is recovered. There are
some things that are just a good thing to do and that she is
proud of as an Alaskan. She would like to come up with some
sort of a compromise that works that recognizes what true cost
growth is. It's probably not 100 percent health care inflation
and probably not just CPI. It would be helpful if some rational
compromise is identified that is based on what percentage of
monthly expenses are related to health care and what are not.
MR. LASLEY responded he agrees with Co-Chair Spohnholz. He said
the proposal put forward was not an easy decision to make and he
struggles with it every day because his job is to care for the
state's elders. The governor's proposal is to truly make this a
needs-based system and what is being proposed is that [the
department] charge what it costs to provide services. Yes, [the
Pioneer Homes] are classified as assisted living but they are
providing services through the end of life. Many of those
individuals who are primarily at [the current] Level III would
not be accepted at a traditional assisted living facility. [The
division's] mission is to provide elders a home in a community
celebrating life through its final breath and that is exactly
what [the division] does. The governor's proposal in this is to
provide the assurance that there is a payment assistance
program, which is set in statute, and to charge the rates that
truly reflect what it costs [the state] to provide services, but
knowing that there is that payment assistance program that has
been set in statute for many years to protect every individual
65 and older that needs to live in a Pioneer Home regardless of
their ability to pay.
4:06:55 PM
CO-CHAIR SPOHNHOLZ offered her appreciation for Mr. Lasley's
comments. She said she thinks it is an honest difference of
opinion around the rate proposals being put forward by Governor
Dunleavy's administration is that it's always highest and best
that the Pioneer Homes charge the highest rates. There is a
certain amount of value and dignity in being able to pay for
yourself that a lot of people would like to continue to be self-
pay for as long as possible. Increasing rates so dramatically
will require a lot of people to spend down all of their assets,
sending them into public assistance, which is psychologically a
difficult burden for a lot of people. Historically the state
has said the Pioneer Homes didn't have to operate on full cost
recovery. She has heard from people in emails and phone calls
that this forces them to spend down every last bit of their
assets and go on to public assistance much earlier. There is a
perceived lack of dignity that comes with that and she is
included to go with her elders on this difference of opinion.
REPRESENTATIVE FIELDS added that a particularly challenging
circumstance is that of a married couple with one spouse in a
Pioneer Home and the other spouse living independently, perhaps
in the home they shared for 50 years. He has heard from his
constituents that the very, very high rates are particularly
threatening for those independent couples where one person has
dementia and the other is still working trying to self-pay at
the Pioneer Home, and these new proposed very high rates from
the administration just put them in an impossible situation. It
is different than just one person who is on his or her own and
maybe they pay or maybe they can't, and they are in the Pioneer
Home already. [The state] should be respectful of those couples
where one spouse is caring for another in the Pioneer Home.
4:09:48 PM
CO-CHAIR ZULKOSKY noted there is no invited testimony on the
bill. She opened public testimony.
4:10:31 PM
BRAD RIDER testified in support of HB 96. He said his parents
are in the Pioneer Home, and that the Pioneer Homes are amazing
and something that should be held up for everyone to see. The
state long ago offered to help its seniors and that should be
continued. Cultures from the beginning of time across the world
have taken care of their elders. For this administration to
have said "it's time to rip the Band-Aid off" is disgusting.
4:11:57 PM
FRED KOKEN testified in support of HB 96. He said he was a
financial consultant for 30 years and understands the need and
the wisdom for a balanced budget. However, the proposed level
of increase for the Pioneer Homes going forward is scary. His
wife is currently a Level III resident in the Juneau Pioneer
Home and the amount of increase they are looking at is scary.
While a balanced budget is important, it shouldn't be balanced
on the backs of the most vulnerable citizens Alaska's seniors.
4:13:26 PM
LUANN MCVEY testified in support of HB 96. She stated she is
very worried about the proposed current draft regulations that
would make the Pioneer Homes unaffordable to people like her
parents who have lived in Juneau since 1957. In the mid-1980s
her 88-year-old father retired from the National Marine
Fisheries Service and her 87-year-old mother retired from the
U.S. Forest Service. They have continued to live in their
Juneau home assuming they could eventually move to the Pioneer
Home and afford to pay for it themselves. It was and is the
only affordable long-term care option available to them here in
Juneau. They applied to and remain on the Juneau Pioneer Home
inactive list. So far, they haven't needed to move there, but
eventually they will. The rate increases proposed in the
governor's regulations would make the Pioneer Home absolutely
unaffordable to them. Her parents are very worried, as is she,
about what is going to happen to them. She urged that the
Pioneer Home rates be kept reasonable so people like her parents
who have spent their lives in Alaska will not have to spend down
all their assets and go on public assistance.
