Legislature(2015 - 2016)ANCH LIO BUILDING
05/12/2015 01:00 PM 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."
1:11:50 PM
Co-Chair Thompson discussed the meeting agenda. He shared
that the committee would continue to address the Medicaid
Management Information System (MMIS). He noted that
committee members had been provided with the Affidavit of
Margaret Brodie [Director, Division of Health Care
Services, Department of Health and Social Services] dated
February 2, 2015 (copy on file). He listed various
department staff available for questions. He had reviewed
the PowerPoint from the prior day and was concerned that it
did not consistently match the affidavit.
1:13:59 PM
Representative Wilson pointed to pages 2 and 3 of the
affidavit related to the delay in providing acceptable
design, development, and implementation (DDI) deliverables.
She asked if deliverables 6 through 8 had been paid and
accepted by the department.
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, replied
that the DDI deliverables mentioned by Representative
Wilson had not been paid for.
Representative Wilson asked what the acronym DDI stood for.
Ms. Brodie replied that DDI stood for design, development,
and implementation.
Representative Wilson asked about the status of the
specific deliverables and why they had not yet been paid.
Ms. Brodie answered that DDI deliverables 6 through 8 were
testing packages for the different types of claims. The
state had determined that if adequate testing had been done
for the deliverables, claims would have been paid correctly
from the beginning.
Representative Wilson wondered if the state did not plan on
paying for the items. Ms. Brodie answered that the testing
had been done with the defect fixes and change requests
that had been underway for past 19 months (since "go live"
on October 1, 2013).
Representative Wilson understood that the division was
still working on the testing. She was trying to determine
if the deliverables were out of the contract or whether
there was still more work that had to be done. Ms. Brodie
replied that it was the state's contention that the Xerox
contract was still in the DDI phase.
Representative Wilson asked if the items would be
determined later down the road. Ms. Brodie replied that
Xerox had submitted its testing documents for the
division's approval; it had not yet given the approval.
Representative Wilson pointed to a list of defects in the
MMIS on pages 4 and 5 of the affidavit. She wondered about
the status of the items on the list.
Ms. Brodie answered that the list included defects for item
7, which had been mentioned on slide 13 of the division's
PowerPoint from the previous day ["Medicaid Payment System
Status Update" dated May 11, 2015 (copy on file)]. The
first two items of the list had been corrected:
1. System is unable to accurately balance claims as a
result of a rounding error imbedded within the system
2. Extreme slow system performance surrounding medical
service authorization functionality
Ms. Brodie elaborated that the time it took to submit a
service authorization had decreased from 30 minutes down to
5 to 10 minutes. Item 3 had been corrected; item 4 had been
corrected by about 97 percent. There were a few minor
claims that still did not pay including TEFRA [Tax Equity
and Fiscal Responsibility Act]; the division was also
working on an issue with hospital stays for cesarean
sections exceeding three days.
3. System does not price claims correctly (12.4 percent
of all claims are not priced correctly)
4. System fails to pay certain categories of claims (e.g.
hospital stays longer than three days)
Ms. Brodie continued addressing the defects listed on pages
4 and 5 of the affidavit. Items 5 through 8 had been
corrected:
5. System inappropriately denies claims (many remain
wrongly denied and outstanding for over a year)
6. System is unable to process many claims, causing the
claims to suspend
7. System lists claims as being paid, but links no
provider to the claim, so checks can't issue and the
claims aren't paid
8. System pays wrong provider; (also problematic because
the checks go to the wrong provider with an EOB -this
is protected health information)
Ms. Brodie relayed that item 9 had not yet been corrected.
Item 10 had been corrected:
9. System is not able to produce the cost based reports
needed to change the provider rates;
10. System is unable to correctly process third party
liability insurance (situations where private
insurance pays share of claim prior to Medicare).
1:19:18 PM
Co-Chair Thompson wondered if the corrected items had been
corrected 100 percent and why they had not been paid if
they were complete. He had asked the division in the
previous meeting if there were items the state had not yet
paid. He recalled that the division had responded that many
things had not yet been paid. He remarked that Ms. Brodie
had just reported that all but one of the items on the
defects list had been corrected; therefore, he wondered why
deliverables 6 through 8 were still open.
Ms. Brodie replied that the division had identified 38
items for Xerox to fix in order for all claims to pay
correctly.
Co-Chair Neuman asked for verification that the division
was able to pay 90 percent of all claims submitted.
Additionally, he asked if the defects listed on page 4 were
all corrected by 97 to 100 percent. Ms. Brodie replied in
the affirmative related to new claims. There was still
cleanup work underway for claims that had been suspended or
denied inappropriately in the past. The division was
currently working on reprocessing the claims; it was
prioritizing by dollar amount and provider type.
Co-Chair Neuman asked how many claims the division was
reprocessing and what the total dollar amount was. Ms.
Brodie did not have a dollar amount associated with the
230,371 claims that would result in a payout to providers.
The majority would be a fraction of one cent. She explained
that when the system had first gone live for professional
providers, the payment rate went out four decimal places;
however, the system had been built with only three decimal
places. She elaborated that there were 226,000 claims for
reprocessing that would result in a recoupment by the state
from providers. By regulation the division had to give
providers notice at least 60 days in advance; the letter
had been mailed to providers on May 1 [2015]. There were
5,436 claims for reprocessing that had no financial impact.
Co-Chair Neuman emphasized that there were 228,000 claims
the division was experiencing problems with.
1:22:35 PM
Representative Gara stated that the costs and benefits
needed to be weighed. He stated that Commissioner Davidson
had provided a chart in the past showing that under the
legislation the state would save over $250 million in the
following six years.
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, replied in the affirmative.
Representative Gara remarked that the legislature had asked
the department to engage in reforms. He asked for
verification that the reforms the department was pursuing
without the bill would save the state an additional $300
million over the next six years. Commissioner Davidson
replied in the affirmative.
Co-Chair Thompson asked if the numbers were estimates.
Commissioner Davidson answered in the affirmative.
Representative Gara highlighted that the state would
receive $145 million in federal funds the first year, which
would grow. He asked for verification that the department
estimated an additional 4,000 jobs would be created in
Alaska. Commissioner Davidson replied that in the first
year of Medicaid expansion $146 million in new federal
revenue was expected. The total new federal revenue in the
first six years would be slightly over $1 billion. She
explained that the 4,000 new jobs figure had come from an
economic study conducted by Northern Economics, which
looked at the multiplier effect in the economy and how many
jobs the new dollars would generate. She detailed that
while some of the jobs would be related to healthcare
others would be related to items like food, clothing,
furniture, kids' things, and other that were associated
with increased medical personnel.
1:25:45 PM
Representative Gara understood there was an issue of old
and new claims. He addressed the consideration of whether
the state would have the ability to pay the new claims if
Medicaid expansion and reform were accepted. He remarked
that the department estimated the accuracy rate on new
claims was somewhere around 95 percent. He asked for
verification that the remaining 5 percent were still
processed within two billing cycles. He reasoned that the
money did not just disappear.
Ms. Brodie replied that the division worked to determine
why a claim did not pay and to correct the defect or error
within a couple of billing cycles; if the cause of the
error could not be determined the division implemented a
workaround to allow payment of the claim.
Representative Gara asked for verification that under
Medicaid expansion and reform the providers would be paid
either in the first billing cycle or within several billing
cycles. He asked for verification that providers would not
be denied their money. Ms. Brodie replied in the
affirmative; providers would be paid within the 30 days
that the state was mandated to pay them.
Representative Gara believed the department had done great
work to get the "mess in order" over the past several
months. He referred to businesses claiming they had gone
out of business due to a system implemented in 2013. He
asked for verification that the businesses were referring
to problems that occurred before the new commissioner
[Commissioner Davidson] started solving the problems. Ms.
Brodie replied in the affirmative.
Representative Gattis commented that Representative Gara
had indicated that MMIS was a bum system. She stated that
in business when a new program was started (e.g. an
accounting program, new software, or other) the old program
was not discontinued until the new program had proven to be
successful. She opined that it was not the wisest thing for
the department to discontinue the old system and start a
new program before its success had been determined. She
continued that the division was currently trying to fix the
system piece by piece. She wondered if the system was still
providing draws or advances to anyone.
Ms. Brodie replied that in the past three weeks the
division had given two advances. One had been given to a
provider because a system error had resulted in an issue
with their claims being paid. The issue had been corrected
the past weekend.
Representative Gattis interjected that the system was still
a bum system. She continued that it was not doing what it
was intended to do. She reiterated her prior comment that
the division should have continued its former accounting
system until the new program was working properly. In
reference to the consideration of expanding the system, she
remarked that the state was still not finished with
cleaning up the old system. She relayed that in the past
her constituents had complained about getting nothing and
then getting advances. Some individuals did not want to
take advances. She had also heard that some individuals did
not want the government to have a "stranglehold" and to be
subject to the continued mistakes. She had attended her
city council meeting the prior evening and relayed that
people had asked her to "stop this; it's madness." She
believed the system continued to have glitches that were
not ready to go forward.
1:31:34 PM
Vice-Chair Saddler relayed that he had heard from several
providers that the delays in providing Medicaid
reimbursements had been a significant hardship to their
businesses. He pointed to page 8, lines 17 and 18 of the
affidavit, which stated that a total of 18 providers had
gone out of business after taking advance payments. He
asked if the department was asserting that it was the
providers' fault for going out of business and that the
absence of reimbursements for Medicaid services played no
part.
Ms. Brodie answered that several of the 18 providers had
changed their tax identification (ID) numbers and had
opened under new provider ID numbers. She believed 3
providers would claim that Enterprise put them out of
business; 2 of which had been prosecuted for fraud and the
other had sold their business.
