Legislature(2015 - 2016)HOUSE FINANCE 519
04/08/2015 08:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB148 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 148 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 148
"An Act relating to medical assistance reform
measures; relating to eligibility for medical
assistance coverage; relating to medical assistance
cost containment measures by the Department of Health
and Social Services; and providing for an effective
date."
Representative Wilson wanted to understand how the provider
tax would work and how much revenue the tax would generate.
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, explained that the provider tax provision
required the Department of Health and Social Services
(DHSS) to recommend a provider tax appropriate for Alaska.
The legislation mandated the department to utilize an
independent third party to analyze provider taxes in other
states and meet with providers and stakeholders to
accomplish the mandate. She detailed that other states
exempted small providers from a tax in favor of taxing
hospital and nursing homes based on their entire revenue
and not solely on Medicaid receipts. Alaska was one of the
few states that did not tax providers. The legislature
would receive a report on the provider tax recommendation.
Additional legislation would be required in order to
implement a provider tax.
Representative Wilson wondered why the state would initiate
a provider tax and how the revenue would be spent.
Commissioner Davidson voiced that Alaska was actually the
only state in the country that did not collect a provider
tax. In light of the budget difficulties, the tax was
proposed as a way to continue to provide programs and
services. She believed that the providers should contribute
by having "skin in the game." Many other business in
Alaska were taxed.
Representative Wilson announced that the provider tax was
not related to Medicaid expansion and could be implemented
regardless of expansion.
Commissioner Davidson responded in the affirmative. She
added that a state was able to implement a provider tax at
any time as long as the tax complied with federal
regulations and the legislature chose to enact a tax.
Representative Wilson felt that Medicaid and Medicare
underpaid providers and the tax was unfair.
Vice-Chair Saddler asked whether a healthcare provider tax
would only be levied on for profit providers.
Commissioner Davidson answered that the department would
ask the third party provider to review how other states
levied the tax. She shared that some states levied a
provider tax on both for profit and non-profit providers.
Vice-Chair Saddler asked how much of Alaska's hospital and
nursing home care were for profit versus non-profit
businesses.
8:43:02 AM
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES; responded
that most of the hospitals in Alaska were non-profit
facilities. He expounded that Alaska Regional Hospital was
a for profit facility and was aware of only one private
nursing home facility located in Anchorage.
Vice-Chair Saddler asked whether it was fair to assume that
a provider tax would cover non-profits in order to raise
enough revenue.
Mr. Sherwood responded that a broad based tax would have to
include non-profits.
Vice-Chair Saddler declared that federal law placed a limit
on the amount a provider tax could impose. He asked whether
the cap was 6 percent.
Mr. Sherwood replied in the affirmative.
Vice-Chair Saddler asked how much a 6 percent provider tax
would raise on for profit and non-profit providers in the
state.
Mr. Sherwood did not know the answer but offered to provide
an estimate.
Vice-Chair Saddler asked whether the provider tax would
raise enough to cover the state's share of Medicaid
expansion.
Mr. Sherwood did not know but would provide the
information.
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES (via
teleconference), replied that she also did not have the
information but would provide it to the committee.
Co-Chair Neuman wanted verification that Alaska was the
only state without a provider tax.
Commissioner Davidson responded in the affirmative.
Co-Chair Neuman remembered that a tax was levied on
Medicaid patients who utilized hospital services and was
reimbursed back to the state to cover the hospital costs
for non-covered patient's emergency room visits.
Commissioner Davidson explained that a provider tax would
be levied on a hospitals' entire revenue base. Currently,
the state taxed for profit hospitals and the taxes were
factored into the rates charged to the patients. Other
states implemented provider taxes as a means to fund
Medicaid expansion.
Co-Chair Neuman commented that he was trying to follow the
tax. He asked how a 6 percent tax would flow through the
system.
Mr. Sherwood replied that the tax revenue would be
deposited into the state's general fund. He elaborated that
the cost to the provider would be factored into the
Medicaid rates. When Medicaid reimbursed the provider the
cost of the tax to the provider would be included in the
payment. The federal government capped a provider tax
because it paid the Medicaid portion of the tax via
reimbursement. The limit was a way to avoid states
purposely inflating the federal match rate.