4:16:01 PM
MARK BADGER testified in support of HB 96. He said he is a
caregiver for his parents in Anchorage. He recalled visiting a
102-year-old man in the Fairbanks Pioneer Home in 1969 whose
pilot license was signed by Orville Wright. It was clear to him
back then that the Pioneer Homes are a shrine to a great deal of
wisdom. He has spent the last three years learning the details
of Medicaid, Alzheimer's resources, and assisted living homes.
It is a very difficult and people do not understand what they
are going to have to field at the end of life and that it isn't
what they expect. There is no golden net to catch people as
they reach the end of their lives. The rate increase is putting
to a parallel of private nursing homes, while the Pioneer Homes
do not have the same patient to nurse ratio and are not the same
as going into private nursing homes. The administration's
managers are in charge of executing this incredibly destructive
rate increase. They are saying no one will be discharged from
the Pioneer Homes but will be moved to Medicaid, while the
administration has made its disdain clear for the number of
people on Medicaid. He expressed his strong support for HB 96
because it would provide a reasoned approach to the adjustment
of rates and because he believes that regulatory or rate
increases should be in the hands of the legislature.
4:19:24 PM
LAURA BONNER testified in support of HB 96. She said she is
retired and nearly 70 years old and the bill would keep Pioneer
and Veterans homes affordable. The notice recently sent to
residents is a slap in the face and another example of cost
shifting in the governor's plan for Alaska. Alaskans still
value their veterans and seniors and have since 1913. Residents
in the homes nearing the ends of their lives and their families
need predictability in what the rates will be. She may be a
[Pioneer Home] resident in the future and she would need that
predictability. The legislature needs to find ways to raise
revenues other than from veterans and elders who may be frail.
4:21:10 PM
SUSAN MILLER testified in support of HB 96. She said the bill
attempts to restrain the effort of DHSS to raise the rates at
the Pioneer Homes well beyond what an average Alaskan could
possibly afford. Because the rates in the department's proposed
regulations are so extraordinarily high, she can only speculate
that the goal is not to pay the full cost of all services, but
rather to eliminate the Pioneer Homes entirely or privatize
them. By focusing on costs, the department ignores the reason
for having and needing the Pioneer Homes. Based on her
experience, people do not choose to live in the Pioneer Homes
because they are looking for a comfortable place to stay. They
live there because they desperately need the services these
homes provide. They live there because they can no longer live
at home, they can no longer receive the care they need at home.
Her mother lived in the Anchorage Pioneer Home from 2000-2008
because she had Alzheimer's disease, a form of dementia that
gradually and inevitably destroys a person's ability to function
and eventually kills them. She visited her mother almost every
night for eight years, so she is quite familiar with and
appreciative of the Anchorage Pioneer Home. She hopes she never
needs the facility, but it would be a tragedy to take it away
from those Alaskans who do and will need those services. The
department may argue that it has a payment assistance program
that helps those who cannot afford the rates they set. But to
get that payment assistance a person must first pay every penny
of the person's savings and then pay all their monthly income if
they have any, making the person a pauper. The bill is needed
to protect Alaskans from the unreasonable fees that DHSS
proposes. The bill, however, is not without its flaws. The
fees in Section 5 are too high, especially the $10,000 monthly
rate. She is also concerned that there appears to be no
definition of the terms used to describe the services provided
at each level. The terms for those services in the statute
differ from those used in the department's proposed regulations.
She receives many services from the state for which she pays
nothing, and she is not sure why her government has chosen such
an important service as the Pioneer Homes as one for which its
users must pay full costs.