Vice-Chair Saddler turned to page 5, number 8 regarding the
failure of the Enterprise system to financially balance
claims. He asked how important the financial balancing of
claims was. Ms. Brodie replied that the balancing was
imperative.
Vice-Chair Saddler pointed to the last sentence under
number 8, page 5: "there has not been a single instance
where the claims have balanced correctly under Enterprise."
He asked for verification that Ms. Brodie had made the
statement on February 2, 2015. Ms. Brodie replied that it
had been correct at the time. She elaborated that the
system did not balance, but the division was able to run
reports to show what the differences were in order to bring
it into balance.
Vice-Chair Saddler referenced Ms. Brodie's statement that
financial balancing was essential. He noted that Ms. Brodie
had stated that the system did not operate properly when it
was implemented on October 4, 2013 and as of February 2,
2015 it did not operate correctly. He continued that Ms.
Brodie had testified during the current and prior meetings
that the system was fixed. He wondered when claims began
balancing correctly.
Ms. Brodie answered that financial balancing had been
accomplished in March 2015. Claims balancing, which was
equally important, had been accomplished in April 2015.
Vice-Chair Saddler asked for clarification on what
balancing had occurred in March. Ms. Brodie answered that
financial balancing had occurred in March 2015 and claim
balancing had occurred in April 2015.
Vice-Chair Saddler asked what had occurred in the past six
weeks that had caused the balancing to work correctly. Ms.
Brodie answered that the division had been working with
Xerox on a corrective action plan since October [2014].
Xerox had devised a plan on how it would fix all of the
defects and change requests that it thought effected claims
processing and payment; it had worked through and corrected
all of the defects and had implemented the change requests.
After the work had been done the division had found that
there had still been 16 items that impacted claims payment
(during the period of October through March).
Vice-Chair Saddler spoke to delays of a couple of years in
terms of manual workarounds and additional delays. He
referred to articles in the Peninsula Clarion and the
Juneau Empire that had referenced significant overtime
expenses. He asked what it had cost the division to provide
the manual workarounds. Ms. Brodie responded that there
were no overtime costs; division staff was not overtime
eligible.
Vice-Chair Saddler asked if Ms. Brodie had absolute
confidence that the claims and financial balancing would
continue to occur properly going forward. Ms. Brodie
replied in the affirmative.
1:36:07 PM
Commissioner Davidson added that the corrections had
occurred due to department staff who had worked tirelessly
to fix the problem. She explained that the department
recognized it had not created the problem, but it was a
problem it owned and was bound and determined to fix. She
referenced an earlier question by Representative Gattis and
explained that the advance payments had been made because
the staff in Ms. Brodie's office had worked very hard to
ensure that the estimates could be assessed based upon the
former 25-year old system to estimate the claim amounts
that could be made. She emphasized that the affidavit had
been written at a point in time in order to document the
past damage and harm caused by Xerox to the state; it did
not reflect the current state of the system as indicated in
Ms. Brodie's PowerPoint presentation to the committee the
preceding day. She emphasized that Ms. Brodie and her team
had worked very hard to bring the system up to where it
should be. She remarked that where she was from it was
important to stop and say thank you when people worked hard
to turn things around. She emphasized that "where we are
today is not where we were in February; it's certainly not
where we were in October of 2013." The department
recognized that the system was not perfect, but she
believed it was cause for celebration that the new day
claims were paying with over 90 percent accuracy and
timeliness.
Commissioner Davidson completed responding to a question
asked earlier by Representative Gattis. She explained that
two advance payments had been made [recently]. One payment
of approximately $16,000 had been made to fix a problem.
The other payment had been made to another provider. She
explained that billing errors happened for a variety of
reasons. She elaborated that the provider had confused two
different fields and had incorrectly entered numbers when
submitting the information. The department could have asked
the provider to redo their claim, but thought it was more
responsible to advance a payment; the provider would be
required to reprocess the claim at a later time. The state
had always worked to ensure advance payments could be made
when possible and when justified, including going back to
look at what the former system was able to process and to
make sure providers could continue to operate as a
business. She elaborated that the priority going forward
had been placed on ensuring that new claims were able to
process in an accurate and timely manner, which was
currently occurring at a rate of 90 percent. She reasoned
that medical providers had to be able to predict what kind
of revenue they would have coming in; therefore,
prioritizing the new claims was an issue the department had
worked on with Xerox.
1:40:02 PM
Vice-Chair Saddler thanked Ms. Brodie for her work. He
commented that she had been the director of the Division of
Health Care Services for three years and he understood the
system problem had not been fun. However, he stressed that
the system had exposed the State of Alaska to some very
significant financial penalties for years; it had also made
the single largest expenditure of state government an
unreliable program, which the administration was proposing
to expand. He found the issue troubling. He noted there had
been a lack of performance by Xerox and the situation had
existed for years. He questioned the department's claim
that most of the problems had been fixed. He stressed that
the system needed to be trustworthy in order to consider
expansion. He stated "thank you for the hard work, but
there's much hard work to be done."
Co-Chair Neuman noted that the committee seemed to be
receiving mixed answers [from various sources]. He referred
to an April 26, 2015 article in the Juneau Empire that
discussed the MMIS and some of the problems. The article
stated that staff had logged 100,000 hours in overtime thus
far in 2015. He acknowledged Ms. Brodie for her hard work,
but he was concerned that she was spending the majority of
her time working on Xerox's problem. He continued that
instead of working to supervise their employees, department
heads were spending their time on fixing the Xerox problem.
He believed things were not adding up and wondered about
the source of the confusion.
Commissioner Davidson answered that the overtime mentioned
in the [Juneau Empire] article had pertained to the
Division of Public Assistance related to processing public
assistance applications for a variety of services. She
agreed that while Ms. Brodie had spent a considerable
amount of time dealing with Xerox, she did not believe Ms.
Brodie had done Xerox's job for them. She addressed that
providers had to get paid for services if the state wanted
to continue to provide a Medicaid benefit.
Co-Chair Neuman understood. He shared that he had spent
many hours working with Ms. Brodie on the issue prior to
Commissioner Davidson's tenure as commissioner. He
highlighted the work they had done to figure out how to
cover costs for all of the personnel time. He countered
that the overtime had included Ms. Brodie as well. He
believed Vice-Chair Saddler had been trying to make the
point as well and he stressed that it was the same point
made in the affidavit.
Representative Gara stated that if the state accepted
Medicaid expansion and reform it was a given that the state
would have to pay claims. Based on the department's
testimony he surmised that the accuracy rate was over 90
percent and if a mistake was made it was fixed within a
couple of billing cycles. He wondered if the department was
ready (given the system improvements) to process claims in
a way that kept providers in business if Medicaid expansion
was accepted. Commissioner Davidson replied in the
affirmative to each question.
Representative Gara asked Commissioner Davidson to
elaborate on why she believed the state was ready to accept
Medicaid expansion under the billing system improvements.
1:45:29 PM
Commissioner Davidson replied that as drafted the bill
would have a start date of August 1 [2015], which was an
amendment made by the House Health and Social Services
Committee. New claims accepted by the department would need
to be new day claims, which were paying at a minimum of 90
percent accuracy for timeliness and dollar amount. She
relayed that the department believed the system was
prepared to handle the additional volume of new claims
coming in.
Representative Gara asked if the new system processed
significantly more claims than the former system. Ms.
Brodie answered that the system was able to process 200,000
claims per week compared to 100,000 claims.
Vice-Chair Saddler remarked on Commissioner Davidson's
statement that department staff were not doing Xerox's
work. He pointed to page 6, line 23 of Ms. Brodie's
affidavit that read: "...the State began tracking the
amount of time its staff spends performing work that
belongs to Xerox under the Contract and has calculated
those costs at $4.5 million to date." He asked the
department to reconcile the discrepancy.
Commissioner Davidson replied that the statement had been
true at the time the affidavit had been written; however,
it was no longer the case. She reiterated her prior
statement that currently over 90 percent of the new day
claims were adjudicating automatically through the system.
Representative Wilson wanted to understand how the state
was planning for the system to go live on August 1. She had
been told that the group of individuals [who would receive
healthcare] under Medicaid expansion were employed single
men and women. She wondered if the plan under Medicaid
expansion would be identical to the current Medicaid plan.
Commissioner Davidson replied in the affirmative. She
elaborated that the Medicaid expansion plan included in the
bill would mirror the current Medicaid program. She relayed
that the department had issued an RFP [request for
proposal] and she believed the contract would be awarded in
the near future. The RFP had asked candidates to identify
Medicaid reform opportunities existing in other states for
the entire Medicaid program. The administration recognized
that Medicaid in its current form was not sustainable;
however, the administration wanted to accept Medicaid
expansion quickly in order to take maximum advantage of the
100 percent federal match including the additional new
federal revenue.
Representative Wilson noted that the administration
acknowledged that the current Medicaid system needed
reform, yet it was willing to add additional people to the
system. She referenced that the RFP sought to determine
what other states were doing, what managed care looked
like, and other. She asked why the department would not
wait for the RFP to come back to get suggestions on what a
more efficient system would look like.
Commissioner Davidson replied that the administration did
not want to wait because there were 20,000 Alaskans needing
healthcare who would be covered under Medicaid expansion.
Representative Wilson interjected that the administration
was claiming that there were 20,000 Alaskans who had no
access to healthcare. In the past, she had been told that
the state did not need more providers because most of the
population was receiving healthcare benefits. She remarked
that the question was related to who was really paying for
the healthcare.