Co-Chair Neuman requested hearing expert testimony from the
hospital association.
Representative Gara announced that without a provider tax,
implementation of Medicaid expansion was estimated to save
the state $6.6 million in the first year and increase to
$20 million each year for the next five years and totaled
over $100 million in state savings. He asked for
verification.
Commissioner Davidson responded in the affirmative and
added that in the out years the projected savings were
actually $24.5 million per year.
Representative Gara pointed out that administrative costs
for expansion would be approximately $2 million in the
first year. The costs would be split between the Alaska
Mental Health Trust Authority (AMHTA) and the federal
government. He heard concerns from some legislators about
who would fund administrative costs in succeeding years. He
opined that the state gained financially from expansion in
state savings. He wondered whether the provider tax
proposal was put forward as a response to concerns over
administrative costs.
Commissioner Davidson confirmed his assumption.
Representative Gara notified the committee that his wife
was employed at Providence Hospital. He shared that even
though Providence Hospital was a non-profit it was
extremely profitable and some years subsidized other
state's hospitals. He asked whether the provider tax rates
would be lower for hospitals that made less revenue.
Commissioner Davidson confirmed his statement.
Representative Gara related that HB 148 did not establish a
provider tax on page 2. The legislation provided for the
development of a provider tax that would be recommended to
the legislature to enact. He asked for verification.
Commissioner Davidson affirmed his statement. She indicated
that in order to implement a provider tax legislation was
required.
Representative Gara asked how many other states had a
provider tax.
Commissioner Davidson replied that 49 other states had a
provider tax.
Representative Pruitt referred to page 9 of the bill and
asked whether the provision was expanding Denali Kid Care.
Commissioner Davidson responded that HB 158 did not expand
eligibility. She elaborated that a provision under the
Affordable Care Act (ACA) changed the way states used
"income disregards" for determining Medicaid eligibility.
The ACA established a new rule called, "modified adjusted
gross income" that set disregards aside and required states
to calculate the income disregard and adjust income after
the disregard versus before the disregard, but was
essentially "the same number." Eligibility was not
increased, the bill merely reflected the new ACA
requirement. She added that questions arose regarding why
the ACA changed the modified adjusted gross income. She
explained that as the federally facilitated marketplace
[health insurance] plans were developed the eligibility
change to using modified adjusted gross income for
determining eligibility for both Medicaid and a marketplace
plan subsidy was commonly required as a way to make
determinations easier.
Representative Pruitt stated that modified adjusted gross
income was not always different than adjusted gross income.
He cited eligibility percentages from the bill and inquired
how the state determined that 25 percent for pregnant women
and 28 percent for children under the age of 19 was correct
and not just a random number that separated the difference
between modified and adjusted gross income. He asked
whether data was used to support the numbers.
Mr. Sherwood informed the committee that the federal
government performed a survey called, "The Survey of Income
and Program Participation" (SIPP) which provided
demographic information about the types of expenditures
that applied to income disregards specific to each state.
Calculations for each state were made to determine what
impact the disregard loss was and provide an adjustment.
Each state was required to either use its own data or the
survey data. The state accepted the survey's adjustment
with one modifier to account for the permanent fund
dividend income disregard. He shared that most states
utilized the SIPP conversion process and Alaska used the
SIPP plus one that included the permanent fund dividend
disregard. He offered that Alaska used the process to
formulate the Denali Kid Care eligibility numbers in the
bill. The disregards impacted each eligibility category
slightly different than the previous calculations, which
explained the two different eligibility percentages between
pregnant women and children.
8:57:01 AM
Representative Pruitt wanted to be clear that the
department did not anticipate an increase due to the
change.
Mr. Sherwood responded in the affirmative. He furthered
that the required modified adjusted gross income standards
were currently in effect. The modification required a
statute change to reflect the required federal
recalculation of adjusted income.
Representative Pruitt relayed a story about a young woman
suffering with a brain tumor who was forced to pay $750
out-of-pocket to see a specialist who was turned away after
a 15 minute consultation. He read that Alaskans paid three
times the national average for a primary care visit. He
expressed frustration over the situation. The woman was not
on Medicaid and he wanted assurance that a similar
situation would not happen with Medicaid providers. He
noted the bill's references to payment reform. He wanted an
outline of what payment reform entailed. He wondered
whether payment reform would cause someone in a similar
situation to pay more.