4:24:39 PM
SHARON LONG testified in support of HB 96. She said her husband
came to Alaska with the U.S. Air Force in the 1960s and fell in
love with Alaska. After two tours he knew Alaska was home and
left the Air Force rather than be transferred. Now 84 years old
he has spent his entire professional career in the private
sector in Alaska. Due to advancing Parkinson's Disease he now
requires the assisted living services of the Anchorage Pioneer
Home. She is relating this so the committee will understand the
depth of importance and meaning to her family of the concept of
pioneer and home. The new supposedly comparable rates suggested
by the administration and, frankly, the compromise bill [CSHB
96(STA)] before the committee, reflect rates in institutions
that offer individual rooms with considerably greater square
footage with kitchenettes or full kitchens, private rather than
shared bathrooms, heating and cooling controls that work, bed
sheets changed weekly, ceilings that don't leak into the
residents' rooms, and dependable hot water for bathing, which is
not the case in the Anchorage Pioneer Home. The administration
has not done an apples-to-apples assessment. She thanked
members for attempting a legislative solution to the
unconscionable approach the administration is pursuing. She
encouraged the committee to craft a bill that: 1) repeals the
regulatory authority under which the administration is making
these unprecedented, ham fisted, and draconian changes to both
the mission and the operation of the Pioneer Homes; and 2)
confirms the current existing rates in statute and links future
increases to the Social Security cost-of-living adjustment,
which is a rational approach to increases and something that
families could plan for. Her husband of 40 years and his fellow
residents who write a check every month to the state are fearful
of these machinations which threaten to drive them from the only
place they call home and financially break their families. They
are scared and bewildered. She is at the Pioneer Home nearly
every day and has come to know and appreciate many of the
residents who are truly pioneers and dedicated Alaskans who in
many cases have served the state long and well. She urged the
committee to do right by them.
4:27:45 PM
ROCKY PLOTNICK testified in support of HB 96. She stated she
lives in her own home while her husband is currently in the
Anchorage Pioneer Home. She agreed with Ms. Long that people in
the Pioneer Home are afraid. They fear the proposed regulations
will go forward and be implemented and these people feel
helpless. She encouraged the committee to move forward with
some version of HB 96. While the bill may not be perfect, it is
a limit, and somewhat of a compromise. Knowing the timeline
with the legislature and that the public comment [deadline] on
the regulations is 5/28/19, time is ticking. So she hopes HB 96
will be moved soon or that there will be a companion bill in the
Senate because a bill is hope to the seniors.
4:29:48 PM
JANET MACCLARENCE testified in support of HB 96. She said she
is currently a resident of the Pioneer Home and will be until
4/25/19. She has given notice that she is moving into an
apartment with one bedroom and one bath for $1,300 a month, plus
$100 in utilities, plus whatever she adds to it for support.
The combination of expenses for herself and her husband will be
less than the $5,000 a month they are currently paying and
certainly much less than the $7,200 a month they would be paying
with the proposed increase. She has Crohn's Disease, which is
aggravated by stress, and she is the caretaker of her husband
who is the survivor of a massive stroke. She and her husband
were co-presidents of the Resident Council but had to resign
because they needed to be in a less stressful and more
predictable environment. The bill would go a long way to make
the Pioneer Homes a more predictable environment. She concurred
that the atmosphere in the Pioneer Home is fearful, people are
very concerned about their ability to continue to retain any
kind of dignity in an environment that forces them to become
complete paupers in order to receive services. She urged the
committee to support and honor the people who have done so much
and who deserve an honorable exit.
4:33:08 PM
JUSTIN PARISH testified in support of HB 96. He said it is only
right to provide some assurance to elders that the rates won't
be doubled at the whim of the state. It is a clear moral
imperative to take care of the state's elders, as is done for
the state's youth. Some degree of assurance must be provided,
and the bill would do a great job of that. The automatic price
adjustment with time is appreciated and he hopes it won't need
to be revisited in the future. He thanked the bill's sponsors.
4:35:01 PM
DEBBIE TILSWORTH testified in support of HB 96. She stated the
bill is a thoughtful piece of legislation and an attempt to find
middle ground between Mr. Lasley's proposed rates and the
current rate structure. She said bravo to Representative
Spohnholz' statement about dignity and respect. When her
mother, who self-pays, moved into the Pioneer Home no one asked
her how much money she had. The new model worries her because
she can foresee a day when seniors are looked at as either
assets or liabilities. If the state starts treating people as
transactions rather than valued elders, then the state will be a
colder and poorer place to be. Increases of the magnitude in
the bill, which are 20-30 percent, need to be phased in over
time. Current residents should be grandfathered into the
current rate structure with annual cost of living or modest
increases. Fifteen years ago, the University of Alaska changed
its benefits structure and it grandfathered the current
employees with benefits in effect at that time; future employees
would come in under different rules. The university ended up
with Tier 1, 2, and 3 benefits; the rules did not suddenly
change for existing employees. The state wisely used the
approach of phasing in the new structure and she asks for that
same wisdom now. She does not buy into the governor's premise
or Mr. Lasley's shock therapy that huge increases are necessary
in one year. It would create havoc with the residents' personal
budgets, and it would not gain the state much money after the
first year or two. While [the administration] estimated $5.7
million, she came up with $4.8 million; and while the state
might get that in year one, what about years two and three? The
state won't gain what [the administration] thinks it will and it
will drive self-paying residents like her mother out of the
Pioneer Home. One thing she does agree with in the governor's
approach, as well as the co-sponsors of the legislation, is that
the current services of the Pioneer Homes need to continue. The
staff is excellent, the care is superb, and she has nothing but
admiration for the way the Fairbanks Pioneer Home is run. She
applauded the committee for taking the concerns of the residents
and their families into account as the committee goes forward.