Commissioner Davidson replied that approximately 42,000
Alaskans would be eligible under Medicaid expansion; the
administration expected that about 20,000 individuals would
sign up in the first year (increasing to 26,000 in later
years). In terms of access to healthcare, it was true that
some individuals did have access through the emergency room
because they waited until they were sick enough that they
were required to go. However, individuals were not
receiving prevention exams including mammograms and
prostate cancer screening; a whole host of services were
not being provided to Alaskans because they were not
emergency room services. She stated that contrary to the
belief that Medicaid was broken, Medicaid continued to
provide critical health benefits to Alaskan citizens. She
detailed that over 11,000 children received immunizations
in the first three months of 2015. She continued that
thousands of Alaskans received mammograms, cancer
screenings, and other. She stressed that Alaskans were
receiving healthcare access through Medicaid.
Representative Wilson countered that it had been
Commissioner Davidson who had said the system needed
reform. She stressed that she had not been the one to say
the system was broken. She remarked that the final report
resulting from the RFP was not scheduled for completion
until May 16, 2016. She wondered why the state would not
implement reforms and look at managed care [prior to
accepting expansion]. She detailed that state employees
with insurance were under managed care with preferred
providers and other. She wondered why the state would not
wait for the RFP results prior to accepting expansion. She
pointed to studying what other states were doing in order
to avoid mistakes that had already been made. She believed
everyone wanted to ensure that Alaskans were healthy. She
discussed that there were behavioral grants that were
issued to care for people without insurance. Additionally
there were sliding payment scales to help individuals
without much money. She wondered why expansion would be
accepted to cover a large group of individuals (i.e.
working men and women) before the RFP results had been
received. She did not believe it made sense to start the
individuals under a program that may be shifted depending
on reforms that were recommended by the RFP.
1:54:46 PM
Representative Wilson continued. She asked if the system
could handle paying groups differently given that employed
individuals with income may have deductibles.
Commissioner Davidson replied that she had not heard the
first question.
Representative Wilson wondered why the administration had
issued an RFP that was not due until May if it wanted to
start Medicaid expansion at present. Second, if it was
better to put the new registrants into a managed care unit
with co-pays, deductibles, and caps, she wondered if the
Xerox system could handle it.
Commissioner Davidson clarified that the preliminary RFP
results were due in January; the date had been moved up in
order for the administration to provide information to the
legislature (the legislature had communicated that a March
due date would be too late) and to get feedback on reform.
The administration did not want to wait to expand Medicaid
given that individuals in the expansion category did not
have access to healthcare. She elaborated that the state
had the opportunity to make Alaskans as healthy as possible
with 100 percent federal funds, but the opportunity would
end in December 2016. She added that reform was a process
that happened over time; it was not like switching on or
off a light switch. She further explained that as the
administration envisioned reform in Medicaid, individuals
in the expansion category would be in a similar benefit
package to existing beneficiaries and therefore would move
along with existing recipients as reforms took place.
Representative Wilson stated that individuals under
expansion were not in the same situation as existing
recipients. She elaborated that current recipients did not
have jobs, were disabled, elderly, and would not be
working. She opined that it not make sense to put the two
groups together. She asked whether the Xerox system could
handle it if the new registrants were put into a managed
care unit with co-pays, deductibles, and caps.
Commissioner Davidson replied that the existing Medicaid
system did have cost sharing and co-payments for certain
kinds of medical procedures. She detailed that the system
included co-payments for out-patient and in-patient
services and for pharmaceuticals. She confirmed that the
system was capable of addressing the situation.
Representative Wilson emphasized that there was currently
access to healthcare. She stated that there may not be
coverage for everything (she noted that she and other state
employees had to pay for certain things out-of-pocket). She
commented that the state had spent over $30 million per
year for women's healthcare. She did not want to send the
message that there was no healthcare. She stated that there
was healthcare available, but it may not be to the extent
allowed under expansion.
1:59:29 PM
Commissioner Davidson answered yes, there were currently
people without health coverage accessing healthcare through
the emergency room, which was the most expensive healthcare
delivery system.
Representative Wilson stated that individuals were also
using a sliding payment scale. She opined that part of the
problem was that the state had not helped people understand
other ways of getting care. She was concerned that the
state was not "going to do the managed care before, so that
we help those understand the process."
Representative Pruitt referred to the discussion on whether
the system could handle additional people. He recalled a
recent statement related to how changes to the system would
impact other areas in the system. He asked what effect
change had on the system overall. Ms. Brodie replied that
it depended on the scope of the change. Some changes were
very easy, such as updating a provider rate. Likewise,
there were difficult changes such as building an entirely
new benefit package. She elaborated that part of the reason
the state was putting forth the same benefit package was
due to the difficulty building a new package would entail
and to save the state millions of dollars in development
costs.
Representative Pruitt discussed his understanding that the
current system handled 14,000 medical codes. He believed a
substantial amount of new codes would be utilized due to
the Affordable Care Act (ACA). He remarked that there had
been challenges with the 14,000 codes; therefore, he
wondered how the system would react to a substantial
increase in codes.
Ms. Brodie replied that the ICD-10 had approximately 77,000
diagnostic codes. The division had already mapped the
current codes to the future codes; it was currently in
testing in the Enterprise system. She elaborated that the
state was currently in the process of testing with
providers; the work was not complete, but the department
was anticipating it would be ready on October 1 [2015].
2:03:03 PM
Representative Pruitt referred to Ms. Brodie's testimony
that changing the benefit package could have a substantial
impact on the system, which was why the administration
proposed that the expansion population would look similar
to the current system. He believed reform would mean a
substantial change to the overall benefit package. He
observed that reform implemented by the legislature or the
department would mean a change to the benefits. He surmised
there would be challenges with the implementation if the
state moved forward with one package and decided to change
it later on.
Ms. Brodie agreed that making changes in the system
required development work, but the department believed it
was possible through the process defined in the corrective
action plan. Additionally, the department had the ability
to conduct the proper testing to ensure that anything
deployed into the system would not break the system or
impact any claims payment. She added that the department
had a very good process in place due to the corrective
action plan.
Representative Pruitt wondered if it would be more prudent
to begin with a system that was ready than to add or fix
something later on. He wondered about costs and other
challenges associated with making changes later on.
Ms. Brodie responded that the department currently had the
processes in place, including scoping of work needed and
development time. Additionally, the proper testing time was
in place for the state and Xerox to ensure the accuracy of
anything deployed into the system.
2:06:01 PM
Representative Gattis asked about what had "bogged down"
the system in the past. She believed that whoever had
started the system had probably thought they had everything
in place. She wondered if the high number of codes or a
particular number of providers or beneficiaries had bogged
the system down.
Ms. Brodie stated that it was a host of issues that had
bogged the system down. She explained that when the new
system went live, the department had been told that it had
the legacy system as a backup. She detailed that the
department had been told that if something did not work in
the new system, claims could be loaded into and paid under
the legacy system. However, it turned out that because the
claims were so different in the Enterprise system, they
could not be loaded into the legacy system. She addressed
what had bogged the system down and detailed that claims
had not been paying correctly.
Representative Gattis interjected that she understood what
the problem had been. She questioned what had put the
initial kink in the system. She wondered how not to bog
down the system moving forward. She remarked that the
department was currently saying that things were in place,
but things were thought to have been in place when the old
system had been implemented. Separately, she believed
reform could be a light switch that was turned on. She
reasoned that it was a "huge light switch that we know
there are areas that we have to do better." She
acknowledged that the possibility of getting the
information working correctly in the system was another
part of the equation. She reiterated that she knew that "we
can do our job and do it better" in Medicaid and in how
business was done in the state.
2:09:07 PM
Commissioner Davidson believed that states doing Medicaid
reform well and delivering good healthcare systems saw
reform as a constant process. The administration believed
that reform and expansion could go hand in hand; the
department was building on reform that it had already
undertaken. She expounded that the department had
identified a number of reforms through the budget process
and in the current legislation.
Representative Gattis opined that reforms should have
occurred already. She was exasperated by the "slow go of
government." She stated that there was no reason for a hold
up on implementing reforms. She expounded that it should
have been possible to get the reforms done already through
regulations, not legislation.
Representative Pruitt addressed that there were many
reforms needed. He spoke to the issue from a policy
perspective. He pointed to the implementation of reform
including pro-pay discussions and an insurance exchange-
type scenario. He wondered whether it would be complex to
enforce the changes impacting individuals. He elaborated
that recipients would become used to the program, but would
be asked to shift in some capacity later on (e.g. more
money out of pocket or other). He wondered if the
department saw the issue as a complex series of events or
as a switch that could just be flipped.
Commissioner Davidson replied that it was a bit of both.
She agreed that everyone, including legislators and Alaskan
citizens, had their own idea about what reform should look
like. Consequently, the department had created the RFP to
look at what other states were doing and at some of the
best practices. Additionally, the goal was to engage with
stakeholders (members of the public etcetera) to look at
which healthcare delivery models would work for Alaska. She
elaborated that what may work in one region of the state
may not work in another region (e.g. what worked in Mat-Su
may not work in Bethel).
Commissioner Davidson addressed educating people in terms
of how they received healthcare. She found it frustrating
when she saw a medical provider for an ailment and they did
not also ask what about her health she would like improved
over the next year and how they could work together to help
improve her health. She explained that one reason providers
did not ask the question, was because they were paid per
incident, not to address overall health. Related to payment
reform opportunities identified in the legislation, the
department wanted to look at innovations other states had
undertaken. She elaborated that the committee had heard
from PeaceHealth in Ketchikan about an innovation grant it
had received from the Centers for Medicare and Medicaid
Services. She detailed that it had cost the entities about
$700,000 to lose $1.5 million in reimbursement opportunity.
Additionally, the committee had heard from Central
Peninsula Hospital, which had been interested in reform
efforts, but needed the resources from expansion to fund
the reform effort. She furthered that many hospitals had
uncompensated care and were not able to spend money to lose
money.