Commissioner Davidson expressed concern that the woman was
not getting the care she needed. She explained Alaska
utilized a fee for service model. She provided an example
of someone visiting a doctor multiple times for strep
throat. The provider was paid for each visit under the fee
for service model. Payment reform provided opportunities to
change the fee for service system. She noted paying for
outcomes as an alternative; the doctor would be
incentivized to figure out why the patient was repeatedly
getting strep throat and prevent another outbreak
therefore, reducing the number of future visits. She
restated that Alaska was a fee for service state and the
department intended to change the dynamic. The department
wanted to reform Medicaid not only for expansion but for
everyone. She emphasized that the way the state delivered
care was not sustainable and change was imperative. The
payment reform language in the bill was purposely broad.
She relayed that some had suggested a switch to a managed
care system. She contended that managed care was developed
in the 1970's and was an outdated system. The rest of the
country was implementing different types of payment models,
i.e., patient centered medical home, super utilizers,
accountable care organizations, etc. New ways of paying for
and delivering healthcare were being tested by the CMS
Innovation Center. The state was interested in implementing
an innovative type of payment reform. She noted that one of
the challenges the state had was a small population spread
over a large geographic area. She exemplified telemedicine
as one method to extend the healthcare reach without
transporting the patient for service when appropriate. The
best payment reform opportunities would examine how the
state delivered appropriate care and how it was paid for.
Representative Pruitt voiced that the state's healthcare
system did not enforce cost control and that many providers
favored expansion because of that. He asked how to avoid
higher costs getting shifted to non-Medicaid patients if
the state "started to narrow the scope of payment". He
suggested that maybe the state needed Medical reform rather
than Medicaid reform. He felt that medical costs in the
state were "out of control" due to price gouging. He
reiterated his concern that implementing cost controls for
Medicaid would shift higher costs to other payers and
wondered how to prevent that scenario with Medicaid payment
reform.
Commissioner Davidson responded that currently many of the
providers were shifting costs to cover uncompensated care.
She detailed that other states such as Arizona that adopted
Medicaid expansion reduced their uncompensated care costs
by 30 percent in the first year of expansion. She
emphasized that the state had to work with providers and
could not implement reforms alone because the state needed
providers to offer services for the agreed upon price. The
department released an RFP (request for proposal) to hire a
third party contractor to examine what type of reform was
happening in other states and she intended to include
stakeholders in the discussion. She relayed from personal
experience that she wanted to see the doctor engage in
healthy outcomes by asking a patient how they can work
together to improve other health concerns. She wanted to
figure out how providers and patients can jointly own
health outcomes. She revealed that providers supported
payment reform as long as they had the opportunity to
participate in the process. Providers were aware of the
severe budget challenges ahead for the state and recognized
the need "to do things differently." She thought that the
budget challenges inspired innovation.
Representative Pruitt referred to a report that revealed
the 300 specialists in Alaska that collectively billed over
$1 billion. He deduced that a specialist provider would be
reticent to work with the state on reform. He asked how the
state would engage the providers to "buy in" to reform and
in some cases "be the bad guy" and how the state would
"bridge the gap."
Commissioner Davidson responded that the first step was
simply to try. She reported that the state was very clear
with providers that the current system was not sustainable
and if a provider wanted to continue providing services for
Medicaid or individuals' reform had to occur. The state was
a significant purchaser of healthcare in a variety of
settings; Medicaid and state employees and retiree health
plans. The state was in a good bargaining position. She
contended that the state was currently in a position to
coordinate collective negotiations with providers on behalf
of Medicaid and the insurance plans.
9:11:34 AM
Vice-Chair Saddler asked what the primary elements of
payment reform were.
Commissioner Davidson defined that payment reform analyzed
the ability to provide better quality service and provide
the service at lower costs. Payment reform was focused on
value; the value for services provided.
Vice-Chair Saddler wanted a better definition of what
payment reform was.