She urged the committee to take a reasoned approach to the
rising costs of care at Alaska's Pioneer Homes, which are a
treasure that need to be protected for future generations.
4:38:28 PM
URBAN RAHOI testified in support of HB 96. He said he and his
wife married in 1940 and lived happily on $100 a month. He
added he agrees with the previous testimony because he is a 73-
year resident of Fairbanks and has done a lot for the country
and appreciates being in the Pioneer Home because it is a good
place for people who need help. He thanked the previous
witnesses for saying the things he would like to say.
4:39:45 PM
BARBARA PARKER testified in support of HB 96. She stated she is
a current resident of the Fairbanks Pioneer Home. She has
noticed a great deal of concern and downright fear in the home
over the proposed changes, especially in the monthly rates.
Most of the residents don't have a lot and when legislators are
talking about tying it to the Social Security increase, she
thinks what increase? She has $18 a month extra, which is eaten
by her Part D payment. The care and staff at the Fairbanks
Pioneer Home are wonderful. She is single and 74 and moved in
voluntarily. She is healthy but came to the home because she
wanted to have a safe, clean, healthy environment as she ages.
She hopes she doesn't hurt herself, but knows that if she does,
she will get care. She asked the committee to consider the
residents who are on fixed incomes and alone and who have lived
in the state 40-50 years. Other countries respect and care for
their elders and Alaska should do the same.
4:41:29 PM
SUSAN CARTER testified that she is a resident of the Fairbanks
Pioneer Home. She related that a friend of hers, as well as
many residents, have had to turn over their homes, properties,
savings, and investment income. She asked what happens to those
assets and to that money because it is never mentioned, but it
always has to be turned over to the state if a resident doesn't
have enough money to self-pay. Those assets are an important
consideration and should be put into the budget, given those
assets are thousands of dollars for each person and most of the
homes and properties have been paid off because the residents
lived in them for so long. She is in her eighties and she heard
that the average age in her home is 88. That means people are
coming into the home in their eighties, not sixties or
seventies, and that means they are staying in their homes
because they cannot yet afford the Pioneer Home charges until
they are forced to come in and turn over all their assets to the
state. She urged that these assets are considered and that
information about these assets and what has been done with that
money be provided somewhere.
4:43:47 PM
CAROL KLOPF testified she lives in the Fairbanks Pioneer Home.
She apologized for not being informed of what HB 96 would do
except raise rates. She urged that any new rates be applied to
the future residents and that everyone now living in the homes
be grandfathered into the rates that they understood when they
applied and moved in. She saved and planned for what she
estimated her costs would be and then chose her time to enter
accordingly. She thinks she has enough to pay for her estimated
lifespan, she is 85, but if the rates are doubled, which is what
the threat seems to be, she is going to run out of money, which
is scary. Others are justifiably scared as well. Residents are
told "no worries, the state will pay for it if you run out of
money." However, it's not that easy. A person must apply for
state assistance and there are requirements. She had a friend
who didn't know some of the requirements and was unable to
control some of the others and got denied. What happens then?
It is scary and unfair, and residents should be grandfathered
into what they agreed to and understood when they moved in. The
new rules should be applied to people who are not yet in the
Pioneer Homes.
4:46:40 PM
WILLIAM HARRINGTON testified he is 70 years old and is an
"unaffiliated old person." He said he did not hear the words
"boomer tsunami" or discussions of its effect and that of the
vastly increasing longevity. Subsidizing elders for a dignified
sunset of life is a fine goal and with money available should be
a real bonus. He said [state] spending priorities as a whole
are under attack and some amendments are needed: 1) privatize
the system; 2) build 1,000-1,500 more units; and 3) the state
needs to govern and not involve itself in private businesses.
CO-CHAIR ZULKOSKY left public testimony open.
[HB 96 was held over.]
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