2:16:58 PM
Representative Pruitt appreciated the conversation related
to providers, but wondered about the public. He remarked
that there could be pushback on making changes, especially
ones that have an impact financially. He noted that a
recent legislative vote to add one penny to a fuel tax had
been very close. He continued that it had been a very
contentious issue. He asked whether the department believed
that starting off with one system and potentially making
changes later would be acceptable to the public. He
remarked that it was possible to incentivize or almost
force some of the discussions with providers, whereas it
was a different conversation related to the public.
Commissioner Davidson replied that engaging with the public
and having a conversation about how the transition would
occur would be critical to success. From her perspective,
they were talking about individuals who did not currently
have health coverage. She believed the individuals would be
open to recognizing that to receive healthcare they would
have to pay copay (already existing under the current
Medicaid program) for pharmaceuticals, hospital inpatient
and outpatient treatment, and other services. She
elaborated that copay was not allowed for certain Medicaid
beneficiaries. She discussed that the department planned to
work with the public to ensure that they understood that
health coverage was a benefit they would have that they did
not previously have. She detailed that the department would
work to educate recipients that the new coverage would
enable individuals to receive care in a more efficient and
patient friendly way. She believed individuals would
welcome the idea, which was why 65 percent of Alaskans had
voiced support for Medicaid expansion and reform.
Vice-Chair Saddler addressed Commissioner Davidson's
testimony about individuals without health coverage. He
noted that she had implied that the emergency room was the
only alternative to receive healthcare. He pointed to a
distinction between health coverage and health insurance.
He referred to the distinction made by Commissioner
Davidson that individuals qualifying for treatment through
the Indian Health Service (IHS) had healthcare, but not
health coverage (defining coverage as insurance).
Commissioner Davidson replied in the affirmative. She
elaborated that it did not qualify as health insurance if
an IHS beneficiary had access to an IHS facility because it
was not a portable health benefit.
Vice-Chair Saddler made the distinction that healthcare was
not the same as health insurance. He explained that maybe
half of the 43,000 people who had been represented as not
getting healthcare actually did have healthcare, but not
health insurance or coverage.
JON SHERWOOD, DEPUTY COMMISSIONER, MEDICAID AND HEALTH CARE
POLICY, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, replied
that individuals who did not have health insurance may have
access to some degree of healthcare. For example, they may
be able to access healthcare in an emergency room or
through a community health center, which may provide some
level of care, but did not necessarily adequately meet all
levels of need. For instance rehabilitative services for a
traumatic brain injury would probably not be available
through emergency rooms, a community health center, or
another provider. He noted that a person may be able to
make some type of payment arrangements or charity care
eventually. Additionally, people with cancer frequently
could not receive treatment through the emergency room
until they were very ill; at which time treatment would be
much more substantial and could include heroic or
palliative care. He explained that the situations were
examples of incidents where individuals may not have access
to adequate treatment if they lacked health insurance or
some means of paying for care.
2:22:20 PM
Vice-Chair Saddler explained that maybe half of the 43,000
people who had been represented as not getting healthcare
actually did have access to health coverage through IHS. He
asked for verification that the care may not be adequate in
the department's terms or provide for every specialty, but
there was access to healthcare.
Commissioner Davidson replied that more than 70 percent of
the individuals eligible for expansion did not have
portable healthcare coverage. She relayed that 43.3 percent
had no coverage at all.
Vice-Chair Saddler asked if coverage was defined as access
to health insurance or access to healthcare. Commissioner
Davidson replied that 29.3 percent of the 42,000
individuals had partial access, which included IHS limited
benefits, veterans' benefits, or access to community health
centers.
2:23:28 PM
Representative Gara provided a scenario about a person with
prostate cancer earning less than 100 percent of the
poverty level who had no health coverage. He wondered where
the individual would go for cancer treatment.
Mr. Sherwood replied that there may be some limited options
for people with an extremely low income; individuals may be
able to receive some care through the chronic and acute
medical assistance program. However, a person in the
situation may be in something of a "no man's land" where
they had to find providers willing to provide charity care.
Additionally, the individual would be faced with
identifying the various providers needed, with lining up
the care, and with getting agreements to accept deferred
payment in place. He stated that the person may or may not
be successful.
Representative Gara stated that as a prostate cancer
survivor he did not believe he was entitled to better
treatment than someone else. He addressed the issue of
copays. He relayed that the previous DHSS commissioner had
been hesitant on the copay issue because in many cases
copays cost more to administer; therefore, some had been
excluded from the system. He asked for verification that
sometimes copays cost more to administer than money they
brought in.
Mr. Sherwood responded that there was a cost to
administering copays in Medicaid that was different than
conventional insurance given the specific federal limits on
what could be charged. He elaborated that it was necessary
to monitor the copays to ensure that limits were not
exceeded. There were situations where the cost of
monitoring and adjustments would exceed the money coming in
from copays.
Representative Gara thanked Commissioner Davidson for all
of her hard work. He pointed out that she had identified
over $500 million in reform savings. He discussed that he
had served on the House Finance Committee for a number of
years. He continued that there had been six years where the
Parnell Administration did not adopt the reforms and now
Commissioner Davidson was being asked why the reforms had
not yet been adopted. He remarked that the legislature had
not adopted the reforms and was asking the department why
the reforms had not been adopted. He believed the situation
was a double standard. He was impressed that the
commissioner had identified over $500 million in reforms
over a six-year period. He did not understand why the
legislature would not want to save the money and why it was
accusing the current administration of not doing what the
prior administration never did. He did not understand the
sudden outrage of the lack of reforms that no one had
adopted before.
2:27:59 PM
Vice-Chair Saddler commented that Mr. Sherwood and Ms.
Brodie had both been in their current positions for at
least three or more years.
Mr. Sherwood replied that he had been deputy commissioner
for the past 6 months; prior to that he had been the deputy
director of the Division of Senior and Disability Services
for 1.5 years and a senior policy manager for the Division
of Healthcare Services and its predecessor the Division of
Medical Assistance.
Vice-Chair Saddler asked about Ms. Brodie's history working
for the department. Ms. Brodie replied that she had been
deputy director of the Division of Healthcare Services for
a 3-month period; prior to that she had been the head of
the finance and recovery section for 2.5 to 3 years. She
shared that prior to her work at DHSS she had been chief of
administration in grants for the Department of Natural
Resources.
Vice-Chair Saddler thought that there was not much
justification in adding to the system until a switch was
flipped and the Enterprise system was successful in
qualifying people for Medicaid and processing applications
for payment. He pointed to page 13, item 20 of Ms. Brodie's
affidavit. He stated that the document read that because
the department had been unable to rely on the Enterprise
system it had forgone the opportunity for several other
reform efforts including the Medicaid program for the
Division of Juvenile Justice that would have saved $1.5
million, Senior and Disabilities Services Telemedicine that
would have saved state travel costs, and the Division of
Behavioral Health's Behavioral Health Aides. He remarked
that the reforms had not happened because the switch had
not been flipped to have an effective Medicaid system. He
quoted from the paragraph "We have not completed the
regulations as there is no specific timeframe for when
Enterprise will be able to accommodate this change. These
losses in savings are very difficult to estimate." He asked
if his understanding was accurate.
Ms. Brodie reiterated earlier testimony that the affidavit
reflected only a point in time.
Vice-Chair Saddler asked if the statements had been true in
the past. Ms. Brodie replied in the affirmative.
Co-Chair Thompson noted that the committee was trying to do
its due diligence for the state. He remarked that the bill
reflected a huge policy change that the committee wanted to
make sure was not rushed into too rapidly. He stated the
committee wanted to make sure Medicaid expansion was done
right. He did not want to end up in a situation like some
other states that had accepted Medicaid expansion; some
states needed to make changes after accepting expansion,
but the federal government would not allow the changes. He
opined that significant due diligence remained before
Alaska accepted Medicaid expansion.
2:31:49 PM
Representative Guttenberg observed that there seemed to be
a situation where the state wanted to look back on its
computer program that had dubious origins. He believed the
issue had been addressed considerably. He addressed that
the cost of healthcare was one of the largest drivers in
the state. He pointed to healthcare costs associated with
the state's unfunded retirement liability and contracts
with public employees. He asked about the ability to get
healthcare costs under control if expansion was not done.
He wondered about the ability to wrangle and take control
of the rising healthcare costs. He stressed that healthcare
costs were out of control and opined that no one seemed to
have a handle on the situation. He wondered if the state
could start to get the rising costs under control without
Medicaid expansion. On the flip side, he wondered about the
chance of controlling the costs if Medicaid expansion was
accepted. He asked about the mechanisms under expansion
that would be utilized to successfully control the costs.
Commissioner Davidson referenced public testimony from
Central Peninsula Hospital and PeaceHealth; the hospitals
had communicated that reform was very challenging without a
cash infusion to offset losses that would come while
payment reform options were tested. Currently, as the
Alaska State Hospital and Nursing Home Association had
testified, about $100 million in uncompensated care was
provided annually by hospitals in Alaska. She explained
that as a result, costs were spread to everyone else. One
way to reduce the cost was to have revenues to offset the
uncompensated cost; the biggest opportunity available was
Medicaid expansion.
2:34:47 PM
Co-Chair Thompson moved to item 9 on pages 5 and 6 of the
affidavit. The item identified that there were problems
with service authorization functionality and user input
screens. He noted that the issues had not been addressed in
Ms. Brodie's PowerPoint the previous day; he asked if the
issues had been corrected.
Ms. Brodie answered in the affirmative. She detailed that
the time it took to submit a service authorization had been
reduced from 30 minutes down to 5 to 10 minutes. She
elaborated that Xerox was working on increasing the
functionality with the hope of reducing the timeframe even
more.