Mr. Sherwood indicated that payment reform was not just one
thing. He added that several options were available and
were not mutually exclusive. One option bundled payments at
different levels in a variety of ways. He provided
examples: bundle all payments related to a knee surgery,
bundle for "larger episodes of service" such as a
hospitalization, or bundle payments even more globally for
accountable care organizations and community care
organizations. He highlighted that typically, payment
reform involved a payment method that provided incentives
for quality called, "pay for performance." Specific
standards were expected of the provider, and if met or
exceeded different payment levels from base payments to
enhanced payments were awarded. He conveyed that
accountable and community care organizations were entities
that "conglomerated" providers and agreed to share the
benefits from improved performance. He provided an example
of an agreement between a hospital and community physicians
to enhance primary care and reduce emergency room
expenditures. The state or the payer could monitor the
outcomes or the accountable or community care providers
could monitor themselves.
Vice-Chair Saddler asked about the difference between
accountable care versus managed care organizations. He
asked whether accountable care organizations existed in
Alaska.
Mr. Sherwood replied that each model had a legal
definition. He explained that a managed care organization
operated much like an insurance company and attempted to
achieve savings through utilization oversight and control
by negotiating favorable rates with providers in its
network. An accountable care organization was comprised of
providers that collectively carried out utilization control
and oversight and payment distribution themselves without
an outside entity.
Vice-Chair Saddler asked whether there was an accountable
care organization in Alaska.
Mr. Sherwood replied in the negative.
Vice-Chair Saddler wanted to know what the impacts of
Medicaid expansion would be on Denali Kid Care (SCHIP
program).
Mr. Sherwood responded that expansion would not impact
Denali Kid Care.
Vice-Chair Saddler referenced the claim that 4000 new jobs
would be created in the state through Medicaid expansion.
He wanted to know what the claim was based on.
Commissioner Davidson responded that the information was
derived from an independent study by the organization
Northern Economics. The organization performed an economic
impact study on the infusion of approximately $1 billion of
new federal dollars flowing into the state. She offered
that not all of the jobs would be in healthcare.
Vice-Chair Saddler asked whether the study's conclusion was
based on the infusion of $1 billion into the economy
equaled 4000 jobs.
Commissioner Davidson indicated that the 4000 figure was
the result of the analysis and took the mid-range between a
high and low number.
Vice-Chair Saddler asked whether the study was available.
Commissioner Davidson answered in the affirmative and would
distribute the study to the committee.
Representative Gara commented that Alaska had the highest
costs for medical care in the country and the highest
increases in costs annually. He stated that the situation
"had nothing to do with Medicaid expansion" and could not
be attributed to any past administrations. He maintained
that that there had been a number of proposals from past
governors and governor's commissions that were not acted on
by the legislature. He understood that Alaska was one of
the most generous states that allowed provider billing at
the top range of costs at the 80th percentile. He shared
that other states endorsed the median costs. He noted that
the information was presented in every prior administration
and the legislature chose to ignore action. He asked
whether DHSS was aware of the rule and if it could be
changed in regulation or by statute.
Mr. Sherwood responded that the agency only establisheda
very small percentage of the Medicaid rates and was not
aware of how the state insurance payers established rates.
Medicaid rates were established from the Medicare formula
with an added adjustment. He mentioned that nursing homes
and hospital rates were based on a cost-based rate that was
facility specific and paid at the facility's projected
costs. He remembered that the median rate was utilized when
pricing new durable medical equipment. He would provide
additional information about when the department applied
the median rate.
Representative Gara announced that he had a great deal of
respect for the prior commissioner [Bill Streuer] of DHSS.
He stated that Alaska had been one of the few state's that
did not cover lung transplants for cystic fibrosis. He
related that a citizen from the Matanuska-Susitna Valley
asked Rep. Gara for help to obtain a lung transplant. He
worked with the previous commissioner and currently the
state provided the coverage. He warned that in an effort to
achieve savings, "waivers could not be stripped without
human consequences."
9:23:28 AM
Co-Chair Neuman requested information regarding a hospital
tax.