Co-Chair Thompson opined that the problem had not been
completely corrected given that it had taken between 60 and
90 seconds under the legacy system. He asked for
verification that submitting a service authorization took 5
to 10 minutes at present. Ms. Brodie replied that the
problem had been corrected to the specifications outlined
in the Xerox contract. She was asking for even better
functionality going forward.
Co-Chair Thompson asked if the correction also applied to
the following language under item 9:
All travel, waiver, hospital stays, durable medical
equipment orthotics, and behavioral health services
are service authorization dependent. This translated
into providers being unable to obtain service
authorization...
Ms. Brodie affirmed that the item had also been corrected.
Co-Chair Thompson asked for verification that the
applications were processed in an efficient manner. Ms.
Brodie affirmed that the applications were processed in a
timely manner.
Representative Gattis shared that she had spoken with a
chiropractor the prior evening about provider tax and
Medicaid expansion; the chiropractor had relayed that there
had to be a pediatrician referral in order to provide
treatment for kids. She relayed that chiropractors could
not get approval to receive payment for services when the
patient was on Medicaid. She stated that trying to get the
authorization was near impossible. From a chiropractic
standpoint there were some glitches in getting
authorization.
Ms. Brodie answered that the specific issue was outside of
the Enterprise system. She asked members to refer anyone
having a difficult time with the issue to Cindy Christensen
the division's chief of operations, who would get it taken
care of immediately.
2:38:42 PM
Representative Pruitt needed clarification on a couple of
components related to department staff costs. He pointed to
the statement in Ms. Brodie's affidavit that "additional
staff to date has cost the state $640,385 and will continue
to cost at least an additional $211,799 each year..." (page
7, lines 4 and 5). He wondered if the system would cost the
state more because it switched to Xerox, because of the
problems associated with the system, or because the state
was doing some of the work Xerox should be doing.
Ms. Brodie answered that because testing protocols had not
been followed in the beginning when deployments had been
put into the system, addressing the issues providers had
with trying to ensure recipients could continue receiving
services had overwhelmed the Xerox and staff. Therefore,
state staff had been working directly with providers on
their specific billing issues, which was a function of the
[Xerox] fiscal agent, not state staff time. Department
staff still did a small portion of the work (a few hours
per week), but nothing like at the beginning. She added
that some of the providers had chosen to work with the
department due to the relationship it had built with them
since Go Live; the providers trusted the department more.
Representative Pruitt wondered if challenges in the system
would be on the state or Xerox to deal with. For example,
related to additional codes or a change to the benefits
package. Ms. Brodie answered that changes could occur as a
standalone project where the state would get 90 percent
federal match. Alternatively, the department had a bank of
600 hours of work that Xerox was required to do and the
department would put in a change order. She detailed that
if a change order was put in, the department would monitor
every step and would get the test results. Under the
standalone project scenario the department would use
protocols implemented in October 2014 to conduct monitoring
and testing. Additionally, the department would watch the
change through three different environments before it got
to the system.
2:42:35 PM
Representative Gattis pointed to page 7, item 12 in the
affidavit related to loss of federal matching funds. She
asked when the department expected the MMIS to be complete,
how the Center for Medicaid Services (CMS) validated that
system requirements were met, and how long the process
took.
Ms. Brodie replied that the department was anticipating
notifying CMS that the division was ready for certification
at the end of the calendar year [2015]. She detailed that
CMS typically came in during the next quarter; it had a
complete certification checklist to ensure the system met
the CMS requirements. She furthered that the department had
a copy of the checklist and was working the checklist prior
to asking CMS to conduct the validation.
Representative Gattis asked if Ms. Brodie had testified
that the process would take 24 to 30 months. Ms. Brodie
affirmed that it appeared to be taking Enterprise systems
24 to 30 months to get certified.
Representative Gattis asked how much funding the state
currently had to make up. Ms. Brodie would follow up with
the figure. She added that because the state had not been
paying Xerox the figure was 25 percent of nothing.
Representative Gattis wondered how much state funds had
been lost due to the funding crossing over the fiscal
years. Ms. Brodie replied that the state funding had not
been lost, but had shifted from one fiscal year to the
next. What the department had identified as a loss in FY 14
would be primarily realized in FY 15 (with the final amount
realized in FY 16).
2:45:04 PM
Representative Gattis referred to the committee's
discussion on penalties the previous day. She wondered if
the state was exempt from penalties. Additionally, she
asked if the state had not been subject to paying penalties
back because it was a pilot program.
Ms. Brodie answered that the discussion on penalties had
been specifically related to the PERM [Payment Error Rate
Measurement] audit. The department had anticipated that its
payment error rate would be much worse than the current
reality. The department had preliminary results for three
months, which included 29 claims for $18,000; the
department had expected it would be much higher.
Representative Gattis asked if the state was exempt from
penalties. Mr. Sherwood answered that penalties did not
attach to PERM audits. He detailed that the department
needed to correct any payment errors that were found in
either direction; the state was responsible for repaying
the federal government if it had claimed money improperly.
To date there had been no additional financial sanctions
imposed with the PERM audits. The department was
responsible for developing a corrective action plan
addressing how it intended to reduce the error rate in the
future.
Representative Gattis asked for confirmation that there had
been no penalties to date. Mr. Sherwood answered that to
date PERM had not been subject to penalties; there was no
federal authority to levy a penalty around a PERM finding.
He elaborated that the federal government had general
authority to impose certain sanctions on state Medicaid
programs, but there was nothing specific to PERM.
Ms. Brodie added that the division had been anticipating a
much higher error rate than it was seeing. She expounded
that if an error resulted in an additional payout to a
provider, the state had to claim it with CMS within eight
quarters in order to receive federal funding. The state had
not anticipated being able to claim some of the payouts
within the eight quarters, which was addressed in the
affidavit.
Co-Chair Thompson asked if the state was subject to another
PERM audit in the near future. Mr. Sherwood answered that
states underwent a PERM audit every three years; Alaska's
next audit would be in FY 17.
Ms. Brodie elaborated that changes were underway with the
PERM audit process, which would begin to take place on an
as needed basis instead of every three years.
2:48:58 PM
Vice-Chair Saddler referred to an earlier question
pertaining to how much money had been lost due to
reimbursements crossing fiscal years. He referenced Ms.
Brodie's answer that there had been no state funding lost;
it had shifted to a different fiscal year. He referred to
another statement by Ms. Brodie that if claims were not
submitted within eight quarters the state lost its chance
to receive reimbursement. He asked if his understanding of
the statements was correct.
Ms. Brodie replied in the affirmative; claims were
submitted well within the eight quarters.
Vice-Chair Saddler read from page 7, lines 16 through 22 of
the affidavit:
...in fixing defects and completing implementation,
CMS has dropped the State's reimbursement rate from 75
percent FFP (Federal Financial Participation) to 50
percent for the administration of the new system. (SOA
Bates Nos. 1163-11638] This has resulted in the State
paying back $2,909,341 to the federal government.
Vice-Chair Saddler asked if the state would get the money
back. Ms. Brodie affirmed that the state would get the
money back at certification.
2:52:00 PM
Vice-Chair Saddler voiced his understanding that the
process for getting a system like Enterprise certified was
not instantaneous and took an application process and
other. He asked for verification that the department
expected certification by CMS by March 30, 2016. Ms. Brodie
answered replied in the affirmative.
Vice-Chair Saddler asked a question about the department's
confidence related to the implementation of the system
[audio indecipherable]. Ms. Brodie replied in the
affirmative.
Co-Chair Thompson spoke to the requirement of federal
certification for the state's MMIS. He remarked that there
had been no discussion on what the certification amounted
to and what it would do. He noted that some other states
(e.g. Indiana) would not accept Medicaid expansion until
they received federal certification of the MMIS; the states
reasoned that they would not receive federal funding until
the MMIS was certified. Given the expected certification
date of March 30, 2016, he wondered if Alaska would be
responsible for paying for Medicaid expansion until that
time.
Commissioner Davidson replied in the negative. She
explained that the certification did not impact the
system's ability to pay. She elaborated that the new day
claims were currently paying at over 90 percent accuracy in
terms of timely payment. She relayed that the certification
process required by CMS would enable the state to be
reimbursed at the enhanced match of 75 percent for the
MMIS.
Co-Chair Thompson asked at what rate the state was
reimbursed excluding certification. Commissioner Davidson
replied that currently the state was reimbursed at a 50
percent rate.
Co-Chair Thompson asked if the state would pay the
remaining 50 percent until certification. Ms. Brodie
answered that the state received administrative payments
and claims for services payments from CMS. The expansion
population would fall under the claims for services and
would be reimbursed at 100 percent as soon as the state's
plan amendment was approved.
Co-Chair Thompson asked for verification that reimbursement
would occur as soon as it [the state's plan amendment] was
approved. Ms. Brodie affirmed. She explained that the 50
percent match was the administrative cost of running the
Enterprise system, which was the only cost affected by the
reduced match.
Co-Chair Thompson surmised that the 100 percent
reimbursement was dependent on the MMIS certification. Ms.
Brodie replied in the negative. She clarified that the 100
percent reimbursement was based on CMS's approval of the
state plan amendment; it was unrelated to the MMIS
certification.
2:55:18 PM
Co-Chair Thompson addressed the PERM audit. He referred to
the department's PowerPoint presentation showing 230,371
claims to be processed that would result in payouts and
226,000 to be processed that would result in recoupment.
The presentation also indicated that the department had
mailed letters on May 1 requesting the recoupment from
providers. He wondered if the 456,000-plus claims had been
involved in the PERM audit and what the results had been.
He believed the number was high.
Ms. Brodie answered that the claims were part of the PERM
review, whether the review selected these specific claims
or not. She had been surprised because when the new system
had gone live it had paid all professional claims a
fraction of a cent off. She elaborated that to a PERM
auditor a claim that was off by 0.0001 constituted an error
albeit financially the dollar amount was insignificant.
Representative Wilson clarified that an audit did not check
everything. She remarked that the claims the auditors chose
could have been more accurate than another random sample.
Ms. Brodie replied that the audit selected a good
representation of the claims for a period of time;
therefore, it was a statistically valid sampling of the
claims.
Representative Wilson understood, but stated that the audit
had not checked every single claim. She surmised that if
the audit had sampled all claims the error rate may have
been closer to what the department had anticipated. She
stated that the selection may have picked the claims that
had no errors. She noted that an audit was a random
selection, but it did not necessarily represent the entire
system. She pointed the issue out because she used to think
that an audit checked everything.
Mr. Sherwood agreed that there was a possibility that the
findings of the audit were not representative [of the
claims as a whole], but statistically the probability was
very low. He explained that the chosen sample size and
statistical methodology went to ensure that the probability
of a substantial variation between the audit findings and
the entire group of claims was very low.
Representative Wilson had heard from many small providers
on errors that still existed.
2:58:58 PM
Co-Chair Neuman referenced an earlier question by
Representative Gattis related to how many providers had
gone out of business [after taking advance payments]. He
pointed to page 8, line 17 of the affidavit, which
specified that 18 providers had gone out of business after
taking advance payments. He believed Ms. Brodie had replied
earlier that only 3 providers had gone out of business
[after taking advance payments]. He addressed the cost to
the state. He remarked that the state had issued advance
payments of over $164 million to providers; however, it had
only recouped $60 million, which left a balance of $104
million [page 8 of the affidavit]. He read from lines 12
through 17 of the document:
This amount will likely never be fully recovered due
to crossing fiscal years, the inability of Enterprise
to provide accurate records, and providers going out
of business. Even, if we are allowed to claim these
monies in the future, it will be within a different
fiscal year and the State may not have the authority
to utilize the funds.
Co-Chair Neuman highlighted the inability to recover $104
million. He spoke to losses to the general fund due to the
inability to draw down another $78 million. He wondered how
to account for the difference between the numbers provided
in the affidavit and the numbers Ms. Brodie had given
earlier in the meeting.
Ms. Brodie answered that statistics had been updated. The
state had recouped over $70 million in advance payments;
there was approximately $95 million outstanding. She
detailed that numerous providers were on repayment
schedules. For example, at the time individuals received an
advance the state had asked how and when they would pay the
money back (i.e. check or a certain percentage of claims
withheld). Therefore, the department was recouping more
every week. She elaborated that the department would
collect money from the remaining providers by December 31,
2015. She relayed that it would not be possible to collect
the entire amount given that some providers had gone out of
business. The state was pursuing collection of those monies
through other provider IDs the individuals had opened; the
department was also looking at garnishing Permanent Fund
Dividends as an option to recoup money.
Mr. Sherwood clarified that the 18 providers listed in the
affidavit included providers that had gone out of business
for any reason (e.g. moving out of state or retiring).
However, it did make recoupment more difficult for the
state if the individual was no longer an enrolled Medicaid
provider.
Co-Chair Thompson stated that the Office of Management and
Budget had provided the committee with a recent report
showing that in 2010 there had been 4,500 providers
participating in the Medicaid program. He relayed that by
2014 the number had dropped to 3,500. He stressed that the
state had lost 1,000 providers that had been participating
in Medicaid program. He believed the loss was substantial
and asked for the department's comment.
Ms. Brodie addressed the change in the number of providers
and explained that the state now enrolled rendering
providers. She detailed that whenever a provider went from
one agency to the next their enrollment had to be ended and
restarted under the new agency. She elaborated that the
department had reenrollment of all of its providers in
anticipation of the Enterprise system; there had been
providers that had not reenrolled or had any activity for
an extended period of time.
Co-Chair Thompson extrapolated that in other words the
providers [that had not reenrolled] did not care to
participate in the Medicaid program. Ms. Brodie answered
that there were providers nationwide enrolled in Alaska
Medicaid in order to provide services to a specific
recipient who may be in their state. She furthered that in
the past those providers did not automatically end their
enrollment; however, when the department conducted the
reenrollment it had automatically ended the enrollments of
providers that had not participated for an extended period
of time.
3:04:23 PM
Vice-Chair Saddler asked for clarification that 1000
providers did not reenroll when all providers had been
moved from the former system to the new system. He asked
what accounted for the reduction in the number of
providers.
Ms. Brodie replied that providers were not taken from the
old system to the new system; providers had the choice to
enroll in the new system if they wanted to provide services
to Medicaid recipients. She reiterated her prior statement
that there had historically been providers from across the
country that had enrolled one time to provide services to
one recipient at that time; their enrollment had remained
open in the legacy system. She elaborated that those
providers had all been terminated when reenrollment for the
new system took place.
Vice-Chair Saddler asked for verification that there had
been 4,500 providers under the former system, but that some
had been inactive and did not reenroll in the new system.
Ms. Brodie replied in the affirmative.
Vice-Chair Saddler asked how confident the department was
that the 3,500 providers currently in the system were
actively providing services in Alaska. Ms. Brodie replied
that the number of providers offering services to Medicaid
recipients had increased in FY 14 by 6.4 percent.
Vice-Chair Saddler asked for detail on the increase. Ms.
Brodie replied that there had been 3,356 providers in FY
13, which had increased to 3,572 in FY 14.
Vice-Chair Saddler wondered how the department measured the
providers as actively providing service to Medicaid
recipients. Ms. Brodie replied that the numbers reflected
providers paid by the department during the fiscal year.
Vice-Chair Saddler asked Ms. Brodie to repeat the FY 14
number. Ms. Brodie replied that the number was 3,572 for FY
14.
3:06:58 PM
Representative Gara referred to past providers who had been
over or under paid. He remarked that the situation would be
different for future providers given the fixes the
department had made. He asked for verification that the
department was more accurate on paying future claims than
on fixing the outstanding over or under payments.
Ms. Brodie replied that the department was more accurate at
present day and going forward.
Representative Gara spoke to payments that had been
withheld by the federal government for the Enterprise
system (the state should qualify for 75 percent
reimbursement upon certification; in the meantime it was
reimbursed at a rate of 50 percent). He believed the
department may have referred to another category of claims
that the department would get full reimbursement for, but
had not yet received. He wondered how much money the state
may still be due. He asked for verification that the money
did not disappear, it was just paid late.
Ms. Brodie replied in the affirmative. She added that the
dollar amount was the amount included in her affidavit
because the state had not been paying for the system since
that time.
Representative Gara believed that the state was receiving
50 percent payment reimbursement from the Enterprise system
that it was no longer paying. He asked for verification
that the state would receive 75 percent when it received
certification; however, the figure would be zero given that
the state was no longer paying for the system. Ms. Brodie
replied in the affirmative.
Representative Gara wondered if the state had received a
lower rate for any claims outside of the Enterprise system
that it would retroactively receive a higher rate for. He
wondered if there was money due to the state for the
claims. Ms. Brodie replied in the negative; the state had
reprocessed these claims.
Representative Gara asked for verification that if the
state applied for certification to enroll in Medicaid
expansion, the expansion would not occur until the federal
government provided its approval. He asked for confirmation
that the state would receive the higher federal
reimbursement rate once approved.
Mr. Sherwood answered that Alaska had to submit a state
plan amendment to be eligible for expansion, which could be
done at any point during the first quarter the state began
Medicaid expansion. He believed the department would submit
the document before the end of the prior quarter. He
elaborated that the state could continue to draw money and
would send in its report of expenditures at the end of the
first quarter. Any settling up was expected to occur at
that point; the state plan amendment should be approved at
that time and Alaska would receive full funding.
3:10:41 PM
Representative Gattis asked what the state expected to
write off as a result of some providers going out of
business. Ms. Brodie replied that at the time the affidavit
had been written the money owed to the state had been
$1,425,520. However, at least one-third of the providers
had reenrolled under a new provider identification number;
therefore, the state was able to attach any debt to the new
ID number.
Representative Gattis asked for verification that the rough
figure was over $1 million at present. Ms. Brodie replied
that she would have to follow up with the information.
Representative Gattis asked how many out-of-state providers
there were compared to in-state providers. She referred to
Ms. Brodie's testimony regarding out-of-state providers who
had registered in Alaska for one particular patient and had
dropped off the provider list when the new system began.
Ms. Brodie would follow up with the information.
Vice-Chair Saddler asked about the average time it took to
have a state plan amendment approved by CMS. Mr. Sherwood
responded that the regulatory approval timeframe was 90
days; the timeframe could be extended if CMS requested
additional information. He did not have a precise average
of all of the department's state plan amendments, but based
on his experience some could be approved in 45 days. He
elaborated that a relatively straight forward amendment
could be expected to receive approval within the 90-day
timeframe; however, there were some state plan amendments
that had taken substantially longer. He indicated that the
amendment under discussion was a "check the box" type of
amendment, which the department expected would receive
approval within the 90-day timeframe.
Vice-Chair Saddler asked what "substantially longer" meant.
Research he had done on the issue indicated that a state
plan amendment could take 1 year to 18 months or more. Mr.
Sherwood answered that some issues had taken that long;
usually amendments of this nature pertained to coverage and
reimbursement rather than eligibility.
Vice-Chair Saddler asked if it was fair to assume that
expanding Medicaid in Alaska may have one of the longer
approval times. Mr. Sherwood responded that he did not
believe the expansion portion of the state plan amendment
would have a longer approval time, which would be distinct
from most of the state plan amendments for reform.
3:14:16 PM
Vice-Chair Saddler thought that something as complex as the
reform envisioned by the state would take longer than the
statutory minimum of 90 days. Mr. Sherwood responded that
the state expected some of the other pieces in the bill to
take longer. For example, state plan amendment involving
the 1115 waivers could be a lengthy negotiation process.