BECKY HULTBERG, SENIOR VICE PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ALASKA STATE HOSPITAL AND NURSING HOME
ASSOCIATION, voiced that the association conducted research
about provider taxes and provided information. She
explained that 49 states had a provider tax because the tax
was used as a mechanism to leverage federal participation
to increase provider rates and allow a tax to obtain
Medicaid match funding. She deemed that the tax was a
potential mechanism to help the state and not harm
providers. She detailed that a provider tax helped in two
ways. First, a provider tax leveraged federal dish
payments. She elaborated that provider taxes leveraged an
additional disproportionate share for hospital payments
from Medicaid, known as "dish" payments. She defined that
"Dish" payments were authorized for hospitals that
performed a high percentage of uncompensated care. A
provider tax can also lavage additional federal
reimbursement when the Medicaid rate was lower than the
Medicare rate, which most likely applied to Alaska for
inpatient services. Therefore, an Alaskan provider tax
could be employed to leverage additional federal matching
funds up to the Medicare rate. She pointed out that the
mechanism was complex and required additional consulting
assistance to determine whether provider taxes would be
beneficial to the state and positive to providers. She
informed the committee that the answer was not known yet
but the association thought that the issue was worthy of
further exploration.
Representative Wilson thought that Medicaid was paying more
than Medicare.
Ms. Hultberg replied that the statement applied to
outpatient care. She suspected the reverse was true for
inpatient care. Medicaid is a relatively better payer in
Alaska than other states. The association was surprised to
discover that inpatient Medicaid rates were likely lower
than the Medicare rate.
Representative Wilson understood that the provider tax was
unworkable if Medicaid was paying more than Medicare. She
stated that a provider tax would be based on all of the
provider's revenues and the tax would be levied on
providers that did not accept Medicaid and Medicare. She
asked for more details on the provider tax.
Ms. Hultberg responded that there were 19 different types
of providers that could be taxed under the federal program.
Typically the tax was only levied on hospitals and nursing
homes and was also known as a "hospital" tax. She expounded
that federal regulation required that the tax was broadly
applied. All providers within a certain category had to be
taxed whether the provider accepted Medicaid or not.
However, subcategories were allowed. She provided the
example within the hospital category. She explained that a
subcategory of hospitals called "prospective payment
system" hospitals, which were large versus "critical
access" hospital, which were small and less able to pay the
tax.
Representative Edgmon suggested that if the department
estimated revenue expected from a provider tax the figure
would be "highly speculative" until the association's study
was completed.
Ms. Hultberg agreed with the statement. She explained that
many variables existed for the manner that the tax could be
levied and subgroups could be taxed and would be highly
speculative at this time.
Representative Guttenberg spoke in regards to circular
billing. He observed that the tax was used to capture
federal funds and "at the end of the day everyone raised
rates because the tax increased costs. He wanted to know
who ultimately paid for circular billing.
Ms. Hultberg answered that through matching federal dollars
the cost of the tax was offset and was net neutral for the
facility therefore, rates were not increased. She added
that if it was true that costs to providers increased then
the costs would be allocated to other payers where the rate
was not fixed.
Representative Guttenberg provided a reform scenario where
the savings were not evenly distributed to all entities and
providers raised rates which ultimately negated any savings
in the system. He wondered whether there were guarantees
that rates would not be increased with implementation of a
provider tax.
Ms. Hultberg agreed and emphasized the importance of
thoroughly studying the issue before implementation. She
maintained that it would not be beneficial if a provider
tax resulted in increased rates. She believed there was an
opportunity to examine the issue because it was possible a
provider tax would be a net positive for the state and net
neutral for providers.
Representative Guttenberg asked the department to provide
the legal definitions for managed care and accountable
care. He referred to billing reform and described issues
with repeated patient billing until claims were processed
and thought it was onerous for the patient and costly to
the system. He asked whether the department figured out how
to streamline the billing process.
Mr. Sherwood empathized with the issue. He detailed that
providers did not bill Medicaid recipients, the state was
billed and providers accepted payment from the state. The
reconciliation was between the state and the providers and
Medicaid patients were not billed. He added that the
department had its own challenges with individuals that had
other insurance. The state contracted with a company to
help recover third-party payments.
9:37:14 AM
Representative Guttenberg referred to his wife's medical
experience with Medicare and his state insurance and the
difficulties with billing from providers. He stated that he
had received bills. He referred to a charge master that
providers used for billing. He asked how hospitals and
providers used the charge master and how it fit into
reform.
Mr. Sherwood responded that the state did not have access
to provider's rate schedules and moved away from the usual
and customary charge approach. The department did not set
rates based on what providers charged and utilized a
separate methodology. The department was aware of what a
provider normally charged for a service since it was
included on the billing claim but had no need for the
information. A condition of Medicaid was that the provider
accepted a Medicaid rate as payment in full.
Representative Gara stated that the collective goal was to
curb healthcare costs for everyone in the state. He relayed
that Alaska Regional Hospital's chief executive officer
deduced that with the additional revenue from Medicaid
expansion, the hospital could establish an on-campus
medical clinic and treat patients who went to the emergency
room (ER) for non-emergency care. The cost savings would
spread through the system. He asked whether the scenario
was "a way to bend the cost curve" through Medicaid
expansion and what was the potential for clinics beyond
Alaska Regional Hospital.
Commissioner Davidson answered in the affirmative and
stated the opportunity existed for other facilities. She
reported that the emergency room was legally required to
provide services, therefore individuals with no other
resources for medical services go to the emergency room,
typically after an illness progressed. Once more people had
access to healthcare the state could help direct patients
to the appropriate providers. She referenced the
Superutilizer Program and gave credit to her predecessor
William Streur, for implementing cost saving measures. She
offered that the superutilizer program was designed for
individuals with excessive use of the ER. Currently the
program was voluntary but HB 148 would establish it in
statute. She explained that when an individual with
multiple ER visits was flagged in the system as a
superutilizer a contractor would contact the person,
discuss the condition, recommended the appropriate primary
care provider and followed up with the patient. She
emphasized the enthusiastic response for the program; 2000
people had voluntarily enrolled. She noted that other
providers indicated that they would like to engage in the
same type of involved patient care.
Representative Gara reiterated his question regarding
Alaska Regional Hospital's plan for building a clinic on
the same campus. He asked whether the plan would be allowed
under federal law.
Commissioner Davidson answered in the affirmative. She
remarked that the ER at the Alaska Native Medical Center
had a similar program in place.
Vice-Chair Saddler asked if an individual who went to the
ER for treatment could decline to be sidetracked.
Mr. Sherwood responded that a patient could always decline
care with the exception of involuntary commitments. The
hospital was required to triage and stabilize the patient,
once stabilized the hospital fulfilled it requirement. He
was uncertain at what clinical point the hospital could
legally relinquish care.
Vice-Chair Saddler wanted to clarify that there would not
be any obligation to force the patient into primary care
treatment if the patient objected.
Commissioner Davidson pointed out that once the patient was
triaged and stabilized and was referred to primary care the
hospital was absolved from further treatment and the
patient could decline care from a clinic or alternate
provider.
9:49:44 AM
Vice-Chair Saddler asked whether a healthcare provider was
obligated to accept a Medicaid patient.
Mr. Sherwood responded that there was no obligation.
Vice-Chair Saddler asked if the department analyzed the
effects of expanding Medicaid on the recipients of
Medicare. He shared concerns that a higher population of
Medicaid recipients would crowd out Medicare patients at
clinics.
Mr. Sherwood reported that the department had not done any
formal analysis.
Vice-Chair Saddler asked whether the issue had been
discussed and if so, list some providers that engaged in
the discussions.
Mr. Sherwood responded that the department engaged in
discussions with provider organizations who felt they could
meet the anticipated expanded demand. He reported that the
issue was discussed with the Primary Care Association,
Behavioral Health, and Tribal Behavioral Health as a
partial list.
Vice-Chair Saddler confirmed that the department had not
analyzed the effect of adding 20,000 more Medicaid patients
on the rest of the healthcare system.
Mr. Sherwood responded in the affirmative that no
quantitative analysis was performed.
Representative Edgmon remarked that the discussion on
Medicaid expansion and reform was far reaching. He wanted
to know what the role of the Alaska Health Care Commission
(AHCC) was in Medicaid expansion and whether DHSS relied on
the commission for any data.
Commissioner Davidson responded that the commission had
provided helpful information on payment reform and factors
that contributed to the high costs of Medicaid in Alaska.
However she shared that the commission's budget was
completely cut and would not be a resource moving forward.
Co-Chair Thompson directed attention to the fiscal notes.