However, he was not aware of an eligibility state plan that
had taken substantially over 90 days to approve.
Vice-Chair Saddler believed CMS would like to see more
states expand Medicaid; however, he did not know how
receptive the federal administration would be to reform or
how long the reform component process would take. He asked
for verification that approval for reform and waivers could
take 1.5 to 2 years or more.
Mr. Sherwood believed it was possible, depending on the
specifics included in the state's reform, that there could
be a lengthy approval time for one or more components;
however, he did not believe it would be the average.
3:15:54 PM
Co-Chair Neuman noted that part of the problem had been
trying to get the certification process done. He stated
that Ms. Brodie indicated that once some of the problems
were fixed the reimbursement rate would increase from 50
percent up to 75 percent, but CMS had previously dropped
the state's reimbursement rate from 75 percent as a result
of continued delays in fixing deficits and completing
implementation. Therefore, the state had to pay back close
to $3 million to the federal government. He pointed to
technical difficulties that had occurred in the
certification process. He stated that the reimbursement
rate for the state's share of design and implementation had
increased from 50 to 90 percent. He reiterated his remarks
about the drop from 75 to 50 percent related to
certification.
3:17:31 PM
AT EASE
3:30:12 PM
RECONVENED
Representative Wilson stated that if the state accepted
Medicaid expansion on August 1 it would be one plan. She
asked for verification that the state would have to ask the
federal government for approval if it wanted to change to
management care or other.
Mr. Sherwood replied in the affirmative. He elaborated that
a state plan amendment or a waiver request would be
required for other kinds of reforms that would implement
managed care or substantially change the benefit package.
Representative Wilson asked for verification that there
would be no guarantee the state would be able to do all the
reforms; it would be up to the federal government. She
thought the state may be gambling on what the federal
government would or would not accept.
Mr. Sherwood answered that there was always some
uncertainty about the exact design of some of the
proposals; they may or may not be approved. In many cases
there was established precedent for federal approval of
reforms that were very similar to reforms discussed by the
department.
Representative Wilson noted that the state's recent
transition to Aetna [for state employees] from the prior
insurance company had not been smooth. She remarked that
the department had testified that there had been two
glitches in the past few months related to state payment to
[Medicaid] providers. She assumed one of the cases was in
Fairbanks (a provider had not been paid due to the glitch).
She communicated that the provider had received a draw,
which was supposed to take about six weeks. She wanted to
verify that there had only been two glitches related to
provider payment in the past few months.
Ms. Brodie clarified that there had been two requests for
advanced payments. One was related to an entity in
Fairbanks; the issue pertained to the need for a valid
supervisor to be connected to the claim. The issue had been
fixed as of the prior weekend. The other issue had resulted
from a provider entering the billing provider in the
rendering ID field in the claims system.
Representative Wilson remarked that maybe other providers
had experienced problems, but had not applied for an
advance payment. She explained that her question was not
limited to providers that had asked for an advance.
3:33:45 PM
Ms. Brodie affirmed that since the implementation of Go
Live some providers had chosen to just wait until the issue
was fixed.
Representative Wilson clarified that she was only
interested in the time period between January 1, 2015 and
present. She reiterated her prior question. Ms. Brodie
replied that there had been one payment issue that was
causing claims not to pay (of the individuals who received
advances). The payment error had been fixed. She relayed
that the department was not aware of any other problems,
but it was possible a provider had just not submitted a
claim yet.
Representative Wilson addressed a discussion the previous
day related to IHS. She noted that IHS had been the only
instance discussed by the department where Medicaid was the
primary payor (IHS was secondary). She elaborated that
Medicare, Tricare, Veteran, and private insurance paid
first, while Medicaid acted as the secondary payor. She
cited statistics that approximately 40 percent of
individuals eligible for IHS utilized the service, but 60
percent had elected to use other services. She wondered why
Medicaid would be the secondary payor and not the first
(unless the federal government was not doing its part to
pay).
Commissioner Davidson replied that the IHS was the "payor
of last resort" as required by federal law. She discussed
that by law Medicaid beneficiaries who were also IHS
beneficiaries were allowed to have a choice of provider.
One of the reasons the state was pursuing the 1115 tribal
waiver was to work with tribal providers to enhance their
ability to provide care to IHS beneficiaries. She relayed
that IHS did not historically pay for long-term care
services. One of the reasons for this was that in the past
people did not live long enough. She elaborated that IHS
historically provided limited healthcare services and did
not provide long-term care, behavioral health, hospice,
disability, or home and community based services. She
continued that historically IHS beneficiaries would receive
the services outside of the IHS system. As IHS and tribal
health providers in Alaska had enhanced their ability to
provide care, much of the services had transitioned over to
tribal providers, which allowed the state to recoup 100
percent federal match. She expounded that the state could
claim 100 percent federal match for IHS/Medicaid
beneficiaries seen in an IHS facility including the
tribally operated facilities in Alaska. Over the years the
legislature had worked with tribes and the department on
efforts to enhance the capability in the tribal health
systems, specifically in long-term care opportunities and
on a patient housing facility that was under construction
at the Alaska Native Medical Center. The facility would
allow more IHS/Medicaid beneficiaries to be seen in Alaska
tribal health facilities, which would bring the state 100
percent federal reimbursement.
3:39:26 PM
Representative Wilson asked for verification that the state
would not receive 100 percent reimbursement if an
individual elected to go to Medicaid provider instead of a
non-tribal facility.
Commissioner Davidson answered that if an IHS/Medicaid
beneficiary did not receive their care in an IHS or
tribally operated facility they were subject to the regular
federal match of 50 percent. She noted that the match was
higher for children and pregnant women.
Representative Wilson wondered if there was an incentive
for a single male or female without Medicaid to go to a
tribal health service instead of the emergency room. She
noted that a person without any money would not pay for
service. She thought there may be no incentive to choose
one option over the other because they were not personally
paying for the service.
Commissioner Davidson asked for clarification. She wondered
if Representative Wilson was asking about an IHS
beneficiary using the service of a private emergency room.
Representative Wilson wondered what would direct a person
towards receiving services in one way or another [from IHS
versus the emergency room]. She remarked that the services
would be paid 100 percent [if a person received treatment
at an IHS facility] or not at all [if a person went to the
emergency room].
3:41:31 PM
Mr. Sherwood replied that if an IHS beneficiary who was
ineligible for Medicaid received services from a provider
(a non-tribal facility), the provider could charge whatever
they charged the general public. However, the individual
would not be charged for care if they received treatment at
a tribal facility.
Commissioner Davidson added that IHS did charge for certain
services. For example, tribal health facilities typically
would provide eye exams, but did not pay for glasses or
contacts. Additionally, tribal health facilities provided
preventative dental exams, but would not pay for a root
canal, crown, or bridge.
Representative Wilson was interested in understanding
uncompensated care. For example, a person may have Tricare
coverage, but it was not enough to pay all the bills. She
elaborated that IHS may pay for some services but not
others. She had recently heard from a couple of people who
had gone to IHS for a doctor appointment. She had been
concerned to find out that the individuals had been
approached with a $25 gift card to sign up for Medicaid.
She wondered why a service that was paid 100 percent by the
federal government would be encouraging individuals to
register for Medicaid. She referred to beautiful IHS
facilities available to beneficiaries.
Commissioner Davidson answered that IHS was the payor of
last resort. She explained that if IHS beneficiaries were
Alaska residents, they could not be categorically excluded
as a class from enrollment in a state benefit.
Representative Wilson replied that she did not want to
categorize anyone. She was trying to determine the benefit
of IHS. She wondered why IHS providers would start the
discussion with beneficiaries about registering for
Medicaid.
3:45:21 PM
Commissioner Davidson replied that according to IHS's
calculation on costs, Alaska tribal health providers
actually received between 50 to 60 percent of the funding
required to provide the most basic care for an individual,
which was why they were a payor of last resort. She
detailed that if a visit cost $1,000 and the IHS provider
received $500 reimbursement for the service, the provider
had to make up the difference in cost. She furthered that
for this reason, Congress had authorized IHS facilities
(including tribally operated facilities in Alaska) to seek
reimbursement from third parties including private
insurance, Medicaid, and Medicare.
Representative Wilson thought the federal government was
supposed to provide 100 percent reimbursement for IHS
services. She surmised that the federal government was
getting out of making the full payment by requiring the
state to pay the difference. She asked if the federal
government had funded IHS services at 100 percent at some
point in time.
Commissioner Davidson replied that the federal government
had never paid 100 percent of healthcare for Alaska Natives
and American Indians.
Representative Wilson asked if the federal reimbursement
rate had been the same over time. Commissioner Davidson
believed that the reimbursement percentage had actually
increased. She discussed that prior to the Department of
Interior healthcare services had been provided to Alaska
Natives and American Indians on a very limited basis. She
elaborated that when immunizations were first started in
rural communities volunteers had traveled throughout Alaska
by boat to provide the service. She noted that many of the
individuals had become community health aides or
practitioners.
3:49:00 PM
Representative Wilson believed that about 47 states had
managed care. She wondered if managed care would be done by
Medicaid or would the state work on an agreement with IHS
to provide managed care.
Commissioner Davidson responded that under the RFP the
department would look at options. She detailed that some
states had Medicaid manage the program, while other states
contracted with a third-party provider. She stated that
Alaska could look at doing contracting with the tribal
provider. She relayed that one of the things the state was
doing with the 1115 waiver it was pursuing was making sure
it had maximum opportunity for 100 percent federal match.
She elaborated that the state currently had opportunities
it was pursuing with long-term care and behavioral health
services; however, it could not currently waive choice
(waiving choice would require an 1115 waiver). The 1115
waiver would allow the state to require IHS beneficiaries
to receive their care in an IHS facility.