He referenced the new DHSS fiscal note allocated to the
Behavioral Health Treatment and Recovery Grants, OMB
(Office of Management and Budget) component number 3099.
Mr. Sherwood explained that the fiscal note reduced general
fund grant funding for behavioral health treatment and
recovery grants. Medicaid expansion would cover the
behavioral health grant services for Medicaid recipients
currently receiving the grants. The reduction increased in
the out years as the conversion from grant to Medicaid
increased. Additionally, beginning in FY 2018 a 1915 (i)
[Home and Community Based Services] option became available
that provided home and community based services for
behavioral health that further reduced funding for
behavioral health treatment grants, which would be replaced
by Medicaid dollars.
Vice-Chair Saddler asked when the savings began for the
1915 I option.
Mr. Sherwood replied that the savings began in FY 2018.
Vice-Chair Saddler suggested it was a 2.5 year process from
implementation of the 1915 (i) option and realized savings.
Mr. Sherwood stated the process would take 2 years.
Representative Wilson asked what the process would be for
the individual receiving the mental health grants.
Mr. Sherwood answered that the grants services were an
option and waivers were not required. However, a person
must meet a functional standard impairment determined by
the state to establish the need for the option. The
individual would participate in an assessment process
similar to the waiver process.
Representative Wilson asked whether the 1915 (i) program
was an option the state could decline.
Mr. Sherwood concurred that the program was optional.
Commissioner Davidson stated that the state currently paid
for and provided the service. Through the 1915 (i) option
the federal government paid 50 percent of the program's
cost.
Representative Wilson requested actual figures for the
grant programs and number of recipients being served. She
announced that some viewed the federal assistance as
opportunity while others thought that they were "more
charges." She wanted to more thoroughly understand the
grant programs.
Co-Chair Neuman announced that he wanted to find
opportunities to reduce the state's costs. He asked whether
accepting the 1915 (i) option was dependent on accepting
Medicaid expansion.
Commissioner Davidson answered that the option could be
pursued without expansion.
10:00:02 AM
Vice-Chair Saddler referenced the 1115 waivers and noted
that the waivers must be renewed every 5 years and the
state was not committed to renewal. He wanted to know if
the same renewal option applied to the 1915(i) option.
Mr. Sherwood responded that the 1915 (i) options did not
have a similar renewal period.
Vice-Chair Saddler understood that 1115 waivers were
required to be budget neutral and asked if that applied to
the 1915 (i) option.
Mr. Sherwood answered in the negative.
Co-Chair Thompson referred to the new DHSS fiscal note, OMB
component number 2665, allocated for the Behavioral Health
Administration.
Mr. Sherwood detailed that the fiscal note added one staff
position to work on the development, implementation, and
oversight of the 1915 (i) option. The amount in the first
year was higher than the out years due to the cost of
adding the position. The 1915(i) option provided a federal
match of 50 percent.
Representative Wilson asked how many people one position
would serve.
ALBERT WALL, DIRECTOR, DIVISION OF BEHAVIORAL HEALTH,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that
the estimated number of recipients for the 1915 (i) option
was 1000. The oversight was needed for program approval and
the staff provided administration of the program for the
provider group that delivered the services.
Representative Wilson wanted to know how much work was
demanded of the additional staffer.
Mr. Wall articulated that there was one other staffer that
performed similar work with other programs and that the
load would be divided out amongst the staff.
Co-Chair Neuman believed that the fiscal note revealed that
the option qualified the state for 50 percent federal
matching funds and would pay for between $56 thousand and
$60 thousand of the staffs' annual wages with general funds
covering the remaining 50 percent. The state would save
between $5 million and $20 million in overall savings by
accepting 1915 (i) option.
Commissioner Davidson stated that under a previous version
of the fiscal note that the savings were calculated at $3.5
million per year.
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
notified the committee that it was a standard policy not to
reflect increases in the out years for personal services.
Co-Chair Thompson moved to the new DHSS fiscal note,
component number of 2330, allocated for Catastrophic and
Chronic Illness Assistance.
Mr. Sherwood explained that the fiscal note served very low
income individuals with chronic conditions that did not
currently qualify for Medicaid. Medicaid expansion would
cover all of the individuals currently being served in the
program. The fiscal note showed a reduction in general
funds that increased in the out years.