Vice-Chair Saddler asked if a person would be able to
receive IHS services if they qualified for Medicaid.
Commissioner Davidson replied in the affirmative; the
services were not mutually exclusive.
Vice-Chair Saddler referred to the time it would take to
approve a waiver. He addressed the department's assurances
that it could make Medicaid expansion and reform happen by
August 1, 2015. He wondered about costs the state may be
exposed to if expansion occurred on August 1, but it took
CMS up to two years to approve reforms or waivers. He
wondered if the department had calculated what it would
cost the state to provide services at less than 90 or 100
percent Federal Medical Assistance Percentage (FMAP) for
the two years it could take to receive final approval.
Mr. Sherwood answered that the department had not
calculated the cost of adding expansion with no federal
reimbursement during the time period because it did not
anticipate that the state plan amendment for expansion
would take that long. He elaborated that the legislation
identified various reforms that would be phased in. The
department did not necessarily anticipate savings from the
reforms to incur in year one.
3:53:01 PM
Vice-Chair Saddler asked for verification that the
department believed approval for expansion would be close
to instantaneous. Mr. Sherwood answered that the department
expected expansion to be approved in a couple of months
(the approval timeframe of a typical eligibility
amendment).
Vice-Chair Saddler asked which of the plan amendments had
been changed in only a couple of months in the past 10
years in Alaska. Mr. Sherwood would provide information on
the department's eligibility state plan amendments.
Vice-Chair Saddler asked about the cost to provide services
to an expanded population. He elaborated that the state
would receive reimbursement at 50 percent until CMS
approved the waivers or certain reforms. He wondered if the
department had calculated the costs. Mr. Sherwood responded
that the 100 percent funding for Medicaid expansion was not
contingent on approval of any reforms in the bill; it was
simply related to the submission and approval of the state
plan to add expansion.
Vice-Chair Saddler remarked that the department's RFP
envisioned going through a thorough evaluation process to
consider other plans' amendments, Alaska's special
circumstances, and how a reform package may be best crafted
to make the most effective and efficient use of the state's
resources. He stated that the results were not expected
until after the department envisioned expansion would take
place. He believed the situation was a matter of "ready,
fire, aim." He did not think it sounded like good planning.
Commissioner Davidson answered that the RFP would look at
the entire Medicaid program.
Vice-Chair Saddler restated that the RFP results would be
received after expansion. He equated the situation to
putting the cart before the horse. Commissioner Davidson
replied that since the passage of ACA five years back, the
state had been given substantial time to look at available
reform options for Medicaid. She relayed that the
department had spent a tremendous amount of time since
December [2014] looking at options for accepting expansion
as quickly as possible in order to take advantage of 100
percent federal match, which started in January 1, 2014 and
would end December 2016. She expounded that the match would
decrease to 95 percent in 2017, 94 percent in 2018, and 93
percent in 2019.
Vice-Chair Saddler countered that the Supreme Court's
decision that mandating Medicaid expansion was
unconstitutional had only occurred in the past year or so.
He stated that there had not been five years to consider
expansion.
3:57:02 PM
Commissioner Davidson replied that it had been three years
since the Supreme Court's decision. Prior to that Medicaid
expansion had been mandatory after the passage of ACA.
Therefore, she would have expected more activity to occur,
not less; however, she could not speak for the past
administration.
Vice-Chair Saddler added that only about half of the states
had considered accepting Medicaid expansion. Commissioner
Davidson answered that 29 states plus the District of
Columbia had accepted Medicaid expansion.
Co-Chair Thompson read a statement from Ms. Brodie's
February 2 affidavit on page 10, lines 4 and 5: "harm
caused by Xerox subcontracting to Cognizant for DDI and
failing to fully staff the project." He thought it appeared
that Xerox had not yet fully staffed the project. He
wondered about the status.
Ms. Brodie replied that Xerox still needed to hire a
systems manager and a Service Utilization Reviews (SURS)
manager.
Co-Chair Thompson referred to an article he had read in a
newspaper that morning. He reported that it looked like
Xerox State Health Care LLC was currently looking for
individuals to provide various services such as accounting
assistance, business analysis, surveillance utilization
review managers, operations manager, and other. He wondered
why it appeared the company was just starting to staff an
office when they were already supposed to be up and
running. He expressed confusion about the situation.
3:59:28 PM
Ms. Brodie replied that some of the positions were being
recruited to be in support of the state system staff. Xerox
was hiring people to specifically work with the state's
system unit to learn the "ins and outs" of Alaska Medicaid,
which would enable the individuals to go back to Xerox and
Cognizant with knowledge of the rules. The process would
help ensure more efficiencies in the future. She explained
that the other positions were actually being staffed out of
other offices at present. She furthered that people had
been placed in acting status in the positions, but they
were not necessarily physically in Alaska.
Co-Chair Thompson asked if Xerox was utilizing its
employees throughout the country. Ms. Brodie replied in the
affirmative.
Vice-Chair Saddler pointed to Ms. Brodie's statement on
page 10, line 18 that "Xerox has left the most critical of
all positions, the Systems Manager, vacant for seven
months." He also noted her statement that the SURS manager,
another critical position, had been vacant since the
previous May. He had seen the advertisement in the
newspaper as well. He asked if there were currently systems
and SURS managers in the office.
Ms. Brodie replied that the managers were not in the
Anchorage office. There was an acting SURS manager in the
Anchorage office, whereas an individual from Xerox
corporate was currently acting as the systems manager.
Vice-Chair Saddler asked which office the systems manager
was working out of. Ms. Brodie replied that the systems
manager was working out of the corporate office in Texas.
Representative Gattis had not been impressed at how the
Xerox MMIS system had worked in the past. She wondered if
people could operate the program worldwide. Ms. Brodie
replied that people could work in the system anywhere.
Representative Gattis wondered why the person's location
mattered. Ms. Brodie answered that the employees did not
have to be face-to-face with the department, but the
department did require the employees to meet with them in
person every four to six weeks to ensure the state's needs
were being met.
Representative Gattis noted that the great thing about
technology was that a person did not have to be physically
present to provide the work.
4:03:17 PM
Co-Chair Neuman drew attention to the fiscal notes. He
discussed that the committee had received some information
on the amount of federal funds that would come back into
the state. He mentioned to Commissioner Davidson's
testimony that the federal government would reduce
reimbursement to the state from 100 percent down to 90
percent over the years. However, the fiscal note related to
Health Care Medicaid services (OMB component 2077) showed
increasing funds reimbursed to the state. He observed that
the figure was up to $278 million in FY 20. He stated that
the money was projected at $309 million in FY 21. He
discussed that the federal government was $16 trillion in
debt. He wondered if there was a system that could accept
up to 40,000 more people. He noted that provisions in the
legislation would change federal reimbursements from 175 to
203 percent of the federal poverty level. He expounded that
the bill expanded the "donut hole" (people under 65 years
of age who were not pregnant). He stressed that the
legislation would add a tremendous number of Alaskans into
the program. He remarked that according to the department's
estimate, a considerable number of federal funds would be
added to the reimbursement amount coming in to Alaska. He
wondered what assurances the state had that the federal
government would continue to provide the increases to the
state. He believed many people were concerned about the
issue. He opined that nationally people were concerned
about the federal taxes coming out of their paychecks. He
remarked that many other states had accepted Medicaid
expansion and had populations in the millions. He believed
it was a "scary proposition" that the federal government
would owe such a considerable sum to states. He spoke to
expanding eligibility for up to 40,000 more Alaskans. He
asked how the state would afford its portion of the costs.
He wondered what would happen if the federal government
could not uphold its reimbursement.
Commissioner Davidson replied that current federal law
required the federal government to reimburse the state at
90 percent beginning in 2020 and beyond. She explained that
a change to the reimbursement rate would require an act of
Congress and consent of the president. The bill required
participation to be contingent upon the match remaining at
90 percent. The department would expect to follow state
statute, which only authorized the state's participation in
Medicaid expansion as long as the match remained at a
minimum federal match of 90 percent.
Co-Chair Neuman discussed that the state's budget was
getting tighter every year. He stated that the federal
government could not continue to spend money given its $16
trillion in debt. He remarked that in Alaska alone, it was
doubling the amount of money it expected from the federal
government in a 10-year period in order to expand Medicaid.
He believed the issue should be of great concern to
everyone.
Representative Gattis was concerned about incentivizing
people to find new Medicaid clients. She referenced
businesses handing out $25 gift cards to incentivize people
to sign up for Medicaid. She did not believe it was
fundamentally the right way to go. She was concerned about
adding individuals to a program that she did not believe
the federal government could afford.
Commissioner Davidson replied that one of the reasons the
administration was interested in expanding Medicaid was
because it provided the opportunity to extend coverage to
Alaskans without health insurance and to save the state in
what it currently paid with 100 percent general fund
dollars. Savings would be about $6.6 million in the first
year; cumulatively the savings totaled $107.8 million in
the first six years; the amount did not include the other
reform efforts identified in the bill.
Representative Gattis disagreed that it was a savings if
the money came from the federal government. She did not
believe a savings took place when the money was paid by
another party.
4:11:46 PM
Representative Pruitt remarked that the projected general
fund savings were based on the 90 percent federal
reimbursement. He asked if the department could alter the
projection to illustrate state savings that would occur if
the federal reimbursement rate was reduced to 50 to 80
percent.
Commissioner Davidson asked for clarification on the
request. She restated the request provided by
Representative Pruitt. Representative Pruitt replied in the
affirmative.
HB 148 was HEARD and HELD in committee for further
consideration.
Co-Chair Thompson discussed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 148 Responses HFIN Packet_05122015.pdf |
HFIN 5/12/2015 1:00:00 PM |
HB 148 |