Co-Chair Neuman wondered whether the constituent with a
brain tumor that Representative Pruitt referred to would
fall under the catastrophic category if she qualified under
poverty levels.
Mr. Sherwood responded that the Chronic and Acute Medical
Assistance (CAMA) program provided maintenance medications
with individuals for chronic conditions such as; mental
illness, hypertension, seizure disorders and were awaiting
for a disability determination from the Social Security
Administration before they could qualify for Medicaid or
Medicare. Cancer was also covered but the benefit were
limited to physicians, drugs, and some cancer therapies.
Co-Chair Neuman asked if the state currently provided CAMA
services and at what cost.
Mr. Sherwood stated that the state provided the services to
approximately 500 recipients at a cost to the state of
approximately $1.5 million annually in general funds.
10:12:09 AM
Mr. Teal clarified that many of the fiscal notes were
linked and that with Medicaid expansion the CAMA program
would go away. He explained that roughly half of the
general fund savings accounted for in the fiscal note
showed up as a Medicaid expense included in another
Medicaid fiscal note related to expansion.
Mr. Sherwood stated that he anticipated that the CAMA
recipients would be covered under expansion by 100 percent
federal funds in the first year of expansion which dropped
to 90 percent in subsequent years. The general fund
increase in the out years would be much smaller than under
the current 50/50 match.
Co-Chair Thompson referred to the new DHSS fiscal note,
component number 242, allocated for Medical Assistance
Administration.
Mr. Sherwood elaborated that the fiscal note contained
administrative costs for Medicaid expansion and reform.
The costs added four positions that eventually grew to six.
One of the positions was needed to implement the 1115
tribal demonstration waiver and the other positions were
associated with Medicaid expansion.
Co-Chair Neuman thought that the AMHTA would contribute
funding in the first year of expansion. He asked for
clarification.
Mr. Sherwood pointed to the MHTAAR fund source on the
fiscal note and explained that covered one expansion
position.
Co-Chair Thompson moved to the new DHSS fiscal note,
component number 2696, allocated to Rate Review.
Mr. Sherwood expounded that the fiscal note was related to
costs associated with Medicaid reform. One provision
required a demonstration project focused on coordinated
care that included a global payment fee structure. The
costs reflected the need to contract with an actuary to
assist in determining appropriate pricing and payment. The
bulk of the work would occur in the first year with ongoing
consulting work for monitoring the rates.
Vice-Chair Saddler cited a reference to "managed care" in
the third paragraph of the fiscal note analysis. He noted
the commissioner's previous allusion to managed care as an
old model that should not be pursued and asked for a
reconciliation of the opposing positions.
Commissioner Davidson replied that the "managed care
system" referenced in the fiscal note related to managing
the care of a population versus a managed care organization
as a specific legal structure.
Co-Chair Neuman asked whether general fund expenses for
expansion could be supplanted by provider tax revenues if
Medicaid Expansion was implemented.
Mr. Sherwood thought that the answer lied in the
legislative authority to retroactively appropriate funds.
Commissioner Davidson reminded the committee that separate
legislation was required to impose a provider tax.
Vice-Chair Saddler referred to paragraph three of the
fiscal note analysis and wanted to better understand what a
managed care system that included a global payment
structure involved.
Mr. Sherwood indicated that the language was referring to
an accountable care or community care organization that
operated in a geographic region where providers came
together.
Commissioner Davidson specified that some kind of global
payment models enacted via fees based per member per month
or based upon disease burden, disease complexity, or
patient complexity were examples. An actuary would assist
in figuring out a more complex payment model fee structure.
Vice-Chair Saddler wanted to ensure all stakeholders would
be involved in the implementation of an accountable care
organization.
Mr. Teal clarified that the first paragraph of the fiscal
note analysis estimated the cost of the consultant's
contract at $175 thousand. He assumed that the department
would absorb the cost and asked for confirmation.
Commissioner Davidson answered in the affirmative.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 148 HFIN FN Summary.pdf |
HFIN 4/8/2015 8:30:00 AM |
HB 148 |
| HB 148 HFIN FN Chart.pdf |
HFIN 4/8/2015 8:30:00 AM |
HB 148 